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Thai-Korean trade talks hung up on rice

Bangkok Post

Thai-Korean trade talks hung up on rice

By Parista Yuthamanop

5 June 2007

Seoul. Thailand and South Korea will continue to work toward a bilateral free-trade agreement, according to Nitya Pibulsonggram, the minister of foreign affairs. Trade talks between the two countries were now focused on cutting tariffs for rice and fruit, two key Thai exports.

’’Apart from rice, there are vegetables and fruits that we need to seek a balance. The pact has not yet been signed as we can’t strike a balance,’’ Mr Nitya said.

South Korea, in turn, would benefit from a free-trade agreement through greater access to Thailand’s service sector, he added.

Diplomats from the two countries held meetings yesterday in Seoul on the sidelines of the Asia Cooperation Dialogue meeting. Mr Nitya said South Korean delegates raised questions about Thailand’s moves to amend the Foreign Business Act.

A government amendment of the FBA significantly tightens the definition of foreign companies to include firms with a majority of voting rights held by foreign nationals. The National Legislative Assembly is reviewing the amendment.

Mr Nitya noted Thailand and Korea would celebrate the 50th anniversary of diplomatic ties this year.

The 30-member ACD, meanwhile, is expected to discuss ways of expanding an initiative to deepen and broaden the Asian bond markets. Thailand has been a strong proponent of the concept, first launched in 2003 with the aim of boosting economic stability in the region and financing growth with Asian savings.

Mr Nitya said Thailand hoped to expand the initiative on a bilateral basis or among a small group of countries.

’’We have not been able to push the project on a broad scale. But we can spin off what we can do such as having baht-denominated bonds [issued by the Lao government],’’ he said, adding that Thailand would continue to support the programme within the ACD framework.

ACD members are also expected to petition major oil-producing countries to invest in Asian bonds at its next meeting in Pakistan in September.

The first Asian Bond Fund was launched in June 2003 with $1 billion raised from Thailand, Korea, Japan, Singapore, the Philippines, Australia, Indonesia and New Zealand. A second bond fund was launched in late 2004, with $2 billion raised to invest in local-currency bonds issued by eight Asian countries.

Mr Nitya said Thailand today would propose a new framework for the ACD in which each working group would cross over among different topics.

The ACD, which includes countries from East Asia, South Asia, Central Asia and the Middle East, currently has 20 working groups.