US-Thai FTA: Final trade deal not expected in Montana round

Bangkok Post, 11 July 2005

FOCUS / AMERICAN-THAI FREE TRADE NEGOTIATIONS

Final trade deal not expected in Montana round

By UMESH PANDEY

The fourth round of trade negotiations between Thailand and its single largest trading partner, the United States, is not expected to yield any significant outcome, although both parties hope the talks starting today will help the two better understand each other and bring them closer to solving respective concerns.

Nothing concrete has come out of the first three rounds of talks as both sides have pushed for their positive lists to be put on the agenda.

The round in the US state of Montana will see issues of concern from both countries tabled for discussion, a significant shift away from initial plans to only table the positive lists.

The third round in Pattaya in April did not yield anything except lengthy discussions. It also took place amid protests from various non-government organisations who are critical of the US stance on intellectual property rights, which they said could eventually lead to price increases of necessary medicines.

The two trading partners have so far not managed to resolve their differences and the negotiation process is expected to carry on for at least another two years before a final draft can be worked out .

This is a far cry from Prime Minister Thaksin Shinawatra’s dream of having a Free Trade Agreement (FTA) ready within a year.

For the Montana round, both sides have agreed to put both their positive and negative lists on the table.

In June, Finance Minister and Deputy Prime Minister Somkid Jatusripitak said that only the positive agenda from Thailand would be put on the table in order to help push the discussion process ahead.

``Things have changed since the statement was made by the Ministry of Finance, and this time around we are going to table all the issues for discussion,’’ said a high ranking member of the 80-member team from Thailand.

The decision to table all the issues was made as Thailand views this as a preparatory stage for the draft resolution and that each country should learn more about the other during this stage, he said.

The US side is not expecting anything substantial to happen in Montana either. They expect the negotiations to be a long, drawn-out process that will include all issues.

``I am expecting a lot of progress during the discussions, but not a deal as such,’’ said Michael Delaney, counsellor for economic affairs at the US embassy in Bangkok.

The US, he added, wants the ongoing discussion to encompass all trade and investment issues.

``What we aim for is a comprehensive agreement that covers all trade and investment between the two countries,’’ Mr Delaney said. ``This is far more than what Thailand is looking for.’’

He said that encompassing all the issues could take a long time.

``We have done it with other countries and some of them are developing countries, and we want to do it with Thailand too, although we are aware of the sensitive issues and are willing to discuss these issues and the ways we can implement them in gradual phases,’’ Mr Delaney added.

Thailand’s sensitive issues are mainly in the financial, investment and intellectual property rights sectors although the question of lowering tariffs for export goods to the US is also high on the agenda.

Other issues are pharmaceutical prices, agricultural patents, telecom regulations and working visas for Thais.

Labour and environmental issues are also on the cards.

Nitya Pibulsongkram, Thailand’s chief negotiator, admits that the process will take a long time to complete and that there is no deadline for the team to meet.

``The process of coming to a formal agreement may take a long time, and I believe that it would require more than 10 rounds of negotiations, similar to the US discussions with Singapore which took a total of 11 rounds,’’ Mr Nitya said recently.

Thailand’s readiness to discuss the intellectual property and financial sectors is still in the early stages, but questions related to investments have already reached an advanced stage.

``We have on the investment side made progress, and are looking at various issues and studying them for adaptation to be used in Thailand’s case. We are learning and will come out with a balanced approach for Thailand,’’ said a senior diplomat involved in the investment negotiations.

Despite the long process, all sides agree that the outcome of a FTA between the two countries would benefit both countries as Thailand would gain access to the lucrative export market in the US, and American companies would gain a foothold in Thailand.

The world’s biggest economy is negotiating free trade with Thailand, Southeast Asia’s second-largest economy. Thailand’s other FTAs with countries such as Australia, Singapore, Peru, New Zealand, China and India have all started to bear fruit, although critics say the gains are far below expectations.

An FTA with the US would give US exporters tariff-free, or reduced tariff access, to Thailand, a growing centre for automobiles in the region. It would increase foreign investments, boost wages and improve the labour conditions in Thailand.

On the other hand, Thailand wants to expand its access to US markets. Shipments of goods to the US, its biggest export market, rose 16% last year to $17.6 billion.

Total trade between the two countries rose 14% to $22.2 billion during the same period, with Thailand having a trade surplus as imports from the US accounted for just over $7 billion of that.

A decision by the ministers involved not to put the negative issues on the table in earlier discussions was an error.

Any negotiations, especially preliminary ones, should involve both the negative and the positive issues as this will help bring out the most balanced approach and avoid future criticism that the deal was completed under pressure from the government.

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source: Bangkok Post