US-Thai FTA: Framework needed before discussions on finance sector

Bangkok Post, 8 July 2005

TRADE / THAILAND-US TALKS

Framework needed before discussions on finance sector

WICHIT CHANTANUSORNSIRI

The rules and framework of the Thailand-US free trade area agreement must be set before discussions on the details of liberalising the financial sector, according to Thai trade negotiators.

Naris Chaiyasoot, the director-general of the Fiscal Policy Office, said financial liberalisation would also have to take into consideration that Thailand is a developing country.

Negotiators from the two countries are to meet on Monday in Great Falls, Montana for five days of talks on the FTA agreement. The Thai delegation will include representatives of the Finance Ministry, the Bank of Thailand, the Securities and Exchange Commission, the Thai Bankers’ Association and the Insurance Department.

Dr Naris said the discussions would aim at setting the rules and framework of the agreement, to set the stage for later talks on the specific commitments made for liberalisation in any particular sector.

Financial sector liberalisation is a sensitive subject for the talks. US authorities have insisted that no FTA agreement can be negotiated without it. Thai authorities have been reluctant to make any commitments on opening up the banking, insurance, asset management or securities sectors.

Even the scope of the agreement remains in dispute. The US wants to use a negative list approach, where all goods and services sectors are assumed to be covered under the agreement unless otherwise specified. That is opposite to Thailand’s preference for a ’’positive list’’ approach, in which liberalisation is for areas explicitly listed in the agreement.

Other areas of potential dispute include mobility of persons between the two countries, and cross-border trade and commercial presence within each country, specifically the treatment of offices and branches set up in each other’s country.

’’One principle of the talks is that consideration must be given to the economic status of each country and its readiness for liberalisation,’’ Dr Naris said.

’’The agreement must also not infringe on the sovereignty of either nation to conduct macroeconomic and other policies, including the stability and security of our financial sector, the economy and exchange rate policies.’’

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source: Bangkok Post