The Nation
Bilateral FTA deals pivotal to govt policy
Jeerawat Na Thalang
Published on December 06, 2004
Each set of talks presents unique problems
The initiation of bilateral free-trade agreements with countries all around the world has become one of the foreign policy cornerstones of Prime Minister Thaksin Shinawatra’s government.
Impatient with the slow progress in trade liberalisation under the World Trade Organisation, this government has in recent years pursued free-trade deals to open up export opportunities.
Thailand is the world’s 23rd largest exporter, shipping out goods valued at US$80.23 billion (Bt3.13 trillion). The government believes that FTAs are the best option to link up with strategic partners such as the US, Japan, China, Japan, India, Australia and countries in the Middle East.
Thai Trade Representative Kantathi Suphamongkhon, overseeing FTA talks with Peru, said everyone is rushing to clinch trade deals. “The only country that doesn’t have an FTA is Mongolia,” he said jokingly.
The government has not set a deadline for FTA talks, but hopes to wrap up each one within 18 months. The one with Australia took just one year.
After two rounds, the closely watched talks with the US look likely to be drawn out due to sticky issues on labour, intellectual property rights and environmental protection among others. “The government didn’t give us a deadline but it is prepared to wait for the best agreement,” said Nitya Pibulsongkram, chief negotiator and former ambassador to Washington.
FTAs have also had to cope with political undertones, especially when it comes to agricultural products.
Dairy farmers have struck out at the Thai-Australian FTA, claiming that they will be wiped out when Australia unleashes a flood of cheap milk products in 2020.
Rice growers were highly disappointed when the government capitulated to Japanese demands to exclude their crop from FTA-covered lists. And the US talks have fanned nationalistic sentiment in some quarters against the possible set-up of an international-dispute settlement panel that might supercede local courts.
Neither are FTAs motivated strictly by economic considerations. Smoothing the way for the world’s sole superpower to seek an acceptable trade-related arrangement with Thailand is the part of the long-standing security relations between the two allies. Thailand’s FTA with China is set up under the broad context of a Sino-Asean FTA.
And the country’s desire for an open Japanese market is also grounded more in strategic considerations than economic incentives.
“The FTA with Japan is not just a question of trade but also a matter of logistics and strategy for Japanese leaders,” negotiator Pisan Manawapat said.
The FTA with India is taking shape, with an “early harvest” scheme cutting duties on more than 80 items. Despite early concerns by India over the possible influx of Thai vehicles, both parties decided to proceed with the FTA to support India’s “Look East” policy and Thailand’s similar vision for the subcontinent.
FTAs with Peru and New Zealand are set to be concluded this month. The pact with Bahrain may appear less significant but it marks the Kingdom’s effort to enter into the Middle East market.
The FTA with Australia is probably the most comprehensive of all, covering all industries and services. It is the first one that Thailand has signed and also sets a precedent for talks with New Zealand.