Bangkok Post

’Mutual benefit’ essential

Tokyo’s car-import requests opposed

WORANUJ MANEERUNGSEE

6 May 2005

Thai auto parts manufacturers and industrialists remain adamantly opposed to liberalising car imports under the proposed Thai-Japan free trade area agreement.

Members of the Board of Trade and the Federation of Thai Industries yesterday held a briefing on their position on the FTA agreement, the first time that the country’s two main business lobbies had taken a public stance on the trade talks.

More than 20 leaders of the two groups, representing some of Thailand’s largest companies, called on the government to ensure that the trade negotiations were based on the principle of mutual benefit''.We feel that Japan has sought to pressure Thailand [to liberalise] without consideration of the benefits for its counterpart. Instead of negotiating on the table, they have preferred to lobby Thai politicians,’’ said Phornpinit Phornprapha, a vice-chairman for the Board of Trade.

Japan has called on Thailand to liberalise steel and auto imports, a move that local producers fear will damage Thai-owned auto parts companies.

At the same time, critics say Jaoan Japan has been reluctant to open up its market for agricultural products for Thailand.

Authorities hope to finalise the talks soon to allow the two countries’ leaders to sign an agreement by July.

Prime Minister Thaksin Shinawatra and Finance Minister Somkid Jatusripitak plan to discuss the progress of the talks today with Shoichi Nakagawa, Japan’s Minister of Economy, Trade and Industry.

Local business leaders insist that liberalisation needs to be undertaken in a gradual manner that considers the needs of local industries.

Sompong Paearnchock, a member of the FTI’s auto club, said that removing the 80% import tariff on cars with engines larger than 3,000cc as requested by Japan would lead to manufacturers shifting to the development of larger-engine cars, due to the reduced price gap.

More consumers would look to purchase Japanese imports, severely affecting prospects for domestically manufactured cars, he added.

Current taxes, including import tariffs, excise taxes and other charges are 328% for CBU (completely-built up) large-engine car imports. Locally assembled CKD (completely knocked-down) cars face a total tax of 196%, a difference that has contributed to the growth of the local industry.

Other auto producers have raised concern about whether lower taxes on Japanese car imports would affect investment and business plans of US and European carmakers, particularly those who have set up local production plants to take advantage of the lower tariff rate when compared with imported cars.

Steel is another sensitive issue. Japanese carmakers have lobbied for import tariffs to be lifted to help improve the competitiveness of locally made products, and have argued that high-quality steel used in the car industry cannot be found locally.

Local steelmakers insist further protection is needed to give domestic mills time to improve their operations.

Korakot Padungjit, secretary-general of the FTI’s steel club, said local steel firms mostly agreed that duties on semi-finished goods and raw materials to make high-quality steel should be lifted.

But other steel categories should continue to enjoy tariff protection for 10 years, with duties cut to zero in the 15th year of the FTA agreement.

For steel that cannot be produced locally, the agreement should set import quotas, which could be cut gradually each year,'' Mr Korakot said. Food exporters, meanwhile, say their position is that tariffs on key products such as seafood, chicken, fruit and vegetables, starch as well as sugar should be cut to zero once the agreement takes effect.Japan’s offers for Thai farm products to date are absolutely unacceptable. If [Japan] wants to succeed in opening up industrial goods, then they should let our farms access their market as well,’’ said Pornsilp Patcharintanakul, the Board of Trade deputy secretary-general.

Leaders of both groups say that while they support the opportunities to improve trade and investment ties with Japan under the FTA pact, the government should not rush into any deal unless it is in the mutual best interests of both countries.