This week a
delegation of Thai government officials, led by the Minister of
Commerce, Watana Muangsook, will visit Washington to make contacts
in preparation for the Free Trade Agreement (FTA) negotiations
later this spring. The delegation's meetings will range from
mingling with Members of Congress to negotiators at the United
States Trade Representative's office (USTR). U.S. officials should
take advantage of these meetings to get to know the Thai officials
and to emphasize the issues that must be covered in this agreement.
Everything must be put on the table in these negotiations.
An FTA with
Thailand is a natural next step for the United States to take.
Thailand is a member of the World Trade Organization (WTO) and has
a Trade and Investment Framework Agreement (TIFA) with the United
States. Two-way trade totaled nearly $20 billion in 2002. U.S.
exports to Thailand include machinery, agricultural products, and
negotiations present many opportunities and challenges. This
agreement has the potential to reap tremendous benefits for both
sides if challenging issues are addressed. There is a laundry list
of issues that U.S. policymakers should begin discussing with their
Thai counterparts this week. These include:
Piracy is a key
issue for U.S. industries. According to the USTR, "U.S. copyright
industries reported an estimated annual trade loss of more than
$160 million from IPR infringement in Thailand in 2002. Many
infringing products manufactured in Thailand are exported." The
export pirated CDs from Thailand is a major problem, according to
the USTR's 2003 Special 301 report. Thailand is on the USTR's
Special 301 Watch List and has been on this list since 1994.
Barriers to Trade
market access is desperately needed for U.S. exporters. Even
products that have very little domestic competition, if any,
currently face high tariffs. Thailand's complicated tariff regime
has 46 rates, according to the USTR. These include an 80 percent
rate on passenger cars and sport utility vehicles and tariffs as
high as 60 percent on pears and cherries.
Adding to the
barriers are inefficient and inconsistent customs procedures.
"Thailand's Customs Department generally enjoys a high degree of
autonomy and engages in practices that are non-transparent and
often appear arbitrary and irregular," according to the USTR.
Maneuvering through these irregular and tedious procedures adds to
the overhead costs of U.S. exporters.
government procurement procedures present yet another non-tariff
barrier to U.S. firms. Thailand has not signed onto the WTO
Agreement on Government Procurement. Thailand's "Buy Thai" policy
excludes non-Thai products from competing for bids. This policy
distorts the market by favoring domestic firms.
use this FTA as an opportunity to eliminate these distortions and
to promote economic freedom. According to The Heritage Foundation's
2004 Index of Economic Freedom, economic freedom has been declining
in Thailand for the past several years. Thailand is ranked as a
"mostly free" economy. Thailand could increase economic freedom
with some changes. An increase of economic freedom would allow
Thailand to achieve a higher GDP per capita.
should take advantage of their meetings with the Thai delegation
this week to prepare for the negotiations later this spring. U.S.
policymakers should not wait until they're at the negotiating table
to broach these challenging issues. Likewise, U.S. policymakers
should prepare to put everything on the table. Exclusion for
sensitive products, such as sugar, should not be made in this
agreement or in future agreements.
The USTR should
seek to gain across-the-board access from this agreement. This
access should include:
- Getting the Thai
government to crack down on piracy;
- A significant
reduction in non-tariff and tariff barriers;
- An agreement
from the Thai government to reform their customs procedures;
- Allowing U.S.
firms to compete for Thai government bids. U.S. negotiators should
encourage the Thai government to sign onto the WTO Agreement on
policymakers should take this opportunity to encourage the Thai
government to pursue economic freedom. While significant reductions
in tariffs and non-tariff barriers will improve Thailand's trade
policy and encourage greater growth, Thailand should pursue further
reforms as well. The FTA negotiations will give both sides an
opportunity to gain tremendous benefits if everything is put on the
table. Additionally, this FTA will strengthen the friendship
between the countries. Such opportunities should not be