Long road to joining TPP negotiations
The Nation, Bangkok
Long road to joining TPP negotiations
Business Reporters, The Nation
19 November 2012
Govt says no commitment yet; banking sector fears loss of capital controls
If members of the Trans-Pacific Partnership (TPP) Agreement welcome Thailand’s bid to join the exclusive trade pact, it would be just the first step for the government, which would have to seek approval from the Parliament to begin negotiations.
"The Thai government has to proceed according to Article 190 of the Constitution and other related processes before joining in the negotiations," said Foreign Affairs Minister Surapong Towichukchaikul.
A senior source at the Trade Negotiation Department added that the Cabinet’s recent approval was only intended to announce Thailand’s interest in joining the TPP negotiations, and did not commit the country to anything. In addition, the US would need to propose Thailand’s interest to the TPP’s other 10 members for a consensus agreement.
If Thailand receives the consensus nod, the government could start its internal process, most importantly seeking Parliament’s approval, as well as conducting public hearings and preparing for the Kingdom’s negotiations, and finally getting approval for the talks.
The source added that the department had already studied the potential positive and negative impacts of joining the TPP agreement.
In fact, ahead of US President Barack Obama’s arrival yesterday, the Commerce Ministry raised the issue with the Foreign Affairs Ministry. The Commerce Ministry’s view is that with the US having approached Thailand to join the free-trade pact many times, the visit is a good opportunity to discuss it.
The same source pointed out that there will be losers and gainers in every free-trade negotiation, but the department will try to minimise any loss. For instance, the private sector has expressed concern over such sectors as telecommunications, information and communications technology, finance and intellectual property. Ultimately, businesses must adjust to cope with competition, the source said.
A source who formerly worked as a senior trade negotiator said the government should consider carefully before joining the TPP negotiations, and seriously weigh the potential losses and gains. For decades, 25-30 per cent of Thailand’s exports went to the US market, but the ratio has declined in recent years, since the government shifted to focus more on new markets. The Kingdom’s exports to the US accounted for 10 per cent of its total export value during the first nine months this year.
"We should seriously consider what the US’ real demands are, as [previously] our obligations under international free-trade agreements mainly focused on goods, rather than services such as information technology, finance and others, for which we would need to consider the timeframe involved," said the source.
Vallop Vitanakorn, chairman of Hi-Tech Group, a leading garment exporter, said rising non-tariff barriers in global trade could force Thailand to join the TPP. The US is still a major garment export market, so the privileges under the TPP would strengthen the country’s export competitiveness.
Buntoon Wongseelashote, chairman of the Board of Trade’s Trade Issues Monitoring Committee, said Thailand needs to negotiate entry into the TPP as it will open a new opportunity for Thailand to access not only the US market, but also those of Canada and Mexico. If the country delays in making a decision to join the TPP, Thailand could lose competitiveness to other TPP members, and investors would give preferences to TPP members as new bases of investment in order to access the US market.
Thai bankers and economists also pointed out that the government must ensure platforms are in place that allow local regulators to control financial stability in a bid to tackle the negative risks of the TPP.
Banking is one sector that will be impacted by the TPP. Bankers said they can accept liberalisation, even the arrival of the TPP, but the government must take strong action to protect local financial stability.
Banluesak Pussarangsi, an economist at CIMB Thai Bank, said that associations in the financial sector including the Thai Bankers’ Association have agreed with the Bank of Thailand, Office of Insurance Commission and the Finance Ministry to work together on negotiations with the US on the TPP. The US must allow Thailand to control capital flows, Banluesak said.
Among the negative risks of joining the TPP is the fact that in the area of capital controls, the US may have the right to file legal charges with local regulators.
Chansak Fuangfu, senior executive vice president of Bangkok Bank, said the TPP is part of the liberalisation process, which all players should accept.
"We [in the financial sector] have to look beyond the reason of why we have to be a member or not be a member in the TPP. We must think about the preparations to reduce certain obstacles," he said.
According to the FTA Watch Group, the TPP negotiations would have a direct negative impact upon the affordability of medicines and access to health care in developing countries.
The TPP would expand the scope of pharmaceutical patents and create new drug monopolies by lowering patentability standards and requiring that patents be available for surgical and treatment methods as well as minor variations on old medicines - even if they do not enhance efficacy.
This negotiation would also lengthen the drug monopolies by requiring countries to extend patent terms if a review at the patent office of the regulatory authority exceeds a prescribed period.
Additionally, it would eliminate safeguards against patent abuse, including among others, the rights of those with third-party status (patent linkage). Under patent linkage, even spurious patents may function as barriers to generic drug registration.
TPP would extend commercial control over regulatory information or data exclusivity as well by providing at least five years’ exclusivity for information related to new products and three more in cases of new uses for old medicines - even when that information is in the public domain.
