Textile makers oppose FTA over origin of raw materials
Bangkok Post
Textile makers oppose FTA over origin of raw materials
27 April 2005
By Aranee Jaiimsin
Thai textile and garment producers say they will lose opportunities to sell to Japan if conditions requested by Tokyo are incorporated into a free trade area (FTA) agreement now being negotiated.
Japan wants to apply the so-called yarn forward'' principle, meaning only materials in which 100% of the yarn came from Thailand or Japan would benefit from reduced tariffs.
Thai manufacturers had earlier agreed to a Japanese proposal to accept thefabric forward’’ principle as the model under the FTA, according to Nilsuwan Leelarasamee, chairman of the non-tariff barriers and rules of origin committee for the Federation of Thai Industries.
However, the Japanese side later told Thai trade negotiators that it wanted to use the yarn forward principle instead, he said.
The difference is significant. Under the fabric forward principle, goods with fabric made in Thailand or Japan would qualify for lower tariffs no matter where the yarn came, said Mr Nilsuwan.
The FTA, if approved, would eliminate the tariffs on textiles and garments, which currently range between 9% and 16%.
Thai trade negotiators should be very careful of any terms written in the final agreement. Otherwise Thai garment industries would become losers in this bilateral deal,'' said Mr Nilsuwan.
Also under the Japanese proposal, even if dyeing and printing were done in Thailand, the finished products could not be considered locally made if the fabric was originally imported, said Piyanuch Malakul Na Ayuthya, chairwoman of FTA negotiated issues taskforce for Thai Chamber of Commerce.
Apparel products that would be accepted as local content must contain fabric locally made with local woven yarn or imported yarn from Japan.Local garment industries would lose benefits if the draft proposal from the Japanese side were accepted because raw material sources are limited to Thailand and Japan only,’’ said Ms Piyanuch.
She added that finished products from Thailand would be less competitive in price because imported raw materials from Japan were generally more expensive than those from other sources.
Ms Piyanuch said Japan wants to promote use of its raw materials and to prevent ``product circumvention’’ _ goods from a third country, notably China, being passed off as Thai.
