Thailand and US equally tough on insurance talks in FTA
MCOT News, Thailand
Thailand and US equally tough on insurance talks in FTA
13 January 2006
CHIANG MAI, Jan 13 (TNA) -Talks to open up market access for the insurance sector within the framework of the Thai-US Free Trade Area (FTA) agreement ended here today with the only agreement - that each side would scrutinise the other’s list of demand for further consultations.
Speaking to reporters after the negotiation this morning, Ms Potjanee Thanavaranit, Director-General of the Insurance Department said key demands from the US include for wholly-owned US insurance firms to set up branches freely, for the US head office of these branches to conduct cross-border sales of insurance policy through brokers, and for Thais to buy insurance overseas.
The Thai side responded that it would need at least 10 years to review and evaluate impact of recent law amendment that increases foreign holdings in local firms from 25% to 49%.
At the same time, Thailand sees no need to allow US insurance firms to open up branches freely in view of the fact that American insurance firms can already do business through local agents when they set up shop here.
Regarding cross-border insurance policy trading, Ms Potjanee said at the moment Thai people can buy insurance outside the country. However, the Thai government reserves the right to give tax break allowance only for insurance policies from locally-registered firms.
On the other hand, the Thai delegation’s demands for the FTA pact include rights for Thai insurance company to conduct business throughout the US regardless of which state they register. The current US law prohibits such practice. But Ms Pojanee said for equity’s sake, a US company registered in Thailand can conduct business in the entire Kingdom and Thai companies should be granted equal rights in doing business in the US.
As for non-life insurance, the US delegates were told that Thailand needs at least 15 years grace period before liberalisation because most Thai companies operating in this sector are small and unprepared to handle sudden impact of full liberalisation.
The US delegation reportedly expressed frustration at the Thai position, citing the case of Singapore that could move quickly. But the Thai side pointed out that the system and private sector in Thailand are different from those of Singapore.
