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Crucial FTA talks resume in Tokyo

Bangkok Post

Crucial FTA talks resume in Tokyo

Tough origin talks block a final deal


24 August 2005

The free trade talks between Thailand and Japan are approaching a crucial step, with officials preparing to address the origin of products, the last and thorniest issue on the agenda.

Both sides hope the differences can be sorted out during the two-day talks starting tomorrow in Tokyo, leading to the signing of the record of discussions between the chiefs of the negotiating teams.

Deputy Prime Minister Somkid Jatusripitak recently assured Thai exporters that the government would not sign the record unless Thai farm products worth nearly 40 billion baht a year got a wider market access to the Japanese market under the bilateral FTA framework.

``We will talk about the origin of every single product, item by item. If [Japan] cannot conclude this issue, [Thailand] will just not sign the agreement,’’ Dr Somkid, also the commerce minister, said.

Yet the prime ministers of both countries have already been scheduled to announce the successful conclusion of the free trade agreement in principle early next month in Tokyo regardless of the outcome of the talks on the rules of origin.

``Thailand would like to declare the talks a success even when the negotiations on the origin of products are still in progress because we would like to show our strong intention to reach the agreement with Japan,’’ said the official.

The same official added the negotiators sought clear agreements to avoid the failures faced by Malaysia, the Philippines and Mexico, Japan’s other FTA partners.

The three countries have already agreed on the principles of bilateral free trade agreements with the world’s second largest economy, but have yet to sign agreements due to the differences on the rules of origin.

At the ministerial meeting early this month, the ministers announced they had agreed on key issues including tariff cuts on steel, automobiles and parts, as well as trade in services. However, they could not agree on rules of origin, a set of regulations that govern the products eligible for favourable quotas and tariffs under trade agreements.

Thailand complains that Japan’s proposal impedes rather than facilitates trade flow. For example, all raw materials for certain products must originate in either Thailand or Japan.

Nilsuwan Leelarasamee, chairman of the non-tariff barriers and rules of origin committee of the Federation of Thai Industries, who has helped the Thai negotiating team, said the Thai team was working hard to prepare information for the upcoming meeting.

But he urged the Thai side to be very careful not to be led astray by some lavish concessions from which the country will not benefit in full. Mr Nilsuwan, who accompanied Thai experts to Japan, cited the tuna case as an example but declined to reveal further details for fear of disrupting the talks in progress.

In addition to farm products, industrial products, a category of much interest to Japan, will also be covered, said a source close to the talks.

In any case, Thailand still has the last card to play. It might revise the existing rules of origin of steel, cars and parts, which are of major interest to Japan, unless Tokyo proposes practical regulations for Thai farm and agro-industrial products including vegetables and fruit, pet food and canned tuna.

The same source said Japan’s agriculture ministry was the centre of the problem now and the ball was now in the court of the Ministry of Economy, Trade and Industry, which had to work hard to persuade it to loosen its protection of local farmers in favour of more benefits for the country’s competitive industrial sector.