Asia Times, 9 Aug 2005
Thai focus on ASEAN trade
By Daniel Ten Kate, ThaiDay
BANGKOK - Thailand intends to focus more on increasing regional trade links since bilateral deals with the US and European nations may take years to complete, according to Thai officials.
"The US just passed the Central American Free Trade Agreement and we see this as positive for continuing negotiations, but we have to wait and see," Winichai Chaemchaeng, deputy director-general of the Trade Negotiations Department, said in an interview. "So far, the prospects [for an FTA with the US] are not very good. There is not much hope. Negotiations will probably continue for two to three more years," Winichai said.
Winichai’s comments, coupled with Commerce Minister Somkid Jatusripitak’s statement that Thailand "should not follow the lead of big countries", signal that the country’s appetite for bilateral deals may be waning. The basic agreement for a trade pact with Japan reached earlier this week came despite complaints that Tokyo was trying to bully Thailand into accepting a one-sided deal.
The same concerns may be surfacing in negotiations with the US, which has said it will accept nothing less than a comprehensive deal that covers sensitive industries like financial services and telecommunications. The US said earlier this month that it hoped to complete talks with Thailand by early 2006, but Thai officials have remained silent on pinpointing a date.
With the latest round of World Trade Organization talks languishing, Thailand is now setting its sights on expanding trade within ASEAN. It is hoping to speed up progress on the ASEAN Economic Community (AEC), which will link the Southeast Asian countries in a similar fashion to nations in the European Union. While tariffs on most goods are slated to be eliminated by 2010 under the ASEAN Free Trade Area, trade arrangements in the AEC would include services as well.
Thailand is also working to complete and implement trade deals between ASEAN and various dialogue partners, including China, India, Japan, South Korea, Australia and New Zealand. "It is necessary that Thailand work harder to lobby ASEAN for regional trade integration," Somkid said in his first official speech as commerce minister. He said he expected the Trade Negotiations Department to play a more proactive role in the next five years in gathering trade data from the private sector. "It is important to ensure that Thailand can be strong enough to stand on its own feet economically."
The government has recently been trying to figure out why oil and gold imports have increased so drastically through the first six months of the year, causing the country to post monthly trade deficits it has not seen in nearly a decade. In a meeting at the ministry, Somkid asked gold and jewelry sellers to voluntarily reduce imports. He was planning to do the same with steel and oil traders on Monday.
"Somkid asked gold and jewelry traders not to import too much from now on if it is not necessary," Jitti Tangsithpakdi, president of the Gold Traders Association, said after the meeting. He added that high global gold prices, coupled with the weak baht, had led importers to order more gold in previous months. But, he added, gold exports topped imports in June, and the deficit was expected to be erased later in the year.
Though the current account deficit, which hit US$6.2 billion in the first half, has ballooned unexpectedly this year, analysts expect it to narrow as seasonal exports increase. Nonetheless, new Finance Minister Thanong Bidaya is closely monitoring the deficits, which may push back the government’s long-delayed investment programs. "We expect to see many changes in the big picture, such as changes in the details regarding the mega projects," said Ussara Wiraipitch, a senior economist at Standard Chartered. "They may reconsider the sequence of the mega projects and implement the ones with low import content first."
As the government figures out how to immediately reverse its trade deficit, the debate about how to most effectively open markets while retaining its competitiveness appears to be moving against bilateral deals. "When you negotiate an FTA with a big country, it’s hard to see how you will get a benefit," said Thanomsri Fongarunrung, an economist at Phatra Securities. "It might not be as positive as everyone thinks."