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8 Apr 2005

International Economy

Third Round of Thailand-US FTA Talks: Prudence Needed for National Interests

The third round of the Thailand-US Free Trade Area negotiations will take place on April 4-8, 2005, in Pattaya. This round of negotiations will focus mainly on exchange of ideas/information on various issues to establish a framework for further negotiations. Although negotiations for the opening of markets have yet to start at this stage, Thai negotiators will have to work hard and brace for possible pressure from the US, which has high negotiating leverage. Kasikorn Research Center (KRC) takes the view that issues which Thailand should take into special consideration during negotiations with the US include:

Intellectual Property ? The US wants Thailand to extend protection on intellectual property beyond what was agreed under the TRIP Plus (Trade Related Aspects of Intellectual Property Rights) agreement of the World Trade Organization. The US demands that patent rights protection for medicinal products must be extended from 20 years under this agreement to 25 years. The fact that all kinds of medications are required to be patented will eventually lift the prices of medicines, thus causing difficulties for access to medicines. It is undeniable that this will have wide-ranging effects on the general public, while the Thai government will have to shoulder greater burdens caused by more expensive drug prices in allocating its universal health insurance budget (the 'Bt30 for all treatments' plan).

Increasing workers' and environmental protection to US Standards ? which would increase Thai production costs and affect Thailand's competitiveness, eventually.

The US is trying to pressure Thailand to cancel non-tariff barriers (NTBs) in order that it can enter more effectively enter the Thai market for goods and services. But, at the same time, the US also uses many forms of non-tariff barriers such as AD (Anti-Dumping) edicts, strict regulations on labeling, workers' and environmental standards, and giving domestic subsidies to its agricultural sector and on farm goods exports, making it harder for goods from other countries to compete there and causing slumping prices for agricultural goods in the world market. Therefore, in the FTA negotiations with the US, Thailand should negotiate on these non-tariff barriers in order for Thai goods to enter the US market more easily, such as setting up a mutual recognition arrangement (MRA) on food products, fruit and vegetables, etc.

Moreover, negotiations with the US will need time to consider carefully, and should not be limited in timeframes. Also, FTA agreements bind both parties, who gain and lose, as well, so the public should have information on negotiations and be able to give suggestions for the maximum benefit and the least disadvantage.

International Economy