The US and Thailand Free

The US and Thailand Free Essay The US and Thailand Free commenced negotiations in respect of a Free Trade Agreement (FTA) on June 28, 2004. Approximately six rounds of talks between the two countries have been conducted pursuant to the FTA negotiations as of 2006. US Chamber of Commerce: Trade Policy) The overall intent is to liberalize â€Å"trade in goods, agriculture, and investment† and harmonization of intellectual property rights (Ahearn and Morrison, 2004) Ever since the founding of the World Trade Organization (WTO and its General Agreement on Trade and Services (GATT) developed nation member states, such as the US have adhered to the WTO’s policy to help developing and less developed member states such as Thailand improve their economic growth by entering into bilateral trade agreements with them. (Fbiosa et ales, 2005) Thailand has over the years demonstrated a keener willingness to open its markets to liberalized trade than many of the other Asian nations. This particularly so in the area of agriculture. Relations between Thailand and the US commenced as early as 1833 with the Trade and Amity and Commerce Agreement. (US Chamber of Commerce: Trade Policy) By 1966 the Treaty of Amity and Economic Relations was successfully negotiated between the two countries with each country granting the other equal trade treatment. (US Chamber of Commerce: Trade Policy) The 1966 Treaty came to an end in 2004, although extended by mutual agreement to December 2006, the FTA is intended to take its place. (US Chamber of Commerce: Trade Policy) Aside from the economic benefits to both countries, the US hoped to strengthen US-Thailand relations for the purpose of combating terrorism. This fact together with cultural differences, a political crisis in 2006, health concerns and Thailand’s relationship with other Asian nations have proven problematic for both countries in reaching a mutual agreement. (US Chamber of Commerce: Trade Policy) This paper examines the US-Thailand FTA Agreement, its history and its future track with reference to the difficulties that impede bringing the negotiations to a final conclusion. History and Background Thailand has long since been regarded as an ally of the US, a position that was only fortified during the Cold War period and strengthened even further following the terror attacks on the US on September 11, 2001. (Chanlett-Avery, 2006) The relationship between the US and Thailand has always been characterized by mutual trade and economic interests. (Chanlett-Avery, 2006) Following the 2001 terrorist attacks in the US the relationship took on a new dimension when it became obvious that Thailand shared, at least in part the US desire to fight terrorism in the Southeast Asian region. (Chanlett-Avery, 2006) These facts and circumstances together with Thailand’s strong economic and political ties to China puts Thailand in a position to have some influence in the Far East. (Chanlett-Avery, 2006) Recognizing the strategic economic and political position of Thailand in the Asia-Pacific area and its close ties with the US, President George Bush â€Å"designated† Thailand â€Å"as a major non-NATO ally in 2003. † (Chanlett-Avery, 2006) This designation is partly due to Thailand’s history of support to the US during the Cold War and partly due to its position with respect to the US counter terrorism initiatives. (Chanlett-Avery, 2006) Aside from sending troops to aide the US in its wars in Afghanistan and Iraq, Thailand authorities arrested a â€Å"high-profile† Islamic rebel in a â€Å"joint Thai-US operation† in 2003. (Chanlett-Avery, 2006) Co-existing with these diplomatic and amicable relations was the Treaty of Amity and Economic Relations between the US and Thailand which was signed in Bangkok on May 29th 1966. (US-Thai Treaty of Amity, 1966) The 1966 Treaty permits US citizens and companies incorporated in Thailand or in the US to hold all the shares in a business situated in Thailand and to conduct business in Thailand in the same manner as Thai citizens. There were certain restrictions on American investments including land holding, fiduciary services, communications, transportation, domestic agricultural trade and damaging natural resources. (US-Thai Treaty of Amity, 1966) The Treaty also provided favourable treatment to Thai businessmen upon application for entry visas into the US for business purposes. Moreover, there were no restrictions on repatriating funds to Thai by Thai business concerns in the US. (US-Thai Treaty of Amity, 1966) The Treaty of Amity and Economic Relations should have expired in September 2006 but was extended to a further period of 90 days bringing it to an end in December of 2006 instead. (US Chamber of Commerce: Trade Policy) In anticipation of the expiration of the Treaty of Amity and Economic Relations and the economic success of trade relations between the US and Thai, President Bush and Thai Prime Minister Thaskin announced on 19 October, 2003 plans to negotiate a bilateral trade agreement between the two countries. (Ahearn et ales, 2004) In March 2004, both countries announced that negotiations would commence in June of 2004. (Ahearn et ales, 2004) The first two rounds of negotiations took place in Thailand in 2004 with a third round taking place there in 2005. (Ahearn and Morrison, 2006) Fourth and Fifth rounds of negotiations were conducted in Montano on September 26-30, 2005 in Hawaii and earlier in the year at Montana on July 15. (Ahearn and Morrison, 2006) A sixth round was conducted in Thailand which ended all talks as a result of political unrests in Thailand. (Ahearn and Morrison, 2006) While some progress was made at the fifth round of talks in Hawaii, the remaining talks were for the most part unsuccessful. Essentially what was agreed to at the fifth round of talks was the removal of barriers to trade with the emphasis on tariffs with respect to goods crossing US borders to Thailand and vice versa. (Thailand’s Legal News Update, October, 2005) Both the United States and Thailand also agreed that Internet Service Providers should be included in all talks relative to intellectual property rights protection. (Thailand’s Legal News Update, October, 2005) Further agreement was made by the US to permit Thailand patent protection with respect to its rice and silk products. (Allison, 2006) The details of these agreements are discussed in much greater detail later on. The World Trade Review reported that the fourth round of negotiations held in Montana did not yield particulars of any specific agreements. However, the talks went well enough to ensure that both parties were likely to come to an arrangement at the fifth round of talks in Hawaii, (World Trade Review, 2005) which as previously noted did yield a consensus on tariffs and patent protection on rice and silk. In Montana, both US and Thai negotiating teams met with business representatives of Montana and were equally impressed with the importance of agricultural trade in the US. The negotiators also met with business officials within the telecommunications, financial, automobile, energy and additional service factions of the community. (World Trade Review, 2005) The World Trade Review believes that the results of this meeting and round of talks helped to pave the way for some agreement in the next round of talks. (World Trade Review, 2005) Be that as it may, relations between the US and Thailand were not without some difficulties. James A. Kelly, Assistant Secretary of State for East Asia and Pacific Affairs touched on a number of issues that were problematic for the US in his address to the Asia Foundation in Washington, D. C. on March 13, 2002. Noting that both countries shared a mutual interest in the concepts and benefits of security, liberty democracy and maintaining free and open trade markets Kelly also noted that there was a growing perception in Thailand that the US was either acting in bad faith or trying to take advantage of Thailand. (Kelly, 2002) Other problems were highlighted at the Bilateral Conference on United States-Thailand Relations in the 21st Century. (Bilateral Conference on United States-Thailand Relations in the 21st Century, 2002) The Bilateral Conference took place in Washington D. C. on March 11-13 under the auspices of 10 senior Thai government officials who met with American trade and government officials for the express purpose of debating the important isses within the context of a bilateral trade agreement. (Bilateral Conference on United States-Thailand Relations in the 21st Century, 2002) There was evidence of a strain in US-Thai relations following the US war with Vietnam from a Thai perspective. Many Thais felt that the US had neglected Thailand and felt even more disenchanted with the US following the Asian financial crisis of 1997 especially with respect tot he US’s the unduly strenuous conditions placed by the International Monetary Fund (IMF) with respect to Thailand’s aid relief. (Bilateral Conference on United States-Thailand Relations in the 21st Century, 2002) By the end of the 90s both political and economic relations between the two countries was quite often tense. (Bilateral Conference on United States-Thailand Relations in the 21st Century, 2002) The waning relationship was complicated by a failure on the US’s part to offer a viable loans system by way of financial relief via the IMF. Further complications arose out of the US’s failure to back-up the Thai Minister of Commerce and the Thai Deputy Prime Minister’s nominations to hold the post of World Trade Organization Secretary General in 1999. (Bilateral Conference on United States-Thailand Relations in the 21st Century, 2002) From the US’s perspective the Thai support of the US at the United Nations was weak if at all. (Bilateral Conference on United States-Thailand Relations in the 21st Century, 2002) Moreover, Thailand was reluctant to support the US position with respect to its EP-3 reconnaissance plane episode which involved China. (Bilateral Conference on United States-Thailand Relations in the 21st Century, 2002) The US also had concerns about Thailand’s position with respect to censorship in the media. Although following the September 11, 2001 terrorist attacks in the US Thailand once again closed the gap between US and Thailand with its support. (Bilateral Conference on United States-Thailand Relations in the 21st Century, 2002) In the global context, Thailand’s difficulty arises out of a desire to balance its relationship with China with that of the US. The problem for the US is in diminishing China’s stronghold on the Asian region and Thailand found itself having to balance its priorities with respect to negotiating its relationships with both China and the United States. The difficulty for Thailand was maintaining some sort of neutrality in its relationships with both super powers. (Bilateral Conference on United States-Thailand Relations in the 21st Century, 2002) Thailand’s political and economical policies reflect a desire to regularize relations within its immediate region. Of particular interest to Thailand is the strengthening of its commercial ties to regions close to its borders. Its relationship with Burma which is characterized by a trend toward conciliatory approaches is largely problematic for the US. (Bilateral Conference on United States-Thailand Relations in the 21st Century, 2002) The US would prefer it if Thailand took an isolationist approach to Burma. The problem was summarized at the Bilateral Conference. Thailand maintained what it referred to as a â€Å"constructive interaction† with its neighbour Burma and this caused some tension with the United States who would have preferred that Thailand adapted an isolationist stance with Burma. (Bilateral Conference on United States-Thailand Relations in the 21st Century, 2002) The US was also suspicious that the Thai government was lending support to regions like Malaysia and Indonesia which the US regarded as unstable and supportive of terrorist factions. (Bilateral Conference on United States-Thailand Relations in the 21st Century, 2002) The US felt that the anti-American sentiments in Indonesia and Malaysia were at risk of spilling over into Thailand. Notably Thailand Prime Minister Thaksin had been elected into office after running an â€Å"anti-American platform† and there was a concern that Thailand was faltering in its support of the United States on its anti-terrorism policies. (Bilateral Conference on United States-Thailand Relations in the 21st Century, 2002) Be that as it may, the US and Thailand had similar economic and political goals. The best approach was therefore thought to be a bilateral trade agreement. (Bilateral Conference on United States-Thailand Relations in the 21st Century, 2002)