Thailand's proposal for the fourth
WTO Ministerial Conference
A clear-cut agenda
Introduction
WTO Ministerial Conferences represent the
highest decision-making body of the WTO. All WTO member
countries and customs unions must attend a Ministerial Conference
at least every two years.
The 3rd WTO Ministerial Conference held in
Seattle, 1999, ended in absolute idle. Due to conflicting
objectives and diverse attitudes towards trade liberalization,
members were unable to move past initial discussions.
Key topics of disagreement between developed
and developing nations that held up negotiations were related
to issues of domestic support, market access and export
competition in agriculture.
Two years after Seattle, WTO members have
agreed to meet again in Doha, Qatar on November 9, 2001.
This much-anticipated 4th Ministerial Conference will be
structured with a goal of launching a new round of negotiations.
Members will prepare for the meeting with the objective
of mending loopholes that exist in current world trade agreements.
How Thailand fairs at the upcoming conference
will depend on how well the government has upheld past commitments
under WTO agreements, the government's present policies
on trade liberalization and the country's future liberalization
goals.
Thailand's past obligations under the WTO
Thailand has been committed to the agreements
under WTO. There is, however, a growing recognition of the
need for new negotiations to revise and update past agreements.
Reconsiderations of current agreements can serve as a building
block for the new round of negotiations. Specific trade
issues Thailand would like to reevaluate include, dumping,
bio-technology, and government subsidies.
Since the birth of WTO, Thailand has fought
dumping allegations against countries around the world.
One of the more familiar dumping allegations was made by
Maui Pineapple Company of the United States. In this case
Maui accused Thailand of dumping pineapples in the US. Maui
won the case in 1995. Today dumping duties are still valid
on Thai pineapple imports to the U.S.
Thailand and other smaller developing nations
believe that developed countries are increasingly resorting
to anti-dumping and countervailing measures as regular non-tariff
barriers or weapons. These types of measures were originally
intended to be used in exceptional circumstances only. In
Doha, Thailand will ask members to reconsider measures designed
to counter the practice of dumping and attempt to ensure
that laws designed to protect against dumping cannot be
employed as instrument for unfair protection for domestic
industry.
In addition to dumping, Thailand also plans
to raise issues pertaining to the Trade Related Intellectual
Property Rights (TRIPS) Agreement, which deals with copyright,
trademark and patent laws that protect biodiversity and
bio-technology. Implementing and enforcing TRIPS is fundamental
for the expansion of international trade in agriculture.
with numerous patented innovations and effective patenting
systems will be have a distinct comparative advantage as
international trade gathers momentum.
Specifically, the Protection of plant species
has become a hot topic with in the last five years. Thailand,
an agriculture export-oriented country, has a great deal
at stake if foreign companies are able to patent their indigenous
commodities. To date, Thailand has been unable to supply
the capital and funding needed to implement the training,
human resources and infrastructure required to make patent
registration readily accessible to the general public.
The final issue that has drawn attention in
the country is related to the topic of domestic subsidies.
Compared with other major economies such as the EU or US,
the Thai government does relatively little in terms of subsidizing
the domestic agricultural economy. Only 7.5 percent of Thailand's
total govt. expenditures are allocated to supporting agricultural
sector, compared with 80 percent in the EU.
Under the WTO Agreement on Agriculture, countries
may not create additional government subsidies that did
not exist prior to the agreement. Developing countries such
as Thailand, however, would like to review this clause.
Unlike wealthy nations that have historically offered substantial
support to domestic industry, Thailand and other emerging
markets have few government subsidies already in place.
It will therefore be difficult for them to compete against
the heavily subsidized agricultural markets of developed
countries. In an effort to level the playing field, Thailand
will ask developed countries to reduce existing subsidies.
The government's present policies on trade
liberalization
Over the past 10 years Thailand has been positioning
itself to compete in a liberalized economy and has taken
significant steps towards market liberalization. Thailand
belongs to three influential trade groups; Asian Pacific
Economic Community (APEC), Association of South-East Asian
Nations (ASEAN) and the Cairnes Group (whose members are
medium-sized exporters of agricultural goods). Membership
in these trade groups has helped to prepare Thailand for
the transition from bilateral to multilateral trade agreements
and to eventually become competitive in free trade area
(FTA) agreements.
One hundred percent market liberalization
will only be achieved when Thailand is able to eliminate
all tariffs on all goods. In Doha, Thailand suspects that
the US plans to discuss Thailand's tariffs on agricultural
goods. The US argues that Thailand's tariffs cause large
trade barriers worth up to $900 million a year. If Thailand's
tariffs and other trade-distorting measures were substantially
reduced or eliminated and the economy recovered to pre-crisis
levels, the US believes trade potential with Thailand would
be significantly improved. However, since Thailand has minimal
subsidies compared with the US and EU, Thailand may feel
that without higher tariffs their agricultural sector is
at a substantial disadvantage.
High duties on agriculture and food products
remain the main impediments for US exports of high-value
fresh and processed foods. Under its Uruguay Round WTO obligations,
Thailand committed to reducing agricultural import tariffs
but this has been a difficult process as import duties represent
an important source of government revenue and serve to protect
politically influential domestic agricultural interests
from import competition.
Although the US argues that Thailand's import
duties remain unreasonably high, there are no longer specific
duties (a fixed dollar amount per physical unit of commodity)
for most agricultural and food products and ad valorem rates
(a fixed percentage of the commodity value) are declining
in accordance with WTO obligations. Nevertheless, some import
duties on agricultural and processed food goods are currently
as high as 55 percent and the average tariff rate is 29.32
percent. Furthermore, duties on many high-value fresh and
processed food products will remain high - in the 30-40
percent range - even after the WTO reductions.
The US would like Thailand to implement more
rapid reforms and market liberalization. Thailand, in cooperation
with other APEC countries, has also been encouraging other
nations to speed trade liberalization. Together with APEC,
Thailand will support further global market liberalization
at the upcoming multilateral round. APEC vocally recognizes
the necessity of communicating the benefits of trade liberalization
with in its region and APEC and Thailand have worked together
to reduce tariffs and non-tariff barriers across a wide
range of sectors. Thailand alone has reduced tariffs on
542 items.
Prior to the WTO Ministerial Conference in
Doha, a 3rd Meeting of the ASEAN Economic Ministers Conference
will be held in Hanoi, Vietnam September 2001. The agenda
is to determine the central issues concerning member nations
that need to be discussed under the regulation of WTO. Chairman
of the AEM and Minister of Commerce, H.E. R. Adisai Bodharamic,
will represent Thailand at the meeting. Members hope to
lay the groundwork for the eventual establishment of a free
trade area between ASEAN countries.
As a member of the Cairnes Group, Thailand
has been adamant in insisting that agriculture remain at
the center of the upcoming WTO negotiating agenda. The Cairnes
Group has agreed to move to a more detailed phase on trade
liberalization negotiations over coming months and has already
submitted proposals to eliminate export subsidies, domestic
subsidies and to substantially reduce import tariffs. These
are the three topics covered under the WTO Agreement on
Agriculture (AoA), which if not eliminated, significantly
distort trade and production.
Thailand's future liberalization goals
The examples above are evidence that Thailand
is in the process of preparing itself for market changes
to be implemented upon completion of a successful round
of negotiations. Thailand is focused on increasing its agricultural
competitive advantage in the world market. Lowering import
tariffs, increasing poverty alleviation, education, health
and social welfare in rural areas are all steps required
to ensure continued future economic growth and development.
One of the Thai government's strategic solutions to address
these issues has been to create incentives for agribusiness
multinational companies (MNCs) to invest in Thailand. This
allows for increased technology transfer and training from
developed countries to the rural areas of Thailand while
maximizing the existing wealth of agricultural knowledge
within the country.
WTO market liberalization promotes market
efficiency. A successful round of negotiations in Doha should
facilitate Thailand in further shifting resources from inefficient
agricultural to higher capital value-added food processing.
Agricultural production in Thailand can then become more
efficient, less land intensive and more environment-friendly
as production shifts from a labor, land and resource intensive
to capital-intensive industries, which are less exploitative
of land and natural resources.
With the help of regional and trade groupings
such as APEC, ASEAN and the Cairnes Group, Thailand should
have the power to successfully negotiate issues on anti-dumping,
biotechnology and government subsidies. Thailand will continue
to demonstrate its commitment to further trade liberalization
by working with other WTO member nations to mend loopholes
in existing WTO trade agreements and reduce distortions
in agricultural trade markets.
