FTAs needed more public support

The Nation, Asia News Network, Bangkok

The government appears to have finally put together a structure and comprehensive strategy to pursue Free Trade Agreement (FTA) negotiations with selected trading partners. But the road ahead is still paved with obstacles. As FTA negotiations get underway with the U.S. and Japan and intensify with Australia, India and China, the Commerce Ministry has decided to form two working teams.

One is to help formulate strategies for negotiations with each country, the other to ensure that the Thai private sector understands the consequences of such agreements, prepares for trade liberalization and works closely with the government to minimize the impact of new trade arrangements.

Two experienced commerce and trade experts have been assigned to these tasks. One is Sompol Kittipaibul, former commerce permanent secretary, the other Narongchai Akrasenee, a former commerce minister and a trade economist. In addition, an FTA unit has been created within the Commerce Ministry to give the ministry a dedicated staff and resources to tackle the issue. FTAs remain under the umbrella of the International Economics Committee, which Finance Minister Somkid Jatusripitak heads.

This arrangement is a welcome one, though it took the government three years to get its act together. No one can deny that many of the pending FTAs have been pursued in haste -- especially those with India and China under the "early harvest" program which saw tariffs in certain trading sectors dismantled rapidly. The government might have won some praise for appearing courageous because of its willingness to act quickly, but on the other side of the coin many businesses found themselves unprepared. Many businesses in the North, for example, found themselves confronting an avalanche of competition in the form of cheap fruit and vegetables from China.

Data shows that so far trade has increased with both India and China, but whether this is due to the FTAs is questionable. In any case, the gamble was made, and Thailand is now pursuing FTA talks with Japan and the U.S.

Japan has already come up with a list of farm products for which it wants exceptions to be made. The U.S., meanwhile, has made both economic and political demands, with key members of the Congress opposing any such deal unless the Thaksin government shows that it's committed to functioning like a democracy, with respect for free press and limits on support for the Burmese junta.

Three big questions remain. First, will FTAs swamp the Thai economy with foreign goods and make a mockery out of Prime Minister Thaksin's nationalism?

Second, will FTAs lead to economic regionalism and new agreements that will help deal with unfair non-trade barriers and give small nations better bargaining power against bigger nations?

Third and perhaps the most crucial, will Thai businesses be able to take advantage of any changes brought about by FTAs? For example, will domestic products be upgraded, or manufacturers become more productive to compete with imports? Will exporters likewise seize on opportunities to increase both export values and volumes, or to sell more services?

These issues remain unresolved. The government has shown that it's committed to aggressively pursuing FTAs, but many fundamental economic questions remain unanswered. Clear answers to these questions are necessary if public skepticism is to be transformed into widespread support for the government on this initiative. This is a giant undertaking and one that would benefit from a little less political PR, both at home and abroad, and more sensitivity, careful thinking and execution of programs to help Thai industries adapt to the new environment with minimal losses.