No retaliation for Malaysia auto tariffs: Thai official
No retaliation for Malaysia auto tariffs: Thai official
Dow Jones, Bangkok
The Thai government won't take any retaliatory steps against
Malaysia for its delay in implementing import tariff cuts for
automobiles and parts required under the Asean Free Trade Area,
or AFTA, agreement, a senior official at the Commerce Ministry
told Dow Jones Monday.
Although representatives from Thailand's private sector have
urged retaliation since Malaysia's delay could hurt Thailand's
automotive industry, the Thai government is pleased that Malaysia
has proposed measures to mitigate the ill effects of the delay,
the official said.
"Retaliation doesn't seem necessary now as Malaysia has taken
positive steps. We're negotiating on details of (the compensatory
measures)," said the official, who is involved in the AFTA
negotiations.
Thailand and Malaysia are members of the Association of
Southeast 10-member Association of Southeast Asian Nations, or
Asean.
Malaysia has delayed the cutting of automotive tariffs that is
required under the AFTA rules by two years until 2005.
Under the AFTA plan, regional tariffs on motor vehicles
imported by Asean's six original members - Malaysia, Indonesia,
Thailand, Brunei, the Philippines and Singapore - are set to fall
to below 5 percent next year.
Malaysia received an extension after saying it wanted to give
the local car market more time to prepare for competition after
the country's economy was hurt by the 1997-98 financial crisis.
Thailand has a sizable car manufacturing sector and wants
compensation for the impact that the delay will have on its
economy.
At an Asean Economic Ministers meeting in Brunei Sept. 12-15,
Malaysia pledged it would come up with several measures to
respond Thailand's request for compensation.
According to an earlier statement issued by the Thai commerce
ministry, the proposed measures included plans to speed up cuts
in Malaysian import tariffs on cars with engines bigger than 2000
cubic centimeters, to import more rice from Thailand on a
government-to-government basis, as well as to import more car and
motorcycle parts.
Malaysia will also negotiate a long-term contract to buy sugar
directly from a state-run Thai company. Like other importing
countries, Malaysia currently buys Thai sugar through
international trading firms.
The ministry official said since Malaysia was offering a
compensation package that mostly involved industries other than
the auto sector, some of those affected in the auto sector won't
be satisfied.
The government will continue monitoring the situation to see
if it would be necessary to pursue further compensation targeted
at getting relief for those affected in the auto sector, the
official said.
Such compensation, however, will also depend on further
negotiations with Malaysia, the official said.
Separately Monday, Thai Chamber of Commerce Secretary-General
Vachara Punachet said he wanted the government to retaliate in
industries in which Thai demand plays a big enough role, and to
pressure Malaysia into soon agreeing to implement the auto tariff
cuts as required by the AFTA agreements.
He, however, denied a report in a local English-language
newspaper, Business Day, which quoted him as suggesting a ban on
imports of Malaysian palm oil.
"I didn't said palm oil is a (viable) measure... I think
Malaysia wouldn't be affected by a Thai ban (as Thailand doesn't
import much Malaysian palm oil)," he told Dow Jones in a phone
interview.
Thailand imports limited amounts of Malaysian palm oil. In the
first seven months of this year, Thailand imported just 2,400
tons of palm oil from Malaysia, compared with China, which
imported 1.05 million tons, India, which imported 979,360 tons,
and Pakistan, with 557,830 tons.