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.