Thai-Japan free trade agreement agreed in principle

Thai-Japan free trade agreement agreed in principle

Associated Press, Bangkok

Thailand and Japan have agreed to forge a free trade agreement
and expect to sign the deal next April unless disagreements arise
over details, the head of the Thai negotiation team said on
Monday.

The agreement aims to reduce tariffs on US$35 billion worth of
trade between the two countries. Japan is Thailand's single
biggest trading partner.

"If all goes well as planned, we hope to sign the deal in
April. However, (even in that case) it would take a few months
for the pact to become effective, possibly around September, as
Japan needs the approval of its parliament," said Pisan
Manavapat, chief negotiator and deputy permanent secretary of the
Foreign Ministry.

Under the proposed agreement, Thailand will reduce tariffs on
steel products imported from Japan over the next 8-10 years, in
order to give time to Thai steel manufacturers to prepare for the
competition.

"There will be enough time for our steel players to adjust
themselves before we open our market," Pisan said.

The two sides have agreed in principle to open each other's
market to agricultural products, he said, but declined to
elaborate.

Thailand also has agreed to reduce import tariffs on cars with
engines of 3,000 cubic centimeters or more to 60 percent from the
current 80 percent by 2009, Pisan said.

Tariffs on imports of automobile parts deemed sensitive by the
Thai authorities will be eliminated by 2013, while tariffs on
imports of other parts will be eliminated by 2011, he said.

If Thailand finds that it may come out at a disadvantage, the
two parties may need to re-open talks and the signing could be
delayed.

Thai Prime Minister Thaksin Shinawatra said that Thailand must
ensure the agreement with Japan does not hurt its automotive
industry.

"We want to be the Detroit of Asia. We have to be confident
that this (agreement) will not destroy our goal," he said.

While Thailand does not have its own car companies, it is a
major parts production and assembly base for the world's big auto
companies, including Toyota Motor Corp., Honda Motor Co. and
General Motors Corp.

Thailand is also the largest receiver of cumulative investment
by Japanese companies in Southeast Asia, said Hideji Sugiyama,
Japan's Vice Minister of Economy, Trade and Industry, said

"We are very closely linked economically," Sugiyama said in
Tokyo. "We hope that (the agreement) will lead to the expansion
of both countries' trade and investment and to closer economic
cooperation."

Total trade between Japan and Thailand reached $35.79 billion
last year. Of the total, $13.50 billion were Thai exports, and
$22.29 billion were imports, according to the Web site of the
Thai Ministry of Commerce.

During the first six months of 2005, the trading value between
the two countries reached $20.56 billion.