Scrapping of TPP may help Thailand
Somkid says trade pact could hinder exports
Thailand is likely to see more benefit than harm if the new US president drops the Trans-Pacific Partnership (TPP) trade pact, says Deputy Prime Minister Somkid Jatusripitak.
TPP's requirements are quite stringent, particularly its calls for the opening of the agricultural and pharmaceutical sectors, which would hurt Thailand's low-income earners and businesses, Mr Somkid said yesterday.
He said the Thai government is still closely monitoring the policies of US President-elect Donald Trump.
Twelve Pacific Rim countries led by the US concluded the TPP agreement on Oct 5 last year. The economies of TPP signatories make up 40% of global trade, with a combined GDP of US$28.3 trillion (some 1 quadrillion baht) representing 38% of the global total. The 12 TPP members account for 40% of Thailand's trade and 45% of foreign direct investment.
"The US government promoted TPP while trying to weigh up Asian markets," Mr Somkid said. "The pact, if implemented, may cause troubles for exports to countries that are not TPP members. We hence see that it could be beneficial if the pact is aborted."
But he said Thailand still wants to join TPP if the new US government remains committed to moving ahead with the plan.
Mr Somkid said that without TPP, the Regional Comprehensive Economic Partnership (RCEP) will become vital to world trade.
RCEP was launched in November 2012 with the aim of establishing deeper economic cooperation between the 10 Asean members and six trading partners: China, India, Japan, South Korea, Australia and New Zealand. The member countries represent 29% of global trade, or $9.5 trillion.
For RCEP, the members have tentatively agreed to eliminate tariffs on 80% of all goods, amounting to 8,000-9,000 items. Asean members need to raise the tariff elimination to cover 92% of all goods.
RCEP is now seen as the likely route in achieving a free-trade area in Asia-Pacific, as the momentum to push TPP in the US Congress died down in the run-up to the divisive US presidential election.
Mr Trump has voiced opposition to the expansive Pacific Rim trade deal as he aims to deliver on his promise to "bring back jobs" to America and revive industries that were edged out by foreign competition.
"Asia needs to come together and strengthen the role of Asia," Mr Somkid said. "I believe the US will pay more attention to Asia anyway if we become more unified."
He said that if Mr Trump cuts corporate income tax and invests $100 billion in infrastructure development as pledged, the US dollar is likely to appreciate.