Deepening of Thai-US economic links

Deepening of Thai-US economic links

Don Pramudwinai, Deputy Prime Minister and Minister of Foreign Affairs of Thailand, meets with a US Congressional delegation led by Congressman Jason Smith (R-Missouri) of the US House Committee on Ways and Means during a visit to Thailand from Aug 2-3. (Photo: U.S Embassy Bangkok)
Don Pramudwinai, Deputy Prime Minister and Minister of Foreign Affairs of Thailand, meets with a US Congressional delegation led by Congressman Jason Smith (R-Missouri) of the US House Committee on Ways and Means during a visit to Thailand from Aug 2-3. (Photo: U.S Embassy Bangkok)

During the last three months of the caretaker government, there have been unexpected and extraordinary movements in Thailand-US relations, both here and in Washington. Several key American lawmakers have visited Bangkok and pledged further US support for stronger economic and security relations with Thailand. In Washington, a group of bipartisan senators has set up the "US-Thai Alliance Caucus" in Congress.

Next month, Thailand will host the fifth round of Indo-Pacific Economic Framework (IPEF) negotiations as its members try to wrap up discussions on the new US economic initiative. Similarly, other countries have used this transitional period to enhance their bilateral ties with Thailand.

The visit by the 8-member delegation of the US Congress House Committee of Ways and Means headed by Jason Smith early this month was very significant as it came amid the political transitional period in Thailand. The visit was under the news radar as local media focused on post-election domestic politics. The US embassy here also did not inform local media.

In the past, no American lawmakers would attempt to visit Thailand during such a period for fear of causing misunderstanding. However, given the current geopolitical shifts and growing importance of Southeast Asia under the Biden administration, US lawmakers are working hard and in tandem to strengthen ties with allies and friends. Lest we forget, Thailand is one of the five US allies in the Indo-Pacific.

One of the highlights of the House Committee's visit was the discussion on ways to boost trade and investment in their countries. Few Thais know that leading Thai companies have created nearly 70,000 jobs across 27 US states with a US$10.3 billion (363 billion baht) investment. Notably, these jobs are in petrochemicals, plastics, oil and gas exploration, and food and beverage.

Five top Thai investors, including Indorama Ventures, PTT Global Chemical, Thai Summit Group and Banpu Group, have given positive optics about Thailand in red and blue states. Two-way trade last year reached US$60 billion, or 12.53% growth. Thailand also enjoyed a huge trade surplus of US$20.34 billion.

The House Committee's other important task is to expand Thai market access to services and high-tech areas. The American lawmakers would like to see more US investment in Thailand. The US ranks fourth after Japan, Taiwan and China as the top foreign investors. Out of the 33 approved US projects last year, the US$5 billion investment project by Amazon Web represented a new kind of investment to promote cloud infrastructure.

Given the growing dynamics of Thailand-US economic ties, it was natural that the Thai government decided to join the IPEF. During the first year of the Biden administration, Thailand was overlooked by the top policy-makers due to their misperceptions of one of Washington's oldest allies. Initially, Thailand was unsure of IPEF's outcomes when it joined.

Now one year has elapsed, and the IPEF trajectory can be useful to boost the BCG economic model to promote balanced and sustainable economic growth. The new framework focuses on different priorities rather than the reduction of tariffs and market accesses, which were the standard bearers of any new trade agreement.

However, the IPEF aims to strengthen economic engagement among member countries to promote economic growth that will bring peace and prosperity to the region.

Thailand is one of the 14 founding signatories of IPEF, launched last year in Tokyo by President Joe Biden and Japanese Prime Minister Fumio Kishida. Other members include South Korea, Singapore, Vietnam, Australia, Brunei, Fiji, India, Indonesia, Malaysia, New Zealand, and the Philippines. The IPEF comprises four pillars: trade, supply chains, clean economy, and fair economy.

Bangkok is now more confident in engaging with the IPEF as its views and positions have been taken seriously. In February, the government set up a steering committee to drive the implementation of the IPEF framework among all concerned agencies.

For instance, the Ministry of Commerce's trade negotiators and the Ministry of Foreign Affairs will handle the trade issue. At the same time, officials from the Customs Department and the anti-corruption agency will be involved in the fair economy pillar. The Ministry of Industry will take care of issues related to supply chains. At the same time, the clean economy will come under the Ministry of Natural Resources and Environment and the Office of the National Economic and Social Development.

To strengthen Thailand's leverage, the fifth negotiating round of the IPEF will be convened in Bangkok from Sept 10-16. This is a giant leap given its previous attitude in considering previous transpacific free trade arrangements. At the Bangkok meeting, Thailand will emphasise the importance of cooperation on capacity building and technical cooperation.

In addition, the government will focus on applying new technological cooperation, particularly related to the clean economy pillar, such as EVs, sustainable aviation fuel, circular economy, and the carbon market.

Thailand also supports the IPEF partners' desire to establish a mechanism to address IPEF's structure and financial support and stress prioritised issues that will support the negotiations on the trade pillar. In addition, despite the current political situation, the Thai delegation has reaffirmed its commitment to the relevant international standards on anti-corruption and taxation while considering IPEF partners' diverse domestic laws, regulations, and capacities.

In Bangkok, IPEF members will continue to discuss concrete ways to advance cooperation, including establishing capacity building and technical assistance mechanisms and plans for the next IPEF ministerial meeting scheduled in November 2023 in San Francisco. Thailand has made clear that after the negotiations, it will consider whether to accept or reject the negotiation results.

While the US lawmakers were in Bangkok, their counterparts in the US, Representatives Michelle Steel and Scott Peters, set up the US-Thai Alliance Caucus at the US Congress. Ms Steel, a Republican, and Mr Peters, a Democrat, representing California, will co-chair the new caucus. In the past, there was only the loosely formed so-called "Friends of Thailand".

The caucus will seek to provide the US Congressional members with current information and address issues impacting the Thai-American community on a broad range of issues. In addition, the caucus will serve as a platform to promote awareness and a better understanding of Thailand.

Other objectives include promoting cooperation between the US-Thai legislative branches and people-to-people and civil society exchanges. In addition, the caucus will also leverage the Thai-US alliances to meet future challenges in the Indo-Pacific and the Mekong subregion.

Thailand and the US celebrate 190 years of diplomatic ties this year. Siam, Thailand's former, was the first Asian country to establish ties with the US. Their relations were formalised in 1833 with a Treaty of Amity and Commerce and reaffirmed with the 1954 Manila Pact of the former Southeast Asia Treaty Organization. In 2003, the US designated Thailand a major non-Nato ally.

Kavi Chongkittavorn

A veteran journalist on regional affairs

Kavi Chongkittavorn is a veteran journalist on regional affairs

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