The imperative of Thailand's trade policy

The imperative of Thailand's trade policy

An activist sprays an anti-free trade agreement message on a plastic sheet during a rally in Bangkok. The Thai government needs to regain clarity on its trade policy direction. (Photo by Patipat Janthong)
An activist sprays an anti-free trade agreement message on a plastic sheet during a rally in Bangkok. The Thai government needs to regain clarity on its trade policy direction. (Photo by Patipat Janthong)

Most of the post-mortems by pundits and trade policy analysts so far on the recently concluded Trans-Pacific Agreement (TPP) have been critical of the largest free-trade pact in two decades.

Few analyses have indicated that the 12-nation TPP can boost the problematic Doha Round of World Trade Negotiations, whereas many have noted the likelihood of global trade competition between competing blocs led by the United States-driven TPP across the Pacific and the China-led Regional Comprehensive Economic Partnership in East Asia. These disconcerting global trade developments are portentous for Thailand. Until the Thai government regains clarity on its trade policy directions, Thailand will stand to lose in the global economic arena.

It is instructive to note Thailand's deep-seated polarisation. As Thailand misses out on TPP, those who are against the May 2014 coup have come out to ridicule the military government. They argue that Thailand has been excluded because it is ruled by coup-makers and that TPP members, especially the US, are against the military takeover in Bangkok last year. Those who go along with or are actively supportive of the coup have simply turned a blind eye and shrugged off the benefits of joining the TPP. Most glaring has been the absence of civil society groups, led by FTA Watch, that have successfully stymied some of Thailand's bilateral free-trade agreements over the past decade.

It is common knowledge that trade policy is politicised the world over. Trade these days is as much about geopolitics and domestic politics as it is the greater liberalisation of international flows of goods and services. Global trade became more politicised during the Uruguay Round conclusion in the early 1990s. When the Doha Round began in November 2001, it was quickly dominated by domestic and international politics. The rise and assertiveness of newer economic powerhouses, such as Brazil, China and India, precluded behind-the-scenes deals between the US and the European Union as was the case in the past.

The TPP, in fact, started off as a small trade vehicle among four small economies, namely Brunei, Chile, New Zealand and Singapore. It was later enlarged to include other Asia-Pacific economies led by the US. Eventually, the US effectively hijacked the TPP and turned it into a US-style free-trade document. The smaller economies that are already free-trading, such as New Zealand and Singapore, complained little because their likely benefits outweighed losses. Other countries like Japan and Vietnam saw geopolitical benefits reinforcing trade gains that could overcome the likely losses.

That the world trading system is unravelling is highly consequential for medium-sized economies like Thailand. Bangkok's last major trade policy agreement was the Japan-Thailand Economic Partnership Agreement (JTEPA), which was concluded and launched under the previous coup government in 2006-07. Indeed, a coup government can do trade policy if it puts its mind to it. Civil society opposition at that time, led by FTA Watch, was subdued because it had been co-opted from its earlier protests against the Thaksin Shinawatra administration's clutch of FTA negotiations. Chief among Thaksin's authoritarian and unaccountable FTA programmes were the Thai-US negotiations that began in 2003.

In hindsight, it is a pity that the Thaksin regime was rife with conflicts of interest and corruption abuses because it was ahead of the curve. In the early 2000s, when the WTO displayed structural flaws and uncertainties, bilateral FTAs became the way forward for trade-policymaking. In Southeast Asia, Singapore led the way with a slew of FTAs. Thailand was second with a clutch that included FTA agreements and negotiations with Australia, New Zealand, Peru, Bahrain, China and the US. FTAs were a foreign policy plank for geostrategic benefit on top of trade creation. The Australian and New Zealand deals came through but the rest got mired in domestic politics. The Thai-US FTA talks bogged down and became a major platform of the anti-Thaksin protest in early 2006. Thai trade policy has never been stable again since.

FTA Watch was so successful in opposing the Thaksin regime on trade that it was able to codify a clause in the 2007 constitution mandating parliamentary approval prior to and after elected governments undertake international negotiations and agreements. Thailand suffered from Thaksin a decade ago, and it has been suffering from the anti-Thaksin backlash since, nowhere more evident than in trade policymaking.

To be sure, it is not just the coup government that has difficulty conducting FTA negotiations. The previous government of Yingluck Shinawatra was also tepid when offered a chance to join the TPP. All governments cannot really move forward on Thailand's FTA imperative because trade policy has been captured by civil society columns who are anti-trade but who offer no viable alternatives for economic expansion underpinned by growing international trade and investment in the years ahead.

Since it intends to stay in office by force and coercion for at least another 18 months, the current military government should seize this opportunity to move forward on trade. The Thai-EU FTA negotiations are unlikely to make headway because of the coup. But others, such as a bilateral deal with Chile worth more than $1 billion, can still be done. The government should also build a trade policy framework based on public interest that allows public input and consultations between key stakeholder groups. The FTA Watch coalition should be integral to this process but it should not have a captive hold on trade policy.

Bilateral FTAs are a third-best outcome. The WTO's Doha Round is still the best way to grow global trade but it is increasingly ineffective. Its future demise also cannot be ruled out. As a second best, regional economic cooperation, such the Asean Economic Community, is preferable but still inadequate. There is no escaping bilateral FTAs if Thailand is still interested in seeing its trade volume and value expand. Thai policy elites, both civilian and military, can keep gazing at Thailand's navel or they can start planning for the longer term by completing the FTA deals that are in the pipeline and looking at others that can provide a way forward.

Thitinan Pongsudhirak is associate professor and director of the Institute of Security and International Studies, Faculty of Political Science, Chulalongkorn University.

Thitinan Pongsudhirak

Senior fellow of the Institute of Security and International Studies at Chulalongkorn University

A professor and senior fellow of the Institute of Security and International Studies at Chulalongkorn University’s Faculty of Political Science, he earned a PhD from the London School of Economics with a top dissertation prize in 2002. Recognised for excellence in opinion writing from Society of Publishers in Asia, his views and articles have been published widely by local and international media.

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