U.S.-Thailand Free Trade Agreement Negotiations

Publication Date: July 2006

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Trade

Type:

Coverage: Thailand

Abstract:

President Bush and former Thai Prime Minister Thaskin on October 19, 2003, agreed to negotiate a bilateral free trade agreement (FTA). Six negotiating rounds have taken place to date, the most recent January 10-13, 2006 in Thailand. U.S. trade officials had hoped to conclude the negotiations by early 2006, but the negotiations were suspended by Thailand early this year due to Bangkok's political crisis. After 18 months of negotiations the two sides were wide apart on a number of issues, such as financial services liberalization and a number of other sensitive issues. Combined with considerable public opposition to the FTA in Thailand, the Bush Administration may be hard pressed to complete the negotiation well before trade promotion authority expires in mid-2007. At this date, negotiators have not even decided on a date or venue to resume the negotiation, thereby making it unlikely an agreement can be completed this year.

In the notification letter sent to the congressional leadership, then-U.S. Trade Representative Robert Zoellick put forth an array of commercial and foreign policy gains that could be derived from the agreement. The letter stated that an FTA would be particularly beneficial to U.S. agricultural producers who have urged the administration to move forward, as well as to U.S. companies exporting goods and services to Thailand and investing there. Mr. Zoellick also alluded to sensitive issues that would be needed to be addressed: trade in automobiles, protection of intellectual property rights, and labor and environmental standards.

Thailand has been viewed as a strong candidate for an FTA with the United States. Its economy has shown relatively healthy growth in recent years, rising by 6.2% in 2004 and 4.5% in 2005. Yet, Thailand maintains relatively high tariff and non-tariff barriers on a number of products and services -- a reduction of these barriers would likely expand bilateral trade and benefit both economies. Secondly, an FTA with Thailand would allow U.S. exporters to gain access to Thai markets similar to that obtained by other countries through bilateral and plurilateral agreements with Thailand. Third, a U.S.-Thailand FTA would likely induce other countries to seek a trade liberalization agreement with the United States. Countries that form FTAs agree at a minimum to phase out or reduce tariff and non-tariff barriers (NTBs) on mutual trade in order to enhance market access between the trading partners. The U.S.-Thailand FTA is expected to be comprehensive, seeking to liberalize trade in goods, agriculture, services, and investment, as well as intellectual property rights. Other issues such as government procurement, competition policy, environment and labor standards, and customs procedures are also on the negotiating table.

The U.S.-Thailand FTA negotiations are of interest to Congress because (1) an agreement would require passage of implementing legislation to go into effect; (2) an agreement could increase U.S. exports of goods, services, and investment, with particular benefits for agricultural exports; and (3) an agreement could increase competition for U.S. import-competing industries such as textiles and apparel and light trucks, thereby raising the issue of job losses. This report will be updated.