PRESS/TPRB/22
12January 1996
TRADE POLICY REVIEW BODY
Review ofThailand
TPRB 'sEvaluation
TheTrade Policy Review Body oftheWorld Trade Organization (WTO) conducted itsreview
ofThailand 'strade policies on19and20December 1995. ThetextoftheChairman 'sconcluding
remarks isattached asasummary ofthesalient points which emerged during thetwo-day discussion.
Thereview enables theTPRB toconduct acollective examination ofthefullrange oftrade
policies andpractices ofeachWTO member country atregular periodic intervals tomonitor significant
trends anddevelopments which mayhaveanimpact ontheglobal trading system.
Thereview isbased ontworeports which areprepared respectively bytheWTO Secretariat
andthegovernment under review andwhich cover allaspects ofthecountry 'stradepolicies, including:
itsdomestic lawsandregulations; theinstitutional framework; bilateral, regional andother preferential
agreements; thewider economic needs andtheexternal environment.
Arecord ofthediscussions andtheChairman 'ssumming-up, together withthese tworeports,
willbepublished induecourse asthecomplete trade policy review ofThailand andwillbeavailable
from theWTO Secretariat, Centre William Rappard, 154ruedeLausanne, 1211 Geneva 21.
Since December 1989, thefollowing reports havebeencompleted: Argentina (1992), Australia
(1989 &1994), Austria (1992), Bangladesh (1992), Bolivia (1993), Brazil (1992), Cameroon (1995),
Canada (1990, 1992&1994), Chile (1991), Colombia (1990), Costa Rica(1995), Côted'Ivoire (1995),
Egypt (1992), theEuropean Communities (1991, 1993&1995), Finland (1992), Ghana (1992), Hong
Kong (1990 &1994), Hungary (1991), Iceland (1994), India(1993), Indonesia (1991 and1994), Israel
(1994), Japan (1990, 1992and1995), Kenya (1993), Korea, Rep.of(1992), Macau (1994), Malaysia
(1993),Mexico(1993),Morocco(1989),NewZealand(1990),Nigeria(1991),Norway(1991),Pakistan
(1995), Peru(1994), thePhilippines (1993), Poland (1993), Romania (1992), Senegal (1994), Singapore
(1992), Slovak Republic (1995), South Africa (1993), SriLanka (1995), Sweden (1990 &1994),
Switzerland (1991), Thailand (1991 &1995), Tunisia (1994), Turkey (1994), theUnited States (1989,
1992 &1994), Uganda (1995), Uruguay (1992) andZimbabwe (1994).
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REVIEW OFTHE TRADE POLICIES AND PRACTICES OFTHAILAND
Concluding remarks bytheChairman oftheTrade Policy Review Body
Thismeeting oftheTrade Policy Review Body hasnowcompleted thesecond review of
Thailand 'strade policies andpractices. These remarks, which aremade onmyownresponsibility,
summarize themain points ofthediscussion. They arenotintended tosubstitute forthecollective
evaluation andappreciation ofThailand 'strade policies andpractices. Details ofthediscussion will
bereflected intheminutes ofthemeeting.
Thediscussion developed under three main themes: theeconomic environment; thetrade
régime; andsectoral policies.
Theeconomic environment
Thailand 'srapid economic growth wasthebackground toalldiscussions. Members remarked
onthepositive contribution prudent macro-economic policies andahighdomestic savings ratehad
made tothegrowth ofinvestment andthefacilitation oftradeliberalization. Inflation, although recently
rising, hadbeenkeptatlowlevels; thecomplex system ofbusiness taxes hadbeenreplaced bya
value-added tax,andinfrastructural constraints were gradually being remedied.
Thailand 'sconsistently higheconomic growth rates since theprevious review were also
recognized asdirectly linked toitsoutward-oriented policies. Theshifttoamore neutral incentive
structure oftrade andinvestment incentives wascommended. However, some members noted the
adverse effects oncompetitiveness ofrapidly rising wages; thispressure might bealleviated bymore
rapid market opening. Inthisconnection, limits onmostforeign equity participation andonforeign
landownership were seenasremaining constraints.
Members observed thatThailand 'scurrent account deficits hadbeenmore thancovered by
capital inflows; however, some concern wasexpressed overthepotential adverse implications of
continued deficits forthepaceofliberalization andsome external vulnerability.
Members commended Thailand 'sstrong support forASEAN 'spolicy of"open regionalism";
however, asThailand 'stariffs seemed tobehigher thantheASEAN average, some concern was
expressed overpossible tradeandinvestment diversion. Thailand wasalsoasked whether preferential
tariff reductions under AFTA would benotified totheWTO under Article XXIV.
Inreply, therepresentative ofThailand saidthatheexpected thesavings ratetofurther improve
overthemedium term. Thiswould helpsustain thecurrent rateofinvestment andinturnhelpeconomic
growth.Headdedthatthecurrentaccountdeficitalsopartlyreflectedbothimportsforprivateinvestment
toupgrade domestic productive capacity andtherecent rapid tradeliberalization, some ofwhich went
beyond thecommitments Thailand hadmade under theWTO. Thailand would continue withits
outward-oriented strategy ofequalizing incentives between export anddomestic sectors, thusenhancing
efficiency. Inthisrespect, limitations onforeign direct investment werenotinconsistent withanyThai
commitments under theWTO. However, Thailand hadembarked uponaneffort torevise itsrelevant
legislation withaviewtoliberalizing theinvestment regime.
With respect toASEAN, therepresentative ofThailand noted thattheAFTA regional
co-operation scheme hadbeennotified under theEnabling Clause; Thailand retained itsrights under
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theClause. Atarecent ASEAN summit inBangkok, ithadbeenagreed toexpand AFTA 'scoverage
andtobring forward thetarget dateforitscompletion byfiveyears to2003. ASEAN hadalsoentered
intoanagreement oncooperation inservices andTRIPS, which wasdesigned tocomplement
liberalization andintellectual property protection agreed intheWTO. Apoint wasmade byone
delegation concerning thenotification ofAFTA under Article XXIV.
Thetrade régime
Thailand wascommended fortheprogress made inimplementing itsUruguay Round
commitments, including thetariffication ofagricultural products. However, Thailand hadnotfully
achieved aone-third reduction inbound industrial tariff levels and,inmany cases, currently applied
tariffs were already below finalbound rates.
Members alsonoted thatThailand 'stariff retained peaks andescalation incertain sectors.
They stressed theneedforfurther streamlining andmore rapid liberalization. Thailand wasrequested
topublish aconsolidated schedule ofapplied tariffs.
Theimportance ofpredictability andtransparency insuchareas astaxconcessions, duty
drawbacks andtrade-related investment measures wasemphasized; onemember urged theremoval
oftariff concessions andexemptions. Some members, asserting thatcustoms valuation continued to
beapplied inanarbitrary manner, urged fullimplementation oftherelevant WTO Agreement and
sought information ontheprogress ofthegovernment committee appointed tostudy customs valuation.
Itwasrecognized thatThailand hadmade good progress inreducing thescope ofimport
licensing. Remaining prohibitions onsome items were nevertheless noted. Concern wasexpressed
overthecontinued useofimport surcharges andthescope ofStatetrading. Members queried theneed
forthepolicy change inJune1995imposing certain countertrade requirements asameans ofreducing
thecurrent account imbalance.
Therewerequestionsconcerningthetransparencyofgovernmentprocurementandthepreferences
granted toThaigoods andservices (with theexception ofconstruction) andtoState-trading agencies;
ThailandwasurgedtobecomeamemberoftheAgreementonGovernmentProcurement.Somemembers
stated thatstandards regulations applied toimports offoods andpharmaceuticals wereexpensive and
time-consuming andasked Thailand toconfirm thatdomestic rules andpractices wereinconformity
withthose oftheInternational Office ofEpizootics andtheInternational Convention onPlantProtection.
Amember asked when newThailegislation oncompetition policy would come intoeffect andwhat
thescope ofthelegislation would be.
Members praised Thailand 'sefforts tostrengthen itslegalframework forintellectual property,
andhoped thatthenewlegislation andtheestablishment ofanintellectual property courtwould improve
enforcement. Pipeline protection forpharmaceuticals wasanongoing concern.
Inreply, therepresentative ofThailand saidthatThailand 'stariffrestructuring wasinlinewith
theinternationalization ofitseconomy; average rateshadfallen substantially andtariffescalation had
declined. Thailand hadmade substantial tariff concessions under theUruguay Round followed by
unilateral reductions. Allchanges intariffs wererequired bylawtobepublished intheRoyal Gazette
andcompilations wereavailable onrequest totheMinistry ofFinance, while planned reductions under
AFTA were available inpublication form.
Thailand wasintheprocess ofbringing itscustoms valuation practices intolinewiththeWTO
Agreement by1997, twoyears ahead ofitsUruguay Round commitments.
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Remaining conditional import prohibitions andnon-automatic import licensing werejustified
under theinfant-industry provisions ofArticle XVIII andunder Article XXoftheGATT. OnTRIMS,
therepresentative ofThailand noted thatThailand waseligible forafive-year transition period but
hadalready started theprocess leading toconformity withWTO obligations byphasing outthelocal
content requirements oneightproducts; allother suchrequirements would beeliminated byend1999.
Countertradewassupplementarytonormaltradepractice;procedureswerecleanandtransparent
andapplied toimports overBaht500million.
Government procurement wasnormally made through tenders bytheMinistry concerned;
purchasing methods andprocedures were under review withaview tostreamlining. International
competitive bidding applied toprojects overBaht1million. Thailand would consider membership
oftheGovernment Procurement Agreement induecourse.
ThenewBusiness Competition Act,covering thepromotion offreeandfaircompetition,
prevention ofmonopolies andprotection ofsmall andmedium-sized business andnewmarket entrants,
should come intoforce bytheendof1996. Itshould prohibit suchpractices asprice fixing, cartels,
business boycotts, restrictions onoutput, market allocation andexclusive dealing.
ThailandnolongerimposedBOI-relatedanti-dumpingsurcharges;newanti-dumpingregulations
were reviewed inDecember 1995 bytheWTO Committee.
Thailand wasintheprocess ofdrafting legislation onprotection ofplantvarieties, totakeeffect
under theten-year grace period provided intheTRIPS Agreement. Patent protection wasavailable
foragricultural chemical products. Compulsory licensing conditions forpharmaceutical products were
laiddown inthePatent Actandrelated Ministerial regulations. Details weregiven ofprotection under
copyright andpatent provisions. Enforcement ofintellectual property rights should befacilitated with
thecreation oftheIntellectual Property Court, withnewrules. Atpresent, preliminary measures were
available through court injunctions.
Sectoral policies
Members pointed outthattariff peaks ofover200percentwere applied tosome tariffied
agricultural products, while thetariff average forthesector wassignificantly higher thaninothers.
TheysoughtclarificationofThailand'stariffbindingsinagriculture.Theapparenttendencyforincreased
government assistance toagriculture, inthefaceofdeclining inter-sectoral competitiveness, should
becarefullyscrutinized.MemberswelcomedThailand'sstatementthatnoexportsubsidieswereapplied,
butexpressed concern overthepotential effects ofsubsidized export credits.
Inindustry, members observed thattheautomotive sector remained protected, andnoted that
automobiles were notincluded inthemost recent tariff reductions programme. Import surcharges
hadbeeneliminated, butlargely replaced bynewexcise taxes. Tariff peaks ontextiles shielded elements
oftheindustry from international competition.
Thailand appeared tobetaking acautious andrestrictive approach toopening market access
forservices. Limits onforeign equity holdings wereregarded asexcessively strict forareas suchas
bankingandinsurance.Thecommitmentnottoimposenewdiscriminatorymeasuresonforeignfinancial
institutions waswelcomed. Thailand wasasked toprovide details ofliberalization measures inthearea
ofbasic telecommunications, andurged toparticipate fullyintheongoing telecommunications and
maritime transport negotiations.
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Members welcomed indications thatThailand wasconsidering theliberalization ofaccounting,
engineering andconsultancy services. They regarded thecurrent Alien Business Lawasaserious
constraint toservices trade andinvestment, andurged that,aspartoftheexpected revisions tothe
Law, advantages presently extended onlytotheUnited States beextended toother trading partners.
Some members urged thatThailand takegreater advantage oftheforeign skilled labour available in
theregion.
Inreply, therepresentative ofThailand saidthatallagricultural tariffs werebound; thefew
unbound items inHSchapters 1-24wereregarded asfalling inthefisheries sector. Automobiles were
theonlyimported industrial itemnotfullyinlinewiththenewtariffstructure, although rateshadfallen
sharply andimports hadgrown rapidly.
Intheareaofservices, Thailand thought itsSchedule appropriate inthelightofitsownstage
ofdevelopment andincomparison toother partners atthesame level. Foreign equity participation
limits weretheresult ofnegotiations andwereinfullcompliance withGATS Article XX.Thailand 's
m.f.n. exemption infinancial services wasinconformity withitsrights under GATS andtheSecond
Annex onFinancial Services. Them.f.n. exemption fortheTreaty ofAmity withtheUnited States
would bereviewed intheCouncil forTrade inServices inabout fouryears. Thailand wasverylikely
toparticipate asafullmember inthenegotiations onbasic telecommunications.
END