12 January 1996
POLICY REVIEW BODY: REVIEW OF THAILAND
TPRB'S EVALUATION Back to top
The Trade Policy Review Body of the
World Trade Organization (WTO) conducted its review of Thailand's trade policies on 19 and
20 December 1995. The text of the Chairman's concluding remarks is attached as a summary
of the salient points which emerged during the two-day discussion.
The review enables the TPRB to conduct a collective
examination of the full range of trade policies and practices of each WTO member country
at regular periodic intervals to monitor significant trends and developments which may
have an impact on the global trading system.
The review is based on two reports which are
prepared respectively by the WTO Secretariat and the government under review and which
cover all aspects of the country's trade policies, including: its domestic laws and
regulations; the institutional framework; bilateral, regional and other preferential
agreements; the wider economic needs and the external environment.
A record of the discussions and the Chairman's
summing-up, together with these two reports, will be published in due course as the
complete trade policy review of Thailand and will be available from the WTO Secretariat,
Centre William Rappard, 154 rue de Lausanne, 1211 Geneva 21.
Since December 1989, the following reports have been
completed: 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), Côte d'Ivoire (1995), Egypt (1992), the
European Communities (1991, 1993 & 1995), Finland (1992), Ghana (1992), Hong Kong
(1990 & 1994), Hungary (1991), Iceland (1994), India (1993), Indonesia (1991 and
1994), Israel (1994), Japan (1990, 1992 and 1995), Kenya (1993), Korea, Rep. of (1992),
Macau (1994), Malaysia (1993), Mexico (1993), Morocco (1989), New Zealand (1990), Nigeria
(1991), Norway (1991), Pakistan (1995), Peru (1994), the Philippines (1993), Poland
(1993), Romania (1992), Senegal (1994), Singapore (1992), Slovak Republic (1995), South
Africa (1993), Sri Lanka (1995), Sweden (1990 & 1994), Switzerland (1991), Thailand
(1991 & 1995), Tunisia (1994), Turkey (1994), the United States (1989, 1992 &
1994), Uganda (1995), Uruguay (1992) and Zimbabwe (1994).
TRADE POLICY REVIEW BODY: REVIEW OF THAILAND
CONCLUDING REMARKS BY THE CHAIRPERSON Back
This meeting of the Trade Policy Review Body has now
completed the second review of Thailand's trade policies and practices. These remarks,
which are made on my own responsibility, summarize the main points of the discussion. They
are not intended to substitute for the collective evaluation and appreciation of
Thailand's trade policies and practices. Details of the discussion will be reflected in
the minutes of the meeting.
The discussion developed under three main themes:
the economic environment; the trade régime; and sectoral policies.
The economic environment
Thailand's rapid economic growth was the background
to all discussions. Members remarked on the positive contribution prudent macro-economic
policies and a high domestic savings rate had made to the growth of investment and the
facilitation of trade liberalization. Inflation, although recently rising, had been kept
at low levels; the complex system of business taxes had been replaced by a value-added
tax, and infrastructural constraints were gradually being remedied.
Thailand's consistently high economic growth rates
since the previous review were also recognized as directly linked to its outward-oriented
policies. The shift to a more neutral incentive structure of trade and investment
incentives was commended. However, some members noted the adverse effects on
competitiveness of rapidly rising wages; this pressure might be alleviated by more rapid
market opening. In this connection, limits on most foreign equity participation and on
foreign land ownership were seen as remaining constraints.
Members observed that Thailand's current account
deficits had been more than covered by capital inflows; however, some concern was
expressed over the potential adverse implications of continued deficits for the pace of
liberalization and some external vulnerability.
Members commended Thailand's strong support for
ASEAN's policy of "open regionalism"; however, as Thailand's tariffs seemed to
be higher than the ASEAN average, some concern was expressed over possible trade and
investment diversion. Thailand was also asked whether preferential tariff reductions under
AFTA would be notified to the WTO under Article XXIV.
In reply, the representative of Thailand said that
he expected the savings rate to further improve over the medium term. This would help
sustain the current rate of investment and in turn help economic growth. He added that the
current account deficit also partly reflected both imports for private investment to
upgrade domestic productive capacity and the recent rapid trade liberalization, some of
which went beyond the commitments Thailand had made under the WTO. Thailand would continue
with its outward-oriented strategy of equalizing incentives between export and domestic
sectors, thus enhancing efficiency. In this respect, limitations on foreign direct
investment were not inconsistent with any Thai commitments under the WTO. However,
Thailand had embarked upon an effort to revise its relevant legislation with a view to
liberalizing the investment regime.
With respect to ASEAN, the representative of
Thailand noted that the AFTA regional co-operation scheme had been notified under the
Enabling Clause; Thailand retained its rights under the Clause. At a recent ASEAN summit
in Bangkok, it had been agreed to expand AFTA's coverage and to bring forward the target
date for its completion by five years to 2003. ASEAN had also entered into an agreement on
cooperation in services and TRIPS, which was designed to complement liberalization and
intellectual property protection agreed in the WTO. A point was made by one delegation
concerning the notification of AFTA under Article XXIV.
The trade régime
Thailand was commended for the progress made in
implementing its Uruguay Round commitments, including the tariffication of agricultural
products. However, Thailand had not fully achieved a one-third reduction in bound
industrial tariff levels and, in many cases, currently applied tariffs were already below
final bound rates.
Members also noted that Thailand's tariff retained
peaks and escalation in certain sectors. They stressed the need for further streamlining
and more rapid liberalization. Thailand was requested to publish a consolidated schedule
of applied tariffs.
The importance of predictability and transparency in
such areas as tax concessions, duty drawbacks and trade-related investment measures was
emphasized; one member urged the removal of tariff concessions and exemptions. Some
members, asserting that customs valuation continued to be applied in an arbitrary manner,
urged full implementation of the relevant WTO Agreement and sought information on the
progress of the government committee appointed to study customs valuation.
It was recognized that Thailand had made good
progress in reducing the scope of import licensing. Remaining prohibitions on some items
were nevertheless noted. Concern was expressed over the continued use of import surcharges
and the scope of State trading. Members queried the need for the policy change in June
1995 imposing certain countertrade requirements as a means of reducing the current account
There were questions concerning the transparency of
government procurement and the preferences granted to Thai goods and services (with the
exception of construction) and to State-trading agencies; Thailand was urged to become a
member of the Agreement on Government Procurement. Some members stated that standards
regulations applied to imports of foods and pharmaceuticals were expensive and
time-consuming and asked Thailand to confirm that domestic rules and practices were in
conformity with those of the International Office of Epizootics and the International
Convention on Plant Protection. A member asked when new Thai legislation on competition
policy would come into effect and what the scope of the legislation would be.
Members praised Thailand's efforts to strengthen its
legal framework for intellectual property, and hoped that the new legislation and the
establishment of an intellectual property court would improve enforcement. Pipeline
protection for pharmaceuticals was an ongoing concern.
In reply, the representative of Thailand said that
Thailand's tariff restructuring was in line with the internationalization of its economy;
average rates had fallen substantially and tariff escalation had declined. Thailand had
made substantial tariff concessions under the Uruguay Round followed by unilateral
reductions. All changes in tariffs were required by law to be published in the Royal
Gazette and compilations were available on request to the Ministry of Finance, while
planned reductions under AFTA were available in publication form.
Thailand was in the process of bringing its customs
valuation practices into line with the WTO Agreement by 1997, two years ahead of its
Uruguay Round commitments.
Remaining conditional import prohibitions and
non-automatic import licensing were justified under the infant-industry provisions of
Article XVIII and under Article XX of the GATT. On TRIMS, the representative of Thailand
noted that Thailand was eligible for a five-year transition period but had already started
the process leading to conformity with WTO obligations by phasing out the local content
requirements on eight products; all other such requirements would be eliminated by end
Countertrade was supplementary to normal trade
practice; procedures were clean and transparent and applied to imports over Baht 500
Government procurement was normally made through
tenders by the Ministry concerned; purchasing methods and procedures were under review
with a view to streamlining. International competitive bidding applied to projects over
Baht 1 million. Thailand would consider membership of the Government Procurement Agreement
in due course.
The new Business Competition Act, covering the
promotion of free and fair competition, prevention of monopolies and protection of small
and medium-sized business and new market entrants, should come into force by the end of
1996. It should prohibit such practices as price fixing, cartels, business boycotts,
restrictions on output, market allocation and exclusive dealing.
Thailand no longer imposed BOI-related anti-dumping
surcharges; new anti-dumping regulations were reviewed in December 1995 by the WTO
Thailand was in the process of drafting legislation
on protection of plant varieties, to take effect under the ten-year grace period provided
in the TRIPS Agreement. Patent protection was available for agricultural chemical
products. Compulsory licensing conditions for pharmaceutical products were laid down in
the Patent Act and related Ministerial regulations. Details were given of protection under
copyright and patent provisions. Enforcement of intellectual property rights should be
facilitated with the creation of the Intellectual Property Court, with new rules. At
present, preliminary measures were available through court injunctions.
Members pointed out that tariff peaks of over 200
per cent were applied to some tariffied agricultural products, while the tariff average
for the sector was significantly higher than in others. They sought clarification of
Thailand's tariff bindings in agriculture. The apparent tendency for increased government
assistance to agriculture, in the face of declining inter-sectoral competitiveness, should
be carefully scrutinized. Members welcomed Thailand's statement that no export subsidies
were applied, but expressed concern over the potential effects of subsidized export
In industry, members observed that the automotive
sector remained protected, and noted that automobiles were not included in the most recent
tariff reductions programme. Import surcharges had been eliminated, but largely replaced
by new excise taxes. Tariff peaks on textiles shielded elements of the industry from
Thailand appeared to be taking a cautious and
restrictive approach to opening market access for services. Limits on foreign equity
holdings were regarded as excessively strict for areas such as banking and insurance. The
commitment not to impose new discriminatory measures on foreign financial institutions was
welcomed. Thailand was asked to provide details of liberalization measures in the area of
basic telecommunications, and urged to participate fully in the ongoing telecommunications
and maritime transport negotiations.
Members welcomed indications that Thailand was
considering the liberalization of accounting, engineering and consultancy services. They
regarded the current Alien Business Law as a serious constraint to services trade and
investment, and urged that, as part of the expected revisions to the Law, advantages
presently extended only to the United States be extended to other trading partners. Some
members urged that Thailand take greater advantage of the foreign skilled labour available
in the region.
In reply, the representative of Thailand said that
all agricultural tariffs were bound; the few unbound items in HS chapters 1-24 were
regarded as falling in the fisheries sector. Automobiles were the only imported industrial
item not fully in line with the new tariff structure, although rates had fallen sharply
and imports had grown rapidly.
In the area of services, Thailand thought its
Schedule appropriate in the light of its own stage of development and in comparison to
other partners at the same level. Foreign equity participation limits were the result of
negotiations and were in full compliance with GATS Article XX. Thailand's m.f.n. exemption
in financial services was in conformity with its rights under GATS and the Second Annex on
Financial Services. The m.f.n. exemption for the Treaty of Amity with the United States
would be reviewed in the Council for Trade in Services in about four years. Thailand was
very likely to participate as a full member in the negotiations on basic
telecommunications. Back to top