WT/TPR/S/123 Trade Policy Review
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II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES
(1) OVERVIEW
1. The structure of trade policy formulation in Thailand has not changed substantially since its
previous Trade Policy Review in 1999.  The Go vernment has introduced measures to improve
bureaucratic efficiency and governance, including establishment of the independent National Counter
Corruption Commission, and on-going public sector restructuring.
2. Thailand is committed to trade and investment liberalization as a means of improving
competitiveness and thereby promoting sustainabl e economic growth and alleviating poverty.  Such
reforms are an important part of the Government’s "dual track" development approach of
strengthening the domestic economy while integrating Thailand more into the global economy.  A
major thrust of trade policy is export growth through market diversification and higher-valuedproducts.
3. The Government supports free trade, and is committed to the liberalization of the multilateral
trading system, especially agricultural liberalization.  As an APEC member, Thailand is also
committed to "open regionalism" for achieving free and open trade and investment by 2020.  It also
engages in regional trade liberalization and, in addition to AFTA, is now seeking to negotiate a
network of bilateral preferential trading arrangements.  Thailand is also pursuing greater regional
trade links within ASEAN, including the establishment of an ASEAN-China Free Trade Area within
ten years, the formation of an East Asia Free Trade Area between ASEAN members, China, Japan,
and Korea (ASEAN plus Three), and an ASEAN-Japan Economic Partnership.  Thailand believes
regional FTAs can be an effective catalyst for free trade and complementary to multilateralism.
4. Thailand continues to operate a generally liberal foreign investment regime.  Negative lists
restricting levels of foreign direct investment in some activities have been reduced.  U.S. investors
receive preferential treatment, being exempt from most FDI restrictions under a 1966 Treaty.
(2) G
ENERAL CONSTITUTIONAL AND INSTITUTIONAL FRAMEWORK
5. Thailand’s Constitution and democratic parliamentary system have not changed substantially
since its 1999 Trade Policy Review.  National Assembly elections were held under the revised
electoral system in 2001, and are due next in 2005 for the House of Representatives and in 2006 forthe Senate.  As provided for in the revised 1997 Constitution, new institutions were established by
1999;  they include the Constitution Court, the Election Commission, and the independent National
Counter Corruption Commission;  countering co rruption is a top government priority.  An
Administrative Court was also created in mid 2000 to adjudicate administrative disputes involving the
Government.
6. The Constitution provides for the freedom to "fairly engage" in free competition, subject to
limits set by legislation to benefit consumer protection, urban planning, natural resources or
environmental preservation, public safety, anti-monopoly or to eradicate unfairness in competition.
State enterprises are limited to where necessary to protect national security or the public interest, or to
provide a public utility. The Constitution also provides for increased government decentralization(Box II.1).Thailand WT/TPR/S/123
Page 15
Box II.1:  Regional  decentralization
Thailand is a unitary state with a highly centralized economy.  While there are 76 provinces (excluding the
Bangkok Metropolitan Administration), each administered by an appointed governor and divided intodistricts and villages, local governments have little administrative and legal autonomy.  Most publicspending is by the national government.  However, the 1997 Constitution provided for increasedgovernment decentralization.  Under the  National Decentralization Act B.E. 2542 (1999), the National
Decentralization Committee, chaired by the Deputy Pr ime Minister, was formed to implement and monitor
the decentralization process, which is due to be fu lly implemented by FY 2010.  An overall Master Plan
was set in 1999 to decentralize administrative powers to local governments, and seven detailed operational
plans were completed for transferring specific functions.  The Government revised these plans beforegaining parliamentary approval in early 2002.
The Act specified that at least 20% of total govern ment revenue would accrue to local governments in FY
2001, and that this would rise to a minimum of 35% by FY 2006.  Functions to be transferred to localgovernments within four years include infrastructure an d planning, education, health, social welfare, social
order, promotion of investment, commerce, tourism, environment and local culture;  in practice, up to
six years is allowed to enable local governments to improve their administrative capacities.  To date, littledecentralization has occurred.  Few expenditure functions  have been transferred to local governments, and
central government grants remain heavily tied to speci fic purposes it sets;  no more than 30% are general
purpose grants based on local governments’ expenditure needs and revenue-raising capacities.  Localgovernment revenue sources are mainly building, land, and signboard taxes; some 90% of revenue comesfrom the central government, either as grants or as their share of certain national taxes (VAT, liquor,excise, gambling, mineral and petroleum, and motor vehicle taxes).
Vertical imbalance is said to exist between local expenditure and revenue raising responsibilities.
However, revenue has been decentralized faster than expenditure responsibilities, and local governments
have accumulated substantial fiscal reserves.  This mis-match in revenue and expenditure transfers mayexpose the central government to added budgetary pressures.
Source:   IMF (2002), Thailand:  Selected Issues and Statistical Appendix,  Country Report No. 02/195.
(3) STRUCTURE OF TRADE POLICY FORMULATION
(i) Executive branches of government
7. In October 2002, the Government embarked on comprehensive bureaucratic reforms to
reorganize government ministries and agencies.  These reforms are aimed at correcting weaknesses in
the centralized bureaucracy whereby inefficient economic, political and administrative systems have
allowed "chronic corruption in both the public and private sectors".1  As a result of the reforms,
11 ministries were given new missions, three mi nistries were renamed, and six ministries were
established;  currently there are 20 ministries (previously 14) and 162 Departments (Chart II.1).  No
other major changes have occurred since 1999 in the structure of key agencies involved in the
formulation, coordination, and implementation of trade and related policies, such as government
ministries, the central bank, and the Board of Inve stment.  Final responsibility for formulating trade
and other economic policies remains largely with the Prime Minister and his Cabinet.  The Ministriesof Commerce and Finance have the main responsibilities for issues relating to trade and investment,
although authority for certain policies extend to the Ministries of Agriculture and Co-operatives,
Industry, Public Health, Energy, Information Te chnology and Communications, and Transport, and
the Bank of Thailand (the central bank).   Ministry/government regulations and notifications are
commonly used to implement trade-related policies, thus they do not require legislative approval.
2
                                                     
1 NESDB (2002), p. 2.
2 For example, applied tariffs may be increased up to 50% above the statutory rates.  Other important
issues requiring inter-ministerial coordination but not parliamentary approval include:  export promotion andWT/TPR/S/123 Trade Policy Review
Page 16
The Department of Trade Negotiations, within the Ministry of Commerce, is mainly responsible for
bilateral and multilateral trade negotiations.  It consults widely with other government and non-
government agencies.
8. The Committee on International Economic Relations Policy, chaired by the Deputy Prime
Minister, and its sub-committees, continues to have the main role of coordinating Thailand's
international economic policies;  they are being restructured to streamline operations.
(ii) Advisory, planning, and other bodies
9. Several institutions within the Government, such as the National Economic and Social
Development Board (NESDB) in the Office of the Prime Minister, review and conduct assessments of
public policies;  no independent body is directly responsible for publicly reviewing or advising
government on trade and sectoral assistance policies.  The independent and self-funded ThailandDevelopment Research Institute reviews and conducts public policy assessments and research on
social and economic development.  Its results are disseminated publicly, with the help of a website
and an "Information Service" launched in 1996.
10. The NESDB is also responsible for preparing Thailand’s five-year national economic and
social development plans and monitoring their implementation.  The Ninth Development Plan, from2002 to 2006, reflects the guiding principle of "sufficiency economy" based on a "middle path" or
balanced development and economic strategy to "overcome the current economic crisis that was
brought about by unexpected change under cond itions of rapid globalization, and to achieve
sustainable development".
3  The Plan’s economic targets are for annual average real GDP growth of
4-5%, an average current account surplus equivale nt to 1-2% of GDP, inflation below 3% annually
and annual labour productivity growth of 3%.4  The Government also adopted an Economic
Development Plan to address short-term economic  problems and long-term fundamental weaknesses
in July 2001.
11. The private sector interacts with the Government  formally and informally.  On international
trade matters, the Government regularly consults the Thai Chamber of Commerce, which is also
responsible for issuing certificates of origin.  Other private-sector bodies providing advice to the
Government are the Federation of Thai Industries, the Foreign Chamber of Commerce, and the ThaiBankers’ Association.  These are represented on the Joint Standing Committee on Commerce,
Industry and Banking (JSCCIB) and the WTO Committee, which the JSCCIB formed in 1999.  The
WTO Committee aims to facilitate the private sector’s participation in multilateral negotiations to
help enhance Thailand’s competitiveness.
5 Other important committees with private and public
representatives are the National Economic Social Development Committee, the Board of InvestmentCommittee, and the National Competitiveness Committee.
                                                                                                                                                                    
financing;  investment incentives;  VAT, excise, interior taxes and surcharges;  controls on imports and exports;
and anti-dumping and countervailing policies.
3 NESDB (2002).
4 The NESDB's current projections for 2002-06 are for annual average real growth of 5-5.5%, inflation
of 1.8% and a negative current account balance in 2006 of 0.4% of GDP.
5 The WTO Committee comprises sub-committees on agriculture and fisheries, services, industrial
goods, legal and investment, food safety, rules of origin and government procurement under the WTOframework.Thailand WT/TPR/S/123
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Chart II.1
Thailand's new bureaucratic structure, effective October 2002  
Source :   Information provided by the Thai authorities.                                  
             
 
Deputy
Prime 
Minister   MinistryOffice of 
the Prime 
MinisterAgencies 
accountable  
to the DPM
Deputy
Prime 
Minister
Deputy
Prime 
Minister
Deputy
Prime 
Minister
Deputy
Prime 
Minister
Deputy
Prime 
Minister• Ministry of Defense
• Ministry of Interior
• Ministry of Justice
• Ministry of Agriculture
• Ministry of Natural 
  Resources and  
  Environment 
• Ministry of Information    and Communications 
  Technology 
• Ministry of Science and 
  Technology 
• Ministry of Social 
  Development and 
  Human Security• Ministry of Culture
• Ministry of Education
• Ministry of Public 
  Health
• Ministry of University 
  Affairs
• Ministry of Foreign 
  Affairs
• Ministry of Tourism 
  and Sports• Ministry of Labour
• Ministry of Transport• Royal Thai  
  Police Office• National Intelligence 
  Agency
• National Security 
  Council
• National   
  Research  
  Council
• National Economic  
  and Social   Development 
  Board• Consumer 
  Protection 
  Board
• Council of State
• Civil Service Commission
• Budget Bureau
• Bureaucratic Development Committee
• Cabinet Secretariat
• Public Relations Department• Mass Communications Organisation of ThailandIndependent 
agencies
• Ministry of Finance
• Ministry of Energy
• Ministry of Commerce• Ministry of Industry• Administrative Courts
• Anti-Money-Laundering 
  Office (AMO) 
• Bangkok Metropolitan 
  Administration
• Bank of Thailand
• Constitutional Court of 
  Thailand 
• Council of State of 
  Thailand • Election Commission of 
  Thailand
• Financial Sector 
  Restructuring Authority
• Government Pension 
  Fund
• Judiciary of Thailand• Marketing Organization
• National Counter   
  Corruption Commission
• National Human Rights 
  Commission of Thailand
• Office of the Attorney 
  General • Office the Securities and 
  Exchange Commission
• Secretariat of the House 
  of Representatives
• Secretariat of the Senate 
• Stock Exchange of 
  Thailand Prime
MinisterWT/TPR/S/123 Trade Policy Review
Page 18
(4) TRADE POLICY OBJECTIVES
12. Export growth, including diversification of ma rkets and higher-valued products, is a major
thrust of trade policy. Trade and industrial policies are aimed at promoting structural reforms to
improve Thailand’s efficiency and international competitiveness and reduce its vulnerability to
external shocks that may arise from globalization.6  The Government has adopted a "dual track"
development approach to strengthen the domestic economy while also facilitating trade andinvestment.  Its aim is to further integrate Thailand into the global economy, by increasing exports
and by developing a world marketing network responsive to consumer needs.
7  This involves "pro-
actively" supporting free trade in the multilateral arena, including seeking improved outcomes from
negotiations on trade and investment that better reflect Thailand's and other developing country
interests, advancing the ASEAN free-trade area, and promoting regional trade and investmentgenerally.
8  The private sector is seen as the main agent for growth.
13. Thailand is committed  to voluntary trade liberalization within APEC  and regional
liberalization within ASEAN, and is looking to expand its bilateral trading arrangements
(section 6(ii)(c)).
(5) TRADE LAWS AND REGULATIONS
14. Thailand’s main trade-related laws are summarized in Table II.1.  It is attempting to
strengthen trade and business laws and regulations to improve the commercial environment and
encourage competition, efficiency and corporate governance.  While the Government has an
ambitious programme of comprehensive legislative reforms, the pace of enactment and
implementation has, in some cases , been slowed, largely by parliamentary processes.  For example,
several changes to banking laws and regulations foreshadowed in the last Trade Policy Review, such
as the new financial institutions act, have yet to be passed.  Nevertheless, several key long-awaitedlaws have been enacted and implemented, including on foreign investment and derivatives markets
(section (8)).
Table II.1
Main trade-related legislation, as at May 2003
Legislation Description
Anti-Dumping and Countervailing Duty Act,
B.E. 2542 (1999)Ministry of Commerce can impose anti-dumping or countervailing measures
Bankruptcy Act (No.5), B.E. 2542 (1999) Amendments to bankruptcy provisions
Corporatisation Act, B.E. 2542 (1999) (also called
Capital of State Enterprise Act)Provides regulatory framework for converting state enterprises to either private
or public limited companies
Direct Sales and Direct Marketing Act, B.E. 2543(2002)Protect consumers against business operators taking "wilful advantage" of them
through deception or coercion.  Internet sales and marketing seem to be
covered
Electronic Transactions Act, B.E. 2545 (2002) Governs both civil and commercial electronic transactions
Establishment of and Procedure for BankruptcyCourt Act, B.E. 2542 (1999)Established the Bankruptcy Court and sets out the rules governing its procedure
Foreign Business Act, B.E. 2542 (1999) Replaced the 1972 Alien Business Law.  Identifies the scope of foreign
participation in businesses in Thailand
Table II.1 (cont'd)
                                                     
6 NESDB (2002), p. 1.  Under the Plan, the Government is also committed to trade liberalization to
promote economic development and alleviate poverty.  The Government also adopted a Poverty AlleviationPlan in January 2002.
7 Government of Thailand (2001), p. 6.
8 Government of Thailand (2001), p. 7.Thailand WT/TPR/S/123
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Legislation Description
Governing Leasing of Immovable Property for
Commercial and Industrial Purposes Act, B.E. 2542(1999)Rights to lease commercial or industrial property for a term of 30-50 years, to
use as loan collateral, to tran sfer leases and to sub-lease
Money Laundering Control Act B.E. 2542 (1999) Combating illicit drug trade and corruption. An Anti-Money-la undering
Prevention and Suppression Office established
Price of Goods and Services Act, B.E. 2542 (1999) Replaced 1979 Act on Price Fixing and Anti-Monopoly
Protection of Layout Designs of Integrated CircuitsAct, B.E. 2543 (2000);  Protection of Plant VarietiesAct B.E. 2542 (1999);  Trade Secret Act, B.E. 2545
(2002);  Copyright Act (No. 3), B.E. 2542;  Patent
Act (No. 3) B.E. 2542; Patent Act B.E. 2522 (1979);
Trademark Act, B.E. 2534 (1991)Intellectual property protection, including protection of trade secrets
Quarantine Act (No.2), B.E. 2542 (1999) Quarantine regulations
Safeguard Measures Act, B.E. 2542 (1999) Safeguard measures on imports
Trade Competition Act, B.E. 2542 (1999) Replaced the 1979 Act on Price Fixing and Anti-Monopoly, and aims to
promote free and fair competition by preventing monopoly.  Administered bythe new Trade Competition Commission
Land Code Act  (No. 8), B.E. 2542 (1999),Condominium Act (No. .3), B.E. 2542 (1999)Foreign ownership of land and property
Customs Act Customs and import procedures, including customs valuation
Telecommunications Business Act B.E. 2544 (2001) Defines types of telecommunication licences, licensing scheme, network
interconnection, rights of way, tariff regulations, universal service obligations
and the role and responsibilities of the National Telecommunication
Commission (NTC)
Act on Organizations to Assign Radio Frequency
Spectrum and to Regulate Broadcasting and
Telecommunication Services B.E. 2543 (2000)National Broadcasting Commission (NBC)
Life Insurance Act B.E. 2535 (1992)
Non-life Insurance Act B.E. (1992)Provide for licensing requirements and procedures, technical reserves, solvency
margins, security deposits;  administered by the Department of Insurance
Commercial Banking Act B.E. 2505 (1962) To be replaced soon by the new Financial Institutions Act, which is designed to
strengthen supervisory practices and procedures in line with international best
practices.  It will combine the Commercial Banking Act and the Act on the
Undertaking of Finance Business, Securities Business and Credit Foncier
Business, thereby creating a uniform standard of supervision
Act on Undertaking of Financial Business, Securities
Business, and Credit Foncier Business B.E. 2522
(1979)Covers finance business for commerce, development, disposition and
consumption, housing and other types prescribed by ministerial regulation.
Legislation also covers the formation of a company and application for a
licence for finance, securities, and credit foncier companies
Public Company Act B.E. 2544 (2001) Listed companies are expected to benefit in terms of management and new
tools available to enhance efficiency in generating investor returns.  Aims topromote debt workouts and to raise the stock exchange to international
standards.  Key features include the abolition of the minimum par value for
shares and provision of debt to equity conversion to assist creditor-debtor
workouts
Mercantile Marine Promotion Act B.E. 2521 (1978) Provisions on possible measures to promote the maritime transport sector,
prevention and prohibition of unfair practices, registration of maritimetransport, port and shipyard operators, and submission of data and information
to relevant authority
Source: Information provided by the Thai authorities.
15. A more effective regulatory framework and institutional arrangements will also promote
transparency and facilitate investment, including from overseas.  As the Asian financial crisis showed,
regulations must be backed with the institutional processes necessary to ensure compliance.   In this
regard, major amendments were made to the Bankruptcy Act in 1998 and 1999 with respect toWT/TPR/S/123 Trade Policy Review
Page 20
bankruptcy and foreclosure procedures, including allowing creditors to seek payment from loan
guarantors;  a Bankruptcy Court was also established in mid 1999.9
16. Legislation is published in the official Government Gazette .  Most ministries, including the
Ministry of Commerce, have websites to disseminate information, mainly in Thai.
(6) TRADE AGREEMENTS AND ARRANGEMENTS
(i) Thailand and the WTO
17. Thailand accords at least MFN treatment to all WTO Members, but not necessarily to non-
Members.  In the period under review, Thailand has made a number of notifications to the WTO
(Table II.2).  Some notifications are yet to be received, especially on import licensing.
18. Thailand is neither a member nor observer of the WTO Agreement on Government
Procurement.  However, it does participate in the WTO Working Group on Transparency inGovernment Procurement.  It is a party to the Multilateral Declaration on Trade in Information
Technology Products (the Information Technology Agreement).  Tariffs on eligible products will
continue to be phased out until 2005.
Table II.2
Status of notifications to the WTO, as at May 2003
WTO Agreement Description of requirement PeriodicityDocument symbol of most
recent notification
Anti-dumping (Article 18.5) Laws and regulations Once by March 1995, then
changesG/ADP/N/1THA/4Corr.1,
18 July 2000
Anti-dumping (Article 16.4) Anti-dumping actions taken Semi-annual G/ADP/N/98/THA,
29 April 2003
Anti-dumping (Article 5.8) Time-period for determination of
negligible import volumesAd hoc G/ADP/N/100/THA,
7 March 2003
Agriculture (Article 10 and 18.2) Export subsidies (outlays and
quantities) (ES:1 & ES:2)Annual G/AG/N/THA/43,
6 February 2003
Agriculture (Article 18.2) Domestic support Annual G/AG/N/THA/37,
13 September 1999
Agriculture (Article 18.2) Information on tariff quotas
administration (MA:1)Once, then changes G/AG/N/THA/45,
6 February 2003
Agriculture (Article 18.2) Volume of imports under tariff
quotas (MA:2)Annual G/AG/N/THA/40,
8 February 2002
Agriculture (Article 5.7 and 18.2) Special safeguard measures
(MA:5)Annual G/AG/N/THA/44,
6 February 2003
GATT 1994  (Article  XVII:4(a) –
Understanding on the
Interpretation of Article XVII)Notification of products traded by
state enterprisesOnce, then changes G/STR/N/7/THA,
18 May 2001
Rules of Origin (Article 5.1 and
Annex II(4))Preferential rules of origin Within 90 days of WTO
AgreementG/RO/N/4,
7 August 1995
Safeguards (Article 12.6) Laws and regulations Once by March 1995, then
changesG/SG/N/1/THA/2,
17 December 1999
Safeguards (Article 12.5) Consultations Ad hoc
Table II.2 (cont'd)
                                                     
9 Creditors may either petition the court to insist that the debtor formally restructure under its
administration, thereby providing an automatic stay of  proceedings to enable th e debtor to trade out of
difficulties, or apply for the court to declare the debtor insolvent and to be wound up.Thailand WT/TPR/S/123
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WTO Agreement Description of requirement PeriodicityDocument symbol of most
recent notification
Safeguards (Article 12.7) Pre-existing measures Within 60 days of the WTO
AgreementG/SG/N/3/THA,
25 April 1995
Sanitary and Phytosanitary
Measures  (Article 6, Annex B)Notification of emergency
measures, and changesAd hoc G/SPS/N/THA/93,
4 April 2003
Services (GATS Article III:3) Changes to laws and regulations
affecting servicesAd hoc S/C/N/91,
18 December 1998
Subsidies and CountervailingMeasures (Article 25.1)Subsidies programmes Annual G/SCM/N/71/THA/Suppl.1,
12 July 2002
Subsidies and CountervailingMeasures (Article 32.6)Laws and regulations Once by March 1995, then
changesG/SCM/N/1/THA/4/Corr.1,
18 July 2000
Subsidies and CountervailingMeasures (Article 25.11)Countervailing duty actions taken Semi-annual and when measure
takenG/SCM/N/93/Add.1,
1 May 2003
Technical Barriers to Trade(Article 10.7)Agreements with other countries Ad hoc G/TBT/10.7/N/22/Rev.1,
22 June 1999
Technical Barriers toTrade (Article 15.2)Laws and regulations Once, then changes G/TBT/2/Add.38,
6 August 1997
Technical Barriers to Trade(Article 10.6 )Information about Technical
Regulations, Standards and
Conformity Assessment
ProceduresAd hoc G/TBT/N/THA/106,
9 January 2003
Textiles and Clothing  (Article 2.8and 2:11)Notification of programmes of
integration12 months before their entry into
effectGTMB/N/412/Rev.1,
6 December 2001
TRIMs (Art 5.1) Investment measures Once by March 1995, then
changesG/TRIMS/N/1/THA/1,
28 April 1995
TRIMs (Art 6.2) Publications in which TRIMS
may be foundAd hoc G/TRIMS/N/2/Rev.10,
11 December 2002
TRIPS (Article 63.2) Laws and regulations Once, then changes IP/N/1/THA/C/1/Rev.1,
28 March 2003
TRIPS (Article 69) Contact points Once, then changes IP/N/3/Rev.6,
1 March 2002
Source: WTO notifications.
19. The Government is committed to a strong rules- based multilateral system that secures market
access to promote global economic growth, developmen t, and employment.  Thailand attaches utmost
importance to agriculture, especially removal of trade-distorting export subsidies and domestic
support.  Fully integrating agriculture into the WTO was seen as a principal, if not the "only reason",
for Thailand entering the current negotiations, which will be considered irrelevant unless
commitments to end such distortions are achieved.10  Other main areas of interest to Thailand include
developing-country concerns over  TRIPS and public health, extension of geographical indications
beyond wines and spirits, and the possible inclus ion in the WTO of investment and competition.
Regarding environmental concerns in relation to trade, Thailand would not accept any proposal to
weaken WTO rules using environmental protection as a pretext to create new trade barriers, or the
adoption of a non-science-based precautionary principle that goes beyond the scope of existing WTO
provisions.
20. Within the WTO, Thailand, a member of the Cairns Group of agricultural producers and
exporters, has joined other developing countries in strongly supporting efforts for multilateral trade
liberalization in agriculture;  these include major reforms to market access, domestic support and
export subsidies, including their elimination, as key outcomes of the Doha Development Agenda.
                                                     
10 WTO document WT/MIN(01)/ST/37, 10 November 2001.WT/TPR/S/123 Trade Policy Review
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(ii) Preferential, regional, and bilateral arrangements
(a) Preferential arrangements for developing and least developed countries
21. Thailand provides preferential tariff treatment to certain imports from other developing
countries under the Global System of Trade Prefer ences (GSTP) (Chapter III(2)(ii)).  At the same
time, it receives trade preferences under the Generalized System of Preferences (GSP) schemes
operated by 27 trading partners, including the EU, Japan, and the United States.  About 19% ofThailand's exports received GSP treatment in 2002 (18% in 2001).  Most GSP exports are to the
European Union and the United States.  The share of Thailand's exports receiving GSP treatment was
lowest for Japan (15%), the United States (16%), and the European Union (24%), and highest for
eastern European countries (46%) in 2002.
(b) Regional arrangements
ASEAN
22. Thailand is an original member of the Association of South-East Asian Nations (ASEAN);  it
participates in the ASEAN Free-Trade Area (AFTA) and provides preferential tariffs on imports from
these countries.  For the six founding members, tariffs were to be reduced on intra-ASEAN trade
(with at least 40% ASEAN content).  Under the Common Effective Preferential Tariff (CEPT) to amaximum 5% by end 2002, or by end 2003 on a few products.
11  At end 2001, the Inclusion List of
CEPT tariff items covered, on average, 85% of the tariff lines of all ASEAN nations (98% for original
and 57% for new members);  93% of total CEPT tariff items for original members had maximum
tariffs of 5% (38% were duty free).  The average CEPT tariff for all members was 3.3% in 2002
(5.4% in 1998), and is expected to fall to 2.7% in 2003 (ranging from zero for Singapore to 5% for
Laos).  Members agreed in 1999 to eliminate all import duties among original members by 2010, and,
in principle, to advance such elimination for new members from 2018 to 2015, except for somesensitive products.  Quantitative restrictions and other non-tariff barriers are also to be eliminated.
23. Products excluded from the CEPT scheme are contained in either temporary or general
exclusion lists, or are sensitive products.
12  Temporarily excluded products (i.e. the Temporary
Exclusion List, TEL) were to be included in the CE PT in equal instalments over five years, beginning
on 1 January 1995.  However, in October 2000, it was agreed to allow original members totemporarily delay CEPT tariff liberalization for TEL products as of 31 December 1999, subject to
agreed compensation to ASEAN partners.
13  At end 2001, TEL products accounted for 0.6% of total
tariff lines for original members and 40% for new members.  General (permanent) exceptions apply to
products deemed necessary to protect national security, public morals, human, animal or plant life and
health, articles of artistic, historic, or archaeological value (about 1% of total ASEAN tariff lines).
                                                     
11 CEPT was to be achieved initially by 2008, but this was accelerated to 2003 for original members
and then to 2002 for most products following the financial crisis.  Longer transitional periods apply to new
ASEAN members:  2006 for Viet Nam, 2008 for Laos and Myanmar, and 2010 for Cambodia.
12 A small number of sensitive agricultural products are allowed until 2010 to be included in CEPT.
These tariff reductions are expected to begin between 2000-05, depending on the country and the product.
13 Protocol Regarding the Implementation of the CEPT Scheme Temporary Exclusion List , Fourth
ASEAN Informal Summit, Singapore, 22-25 November 2000.  The transfer of products from TEL into CEPTcould be delayed and concessions suspended on the last tranche of TEL manufactured products at
31 December 1999 (or other relevant dates for new members) where liberalization would "cause real problems,
by reasons not covered by emergency measures" (Article 1).  "Compensatory adjustment measures" are to"ensure a general level of reciprocal and mutually adva ntageous concessions not less favourable to trade than
that provided for and prevailing" beforehand, and are to be applied on an MFN basis to all ASEAN members(Articles 3 and 5).Thailand WT/TPR/S/123
Page 23
24. Thailand has transferred products to CEPT progressively.  At end 2002, virtually all of
Thailand’s tariff lines were subject to maximum tariffs of 5% (60% of lines had zero rates).
Thailand’s CEPT tariffs averaged 6.0% at end 2002 (10.6% in 1998), and are to fall to 4.6% in 2003.
By 2002, Thailand had no temporary or general exclusions;  however, seven items including copra,
coffee, cut flowers, and potatoes, were still excluded on grounds of sensitivity.
25. ASEAN countries are also negotiating intra-regional services liberalization (the 1995 ASEAN
Framework Agreement on Services - AFAS).  Commitm ents in this regard ha ve liberalized trade in
priority sectors, i.e. air transport, business services, construction, financial services, maritime
transport, telecommunications, and tourism.  A third round of negotiations covering 12 sectors and all
four modes of supply based on the GATS framework was launched in September 2001, and is due to
end in 2004.  Members agreed in 2001 to accelerate services liberalization and to negotiate mutualrecognition arrangements for professional services.
26. Other agreements aimed at promoting intra-ASEAN trade, investment, and greater regional
integration include the ASEAN Industrial Coopera tion Scheme (AICO) and the ASEAN Investment
Area (AIA).  The AICO, signed in 1996, encourages technology-based investments in ASEAN.
ASEAN-based companies meeting certain conditions are eligible.
14  AICO-approved products, raw
materials and intermediate inputs are immediately subject to maximum tariffs of 5% and eligible for
local-content accreditation and as yet unspecified "non-tariff incentives".  The AIA, signed in
October 1998, aims to increase foreign invest ment from ASEAN and non-ASEAN regional sources
by removing barriers to all ASEAN investors by 2010 and for all investors by 2020.15  Business listed
in general exclusions and sensitive products are excluded.16  ASEAN-6 and Myanmar agreed to
remove their temporary exclusions for ASEAN in vestors in manufacturing from 2003.  Temporary
exclusions in manufacturing, agriculture, fisheries, forestry, mining and related incidental services areto be removed by 2010 for the ASEAN-6, by 2015 for the Lao People's Democratic Republic,
Cambodia, and Viet Nam, and by 2020 for Myanmar.
17
27. ASEAN members are increasingly pursuing bilateral cooperation with non-member states,
and other regional inter-governmental organizations.18  The "ASEAN +3" members (China, Japan,
and Korea) agreed in November 2002 to study and formulate options to gradually establish an EastAsia Free Trade Area.  Thailand also supports the establishment of an ASEAN-China Free Trade
Area within ten years for original ASEAN members (i.e. 2010) and by 2015 for newer members, with
flexibility on sensitive products.
19  An "early harvest" is envisaged by starting some preferential tariff
reductions in 2004.  Thailand played an important role in the ASEAN negotiations and sees this as a
way to increase regional cooperation that would expand Asian trade and investment and boost the
                                                     
14 Companies must incorporate and operate in an ASEAN country;  have at least 30% ASEAN equity;
and be sharing resources (e.g. sharing of technology, market sharing, or consolidated purchases of rawmaterials).  At least two companies in two ASEAN countr ies must participate.  These may be waived in certain
circumstances.  In April 2002, there were 90 approved AICO ventures (annual transaction value ofUS$1.09 billion).
15 It is based on opening all industries to foreign investment, and phasing out exclusions;  immediate
national treatment for ASEAN investors, with few exceptions;  eliminating investment impediments;streamlining investment procedures;  enhancing transparency;  and applying investment facilitation measures.
16 A list of temporary exclusions was adopted for agriculture, forestry, and fisheries in October 2000.
17 A recent study on preferential trading arrangements has found that AFTA has mainly diverted trade
and investment (Australian Productivity Commission, 2003).
18 These include the Andean Council, the Australia-New Zealand Closer Economic Relations (CER),
MERCOSUR, the South Asian Association for Regional Cooperation, and the South Pacific Forum.
19 The ASEAN-China Expert Group on Economic Co-operation estimated that an ASEAN-China FTA
could increase ASEAN’s exports to China by 48% and China’s exports to ASEAN by 55%, and boost respectiveGDPs by 0.9% and 0.3% (Report to ASEAN Leaders Summit, Bandar Seri Begawan, 5-6 November 2001).WT/TPR/S/123 Trade Policy Review
Page 24
region’s competitiveness, thereby bringing substantial benefits to ASEAN members.  It also supports
stronger ASEAN trade links with Australia, Japa n, Korea, India, and New Zealand.  At the ASEAN-
Japan Summit in Cambodia in November 2002, l eaders decided that ASEAN and Japan would
develop a framework that would provide a basis for concrete plans towards realizing an ASEAN-
Japan Comprehensive Economic Partnership within ten years. Thus, through ASEAN, Thailand is
actively pursuing regional trade liberalization.
Asia-Pacific Economic Cooperation (APEC)
28. Thailand intends to meet APEC’s target of open and free trade, including in services, and
investment for developing economies by 2020 (2010 for developed economies).  These are to be
achieved on a voluntary and non-binding basis (concerted unilateral liberalization) using Individual
Action Plans (IAPs) as road maps containing the intended actions in 15 policy areas for realizingAPEC’s liberalization goals.  They are updated annually.  For example, in its 2002 IAP, Thailand has
indicated that it will reduce applied tariffs (by an unspecified amount) as part of on-going tariff
restructuring.
29. APEC’s goals are based on key general principles of comprehensiveness, WTO consistency,
and non-discrimination (or open regionalism) contained in the Osaka Action Agenda, whereby tradeliberalization should not discriminate betwee n APEC economies or between them and non-APEC
countries.  Many APEC economies, including ASEAN members, have either formed or are
contemplating regional trading arrangements that  discriminate against other APEC and non-APEC
economies.  According to the authorities, thes e agreements help promote economic growth of
members while also promoting greater internationa l trade liberalization consistent with WTO rules
and disciplines and APEC's goals and principles.
30. APEC has strengthened its peer review proce ss to examine more rigorously the progress of
APEC economies in achieving their free and open trade and investment targets.  Thailand was
reviewed in February 2003.  The review concluded that  it is in Thailand’s interest to liberalize trade
and investment, and that market opening anticipated as a result of the ASEAN China Free Trade
Agreement would create the competitive environment to promote reforms.  This would enable
Thailand to better address pockets of protection, such as in textiles, agriculture and steel, that arepolitically sensitive and resistant to change, to the benefit of both Thai industry and consumers.
20  The
review indicated that Thailand viewed its bilateral/regional arrangements as complementary to its
multilateral trade and investment liberalization goals.  It noted the importance for Thailand of
ensuring that such arrangements are open and not inward-looking in order to facilitate its progress
towards Bogor objectives and in support of wider liberalization and the multilateral system.21
Asia-Europe Meetings (ASEM)
31. The informal process of dialogue and cooperation among EU States and ten Asian countries,
including Thailand, addresses political, economic, social, and other issues to help strengthen regional
relationships.  The Trade Facilitation Action Plan (TFAP) aims to reduce non-tariff barriers, increase
transparency and promote trade opportunities between the two regions.  It specifies bi-annual
                                                     
20 APEC (2003b).
21 The report prepared for the review by the APEC Secretariat also noted that Thailand's trade regime
risked becoming more discriminatory if concessions unde r an anticipated network of FTAs provided preferential
access to partners.  It added that discriminatory bilateral and regional arrangements are likely to divert trade and
investment, and that it was uncertain how Thailand's discriminatory regional arrangements would contribute tothe non-discriminatory Bogor goals, without entailing multilateral and/or unilateral MFN reductions (APEC,2003b).Thailand WT/TPR/S/123
Page 25
"concrete goals" in the priority areas of customs, standards and conformity assessment, public
procurement, quarantine and SPS, intellectual property, mobility of business people, and other trade
activities, such as market access in distribution.  Concrete goals adopted for 2002-04 include new
initiatives to provide enhanced paperless customs procedures.  The Investme nt Promotion Action Plan
(IPAP) continues to promote two-way investment by focusing on investment promotion and policy
issues.  ASEM members negotiating regional and bilateral free-trade arrangements are to ensure thatthese complement multilateral rules and are WTO consistent.
22  The Asia-Europe Business Forum
(ABEF) fosters regional cooperation among the private sector.  The ASEM Trust Fund also finances
technical assistance on financial sector restructuring and addressing poverty.
Asia Cooperation Dialogue (ACD)
32. The ACD, a Thai initiative launched in June 2002, aims to serve as a "missing link" for all
Asian sub-regions to create strategic partnerships and cooperation by drawing upon and combining
Asia's diverse strengths so as to position it as a viable partner for other regions.23  A number of areas
of cooperation have been agreed, including energy, security, agriculture, transport linkages, small and
medium enterprise cooperation, poverty alleviation, tourism, and human resource development.  In
June 2003, ACD ministers adopted the Chiang Mai Declaration on Asian Bond Market Development,collectively providing political support for such a regional market.  ACD is open to new Asian
members.
Bangladesh-India-Myanmar-Sri Lanka-Thailand Economic Cooperation (BIMST-EC)
33. Thailand supports the BIMST-EC forum’s objectives of facilitating and promoting trade,
investment, and technical cooperation among members by forging links between ASEAN and
SAARC, and developing a free-trade area.  Curren tly, there are six working groups involving trade
and investment, tourism, energy, technology, fisheries, and transport and communications.  Priorityareas of cooperation are trade, investment, tourism, transportation, and technical cooperation.
Thailand is a "lead country" in the issues of fisheries, the automotive industry, standards and
conformity, rubber, tea, coffee, and horticultural and floricultural products.  Trade/economic ministers
agreed in March 2003 to accelerate the proposed BIMST-EC Free Trade Area.
24  An Expert Group is
to prepare an FTA Framework Agreement possibly for consideration at the BIMST-EC Summit inThailand in 2004.
25  Greater private-sector participation in the forum’s trade and economic
cooperation initiatives was also encouraged.  In addition, members were urged to better coordinate
their WTO positions, including through regular meetings of permanent representatives in Geneva, and
the lead country on trade and investment (Bangladesh) was directed to consult with other members on
possible modalities for establishing collaborative li nks with regional organizations, such as SAARC
and ASEAN.
Greater Mekong Subregional Economic Cooperation (GMS-EC)
34. Along with other members, Cambodia, China (Yunnan Province), Myanmar, Laos, and
Viet Nam, Thailand believes that mutual benefits from closer trade, investment, and economic
cooperation will promote economic and social development and contribute to their joint aim ofhalving poverty by 2015.  GMS-EC’s vision is for sustainable development and reduced poverty, and
                                                     
22 Chair’s Statement, 8th ASEM Senior Officials Meeting on Trade and Investment, 17 July 2002, Bali.
23 Members are Bahrain, Bangladesh, Brunei, Cambodia, China, India, Indonesia, Japan, Republic of
Korea, the Lao People's Democratic Republic, Malaysia, Myanmar, Oman, Pakistan, the Philippines, Qatar,Singapore, Sri Lanka, Thailand, and Viet Nam.
24 4th BIMST-EC Trade/Economic Ministerial Meeting, Agreed Conclusions , 7 March 2003, Colombo.
25 Members were asked to provide the necessary inputs into the Framework Agreement by May 2003.WT/TPR/S/123 Trade Policy Review
Page 26
a competitive sub-region more globally integrated.  Assisted by the Asian Development Bank, its
work programme has centred on linking the sub-region through transport networks, facilitating
movement of goods and people, marketing GMS as  a single tourism destination, and improving
infrastructure, including in energy and teleco mmunications for enhanced regional power and
communication systems, such as under the Intergovernmental Agreement on Regional Power Trade.
An action plan on trade and investment facilitation is to be formulated, including support for theASEAN-China Free Trade Area and ASEAN trade liberalization.
26
(c) Bilateral arrangements
35. Thailand and Bahrain have recently concluded a Framework Agreement on Closer Economic
Partnership, which entered into force on 29 December 2002.  Both parties exchanged a list of
626 items, on which tariffs of 3% were immediately eliminated.  Other tariffs are expected to beeliminated by 2010.  Negotiations with India (FTA  Framework Agreement) and Australia (CER-FTA)
are due to be concluded by October 2003.  Thailand is also negotiating or intending to negotiate a
network of comprehensive bilateral trading arrangements with various partners, including Japan, the
United States (possibly in addition to the existing Treaty of Amity), Peru, Mexico, New Zealand, and
the Republic of Korea, covering up to 12 countries in the near future.
36. Thailand believes FTAs can be an effective catalyst for free trade and a building block for the
multilateral trading system.  The authorities in dicated that Thailand would attempt to ensure
consistency with APEC principles of "open regiona lism" and WTO provisions such that the accrued
benefits will be extended to third countries.
(7) T
RADE DISPUTES AND CONSULTATIONS
(i) Dispute settlement under the GATT/WTO
37. Thailand has been involved in various disputes within the WTO since its last Trade Policy
Review (Table II.3).  Only one case, which brought by Poland on anti-dumping duties imposed on
certain iron or non-alloy in 1995-96, was against Thailand.  To implement the DSB’s
recommendations and rulings, Thailand re-examined its injury determination within the mutually
agreed time frame.  This reaffirmed that the domestic industry had been materially injured, and the
duty was maintained.
38. Thailand recently requested consultations with the EC on sugar export subsidies and on the
customs re-classification of imported frozen boneless chicken cuts and the panel was established on
29 August 2003.
39. On 13 June 2003, an arbitration award was issued with regard to a "reasonable time period"
for the United States to comply with the DSB’s recommendations and rulings on the case related tothe Continued Dumping and Subsidy Offset Act of 2000.
(ii) Other
40. ASEAN’s dispute settlement mechanism is similar to the WTO.  The authorities state that
Thailand has resolved trade and economic disputes between ASEAN members amicably through
bilateral consultation/discussion.  It has never used the formal ASEAN dispute settlement mechanism.
                                                     
26 Making it Happen:  A Common Strategy on Cooperation for Growth, Equity and Prosperity in the
Greater Mekong Region , Joint GMS Summit Declaration, Phnom Penh, 3 November 2002.Thailand WT/TPR/S/123
Page 27
Table II.3
Involvement in the WTO Dispute Settlement mechanism, as at August 2003
Complain initiated
Dispute
by againstRequest for
consultation/
Request for
panelFirst panel
established/
Panel report
circulatedNotice of
appealPanel/
Appellate
Body
report
adopted
Anti-Dumping Duties onAngles, Shapes and
Sections of Iron or Non-Alloy Steel and H-B-
beamsPoland
WT/DS122/1Thailand 15.04.98/
15.10.9919.11.99/
28.09.0023.10.00 05.04.01/
05.04.01
a
Generalized System of
PreferencesThailand
WT/DS242/1EC 07.12.01
Import Prohibition on
Canned Tuna with
Soybean OilThailand
WT/DS205/1Egypt 22.09.00
Customs Classification of
Frozen Boneless Chicken
CutsThailand
WT/DS286/1EC 31.03.03
Export subsidies on sugar Thailand
WT/DS283/1EC 20.03.03 29.08.03
United States – Continued
Dumping and SubsidyOffset Act of 2000Australia,
Brazil, Chile,the EC, India,
Indonesia,
Japan, Korea,and Thailand
WT/DS217/1;
Canada andMexico
WT/DS234/1United
States21.12.00/
21.05.01(Canada and
Mexico)
13.07.01/10.08.0123.08.01/
10.09.01(Canada and
Mexico)
c /
l6.09.0218.10.02 27.01.03b
a Parties agreed that the reasonable period of time for implementing the recommendations and rulings of the DSB would be six
months and 15 days from adoption of both reports, i.e. until 20 October 2001 (WTO document WT/DS122/8, 29 may 2001).  The
parties agreed that the item should be removed from the DSB’s agenda (WTO documents WT/DS122/11, 23 January 2002).
b The complaining parties requested that a reasonable time period for implementation be determined through binding arbitration
(WTO document WT/DS217/12 and WT/DS234/20, 19 March 2003).
c DSB decided that the panel established on 23.08.01would also examine the complaints by Canada and Mexico.
Source: WTO Secretariat.
(8) FOREIGN INVESTMENT REGIME
(i) Recent performance and developments
41. Thailand has a relatively open foreign investment regime.  It views foreign direct investment
(FDI) as vital to the economy’s growth, and encourages investors from all sources.  Thailand’s FDI
was relatively unaffected by the financial crisis, partly reflecting its political stability, but also
because it undertook investment reforms, especially the partial opening in 1998 of several sectors,
such as banking, energy, and telecommunications.  However, after peaking at US$5.1 billion in 1998,net FDI inflows fell to a bout US$1 billion in 2002.
(ii) Basic framework
42. New investment legislation (the 1999 Foreign Business Act B.E. 2542) replaced the 1972
Alien Business Law from 3 March 2000.  The Foreign Business Act maintains negative lists ofWT/TPR/S/123 Trade Policy Review
Page 28
restricted activities, albeit 21 businesses activities less than in the previous legislation (Table II.4).27
All other activities, except for banking, insurance,  aviation, transportation, commodity export, mining
and other enterprises subject to foreign ownership restrictions under various sector-specific laws (such
as telecommunications), are fully open to foreign participation.  Foreigners or foreign companies are
prohibited from holding 50% or more equity in List 1 businesses, such as media, farming, forestry,
and fishing.28  Foreigners investing in List 2 businesses, e.g. domestic aviation, sugar refining and salt
mining), and List 3 activities (rice milling, fisheries, plywood manufacture, and certain professional
services (e.g. legal)), require special authorization, unless granted investment promotion by the BOI,
permitted by the Industrial Estate of Thailand or allowed under some other law.  Foreign investment is
a List 2 activity requires cabinet approval through the Minister of Commerce.  Foreign equity
participation is allowed up to 60% and, on a case-by case basis, up to 75%.  At least two fifths of theboard of directors must be Thai nationals.  For List 3 businesses, foreigners need permission from the
Ministry of Commerce (Director-General of Department of Commercial Registration).  Initial foreign
investment is subject to minimum capital requirements of B 2 million and, in the case of restricted
businesses, 25% of the total three-year average expected annual expenditure, but not less than
B 3 million.  Most projects substantially exceed these limits so that their practical significance isreduced.  Local businesses (up to 49% foreign equity) can generally participate in restricted sectors.
Table II.4
Business activities restricted for foreign investment
No. Business activity
List 1 Businesses not permitted for foreigners to operate due to special reasons
1. Newspapers, radio or television stations
2. Upland or lowland farming or gardening
3. Animal farming
4. Forestry and wood fabrication from natural forests
5. Fisheries – marine animals in Thai waters and within Thailand’s specific economic zones
6. Extraction of Thai medicinal herbs
7. Trading and auctioning Thai antiques or national historical objects
8. Making or casting Buddha images and monk alms bowls
9. Land trading
List 2 Businesses related to national safety or security or affecting arts and culture, tradition, folk handicraft or natural
resources and environment
1. Production, sale, repair, and maintenance of (a) firearms, ammunition, gun powder, explosives (b) components of firearms,
ammunition, and explosives (c) armaments, military ships, aircraft or vehicles (d) equipment or components of all war materials
2. Domestic land, waterway, or air transportation, including domestic airlines
3. Trading antiques or art objects and Thai handicraft
4. Production of carved wood
5. Silkworm farming, production of Thai silk yarn, weaving Thai silk or pattern printing on Thai silk
6. Production of Thai musical instruments
7. Production of goldware, silverware, nielloware, bronzeware and lacquerware
8. Production of crockery of Thai arts and culture
9. Production of sugar from sugarcane
10. Salt farming inclusive of making salt from salty earth
11. Making rock salt
Table II.4 (cont'd)
                                                     
27 These included mainly manufacturing activities, like drugs, matches, cement and cement products, as
well as livestock farming (except silkworms), extraction of vegetable oils, trade in ores, and certain services,
such as hairdressing.  Some services were also partia lly opened to foreigners by being shifted from List 1 to
List 3, such as certain construction activities (Voight, 1999).
28 A foreigner (alien) is a non-Thai national, a n on-Thai registered company, a locally incorporated
company with more than 50% overseas share ownership, or a partnership with a foreign managing partner.Thailand WT/TPR/S/123
Page 29
No. Business activity
12. Mining, inclusive of stone blasting or crushing
13. Timber conversions to make furniture and articles of wood
List 3 Businesses in which Thai nationals are not yet ready to compete with foreigners
1. Rice milling, and flour production from rice and farm produce
2. Fishery, limited to marine animal culture
3. Forestry from reafforestation
4. Production of plywood, veneer, chipboard or hardboard
5. Production of lime
6. Accounting business services
7. Legal business services
8. Architecture business services
9. Engineering business services
10. Construction, except for (a) construction rendering basic services, requiring special machinery, technology or construction
expertise and having foreign minimum capital of B 500 million;  (b) other categories of construction prescribed by ministerial
regulation
11. Broker or agency business, except (a) for underwriting securities or services connected with futures trading of commodities or
financing instruments or securities (b) for trading or procuring goods or services necessary for production or rendering servic es
amongst affiliated enterprises (c) for trading, purchasing or distributing, or seeking both domestic and foreign markets for
selling domestically manufactured or imported goods in the manner of international business operations having the foreigner’sminimum capital of  B 100 million (d) of other category as prescribed by ministerial regulations
12. Auction, except (a) in the manner of international bidding not being the auction of antiques, historical artefacts or art objec ts
which are Thai works of art, handicrafts or antiques or having historical value (b) other categories as prescribed by ministeri al
regulations
13. Internal trade connected with native products or produce not yet prohibited by law
14. Retailing – all categories for good giving total minimum capital less than B 100 million, or less than B 20 million per shop
15. Wholesaling – all categories of goods having total minimum capital of each shop less than B 100 million
16. Advertising
17. Hotel business, except hotel management
18. Tourism
19. Selling food or beverages
20. Plant cultivation or propagation
21. Other categories of business services except that prescribed in ministerial regulations
Source: Foreign Business Act B.E. 2542 (1999).
43. Licence applications by foreigners for List 2 and List 3 businesses must be decided within
60 days of being filed.  Cabinet may postpone  List 2 decisions for another 60 days.  Licences must be
issued within 15 days from approval.  Factors taken into account in assessing licence applications are:
national safety and security; economic and social development; public order and morality; art, culture,and tradition; natural resource conservation; energy conservation and environment protection;
consumer protection; enterprise size; employment; technology transfer; and research and
development. If rejected, the applicant must be informed along with the reasons within 15 days
(List 3) or 30 days (List 2).  Rejection of List 3 applications may be appealed to the Minister of
Commerce within 15 days, and decision on appeal must be taken within 30 days.  Licences are validuntil automatically cancelled on cessation of business by the licensee or revoked by the Minister.
Revocation or suspensions may be appealed to the Minister within 30 days, and decision on appeal
must be taken within 30 days.
44. Thailand continues to operate a generally liberal foreign investment regime. No applications
satisfying the legislative criteria have reportedly been refused, and only about 11% of applications,primarily in services, have been rejected as not meeting the criteria.
29  However, the criteria used to
                                                     
29 APEC (2003a), p. 45.WT/TPR/S/123 Trade Policy Review
Page 30
assess licence applications tend to be rather open-ended and are not necessarily supported by detailed
regulations, thereby potentially allowing considerable administrative discretion in their application.30
The application process can also be time-consuming and unpredictable.31  Several key elements, such
as the business lists, can be changed by ministerial regulation.   The Foreign Business Board reviews
these lists at least annually and, based on these recommendations, the Minister of Commerce can
make changes by issuing a ministerial regulation.
45. The Foreign Business Act does not apply where an international treaty requires Thailand to
provide national treatment to foreign investors.  One such case is for U.S. investors under the 1966
Treaty of Amity and Economic Relations Between the United States and Thailand.  It provides
preferential access by extending national treatment to U.S. investors, thereby exempting them from
most FDI restrictions.  Under the Treaty, Thailand can restrict U.S. investors in only communications,transport, banking, exploitation of land or other natural resources, and domestic trade in agricultural
products.
(a) Land and labour restrictions
46. Land ownership restrictions in Thailand have been relaxed.  While non-Thai businesses and
individuals can still only own land on government-approved industrial estates, the Land Act wasamended in 1999 to allow foreign investors to own up to 1,600 square metres of land for residential
purposes.  The foreign investment must be a minimum of B 40 million, be for at least three years, and
be in a business that is believed to benefit the economy, promote social welfare or is BOI promoted.
Foreigners can also own up to 49% (instead of 40%) in a condominium, and up to 100% (if purchased
within five years of the date of legislative ch ange), subject to certain conditions (Condominium
Act).
32  The BOI allows foreigners to own land within specified limits for offices and residences of
executives and employees (BOI Announcement No. 4/ 2544, 2001).   Foreigners may also construct
buildings on leased land; commercial and industrial leases were raised from 30 to 50 years in 1999
(Commercial and Industrial Leases Act).  Leases can also now be used for loan collateral.
47. Foreign workers in Thailand generally require in advance a work permit from the Ministry of
Labour and Social Welfare (Alien Employment Act, 1978).  A number of occupations and professions
are closed to foreigners (1979 Royal Decree).  Sp ecial arrangements apply to foreigners working in
companies promoted by the BOI or under special laws , such as the Petroleum Act, to facilitate the
issuance of work permits.  Foreign nationals working in Thailand must also meet visa requirements.
(iii) International agreements
48. Thailand became a member of the World Bank’s Multilateral Investment Guarantee Agency
(MIGA) on 29 April 2000.  It is taking steps to ratify membership of the International Centre for theSettlement of Investment Disputes Between Stat es and Nationals of Other States (the ICSID
Convention), signed in 1985.  It is a member of the Convention on Recognition and Enforcement of
Foreign Arbitral Awards (New York Convention), a nd has revised its own arbitration and conciliation
rules (Arbitration Act B.E. 2545 (2002) and Regulations on Compliance with Arbitration Awards,
2001) to enforce these obligations.  Other avenues increasingly being used by foreign investors toresolve disputes are the 1990 arbitration and concil iation rules of the private Arbitration Institute of
the Ministry of Justice, and the Thai Commercial Arbitration Rules administered by the Thailand
Board of Trade.
                                                     
30 APEC (2003a), pp. 45-46.
31 Piyanuj Ratprasatporn (2002), p. 2.
32 Foreigners may also use funds from local bank accounts to make such purchases instead of having to
bring in foreign funds (Thanachaiary and Wales, 1999, p. 1).Thailand WT/TPR/S/123
Page 31
49. Apart from the non-MFN Treaty with the United States, Thailand has many bilateral
investment treaties or investment promotion and protection agreements.  It concluded the latest
Investment Promotion and Trade Ag reement with Russia in October 2002, and is expected to finalize
one with Australia in 2003.  These agreements generally provide for national and MFN treatment, and
dispute settlement mechanisms.  Thailand is pursuing further agreements with developed and
developing countries, especially agreements that promote FDI and encourage technology transfer.33  It
is also party to the ASEAN Investment Area Agreement, which requires disputes to be resolved under
the Arbitration Rules of the United Nations Commission of International trade Law (UNCITRAL).
Thailand has concluded 51 agreements on the avoidance of double taxation and is considering
negotiating more.
                                                     
33 APEC (2003b), pp. 46-47.