RESTRICTED
WORLD TRADE WT/TPR/S/9
21November 1995
ORGANIZATION(95-3629)
TRADE POLICY REVIEW
THAILAND
Report bytheSecretariat
Thisreport, prepared forthefirstTrade Policy Review ofThailand, hasbeendrawn
upbytheWTO Secretariat onitsownresponsibility. TheSecretariat has,asrequired
bytheAgreement establishing theTrade Policy Review Mechanism (Annex 3ofthe
Marrakesh Agreement Establishing the World Trade Organization), sought
clarification from theGovernment ofThailand onitstrade policies andpractices.
Document WT/TPR/G/9 contains thepolicy statement submitted bytheGovernment
ofThailand.
________________________________________________________________________________________
Note:Thisreport issubject torestricted circulation andpress embargo untiltheendofthemeeting
oftheTrade Policy Review Body ofThailand.Thailand WT/TPR/S/9
Page iii
CONTENTS
Page
SUMMARY OBSERVATIONS xi
(1) Thailand inWorld Trade xi
(2) Policy Framework xi
(3) Trade Policy Features andTrends xii
(i) Recent evolution xii
(ii) Type andincidence oftrade policy instruments xiii
(iii) Sectoral policies xiv
(iv) Emergency measures xvi
(4) Trade Policies andForeign Trading Partners xvi
I. THE ECONOMIC ENVIRONMENT 1
(1) Recent Economic Performance andPolicy Objectives 1
(2) Trade Performance 9
(3) Outlook 13
Annex I.1 Foreign Exchange Deregulation Measures since 1991 14
II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES 16
(1) General Framework 16
(2) Structure ofTrade Policy Formulation andImplementation 17
(i) Legislative andexecutive branches ofgovernment 17
(ii) Review andadvisory bodies 19
(3) Trade Policy Objectives 19
(i) General trade policy objectives 19
(ii) Thailand andtheUruguay Round 20
(4) Trade Laws andRegulations 21
(5) Trade Agreements 22
(i) Multilateral agreements 22
(ii) Bilateral agreements 22
(iii) Preferential trade 22
(iv) Regional co-operation 23
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Page
III. TRADE-RELATED ASPECTS OFINVESTMENT POLICIES 25
(1) Foreign Direct Investment: General Policy Direction 25
(2) Legal Framework ofForeign Direct Investment 26
(3) Trends ininward andoutward foreign direct investment 29
Annex III.1 Comparison ofjoint venture criteria 31
IV. TRADE POLICIES AND PRACTICES BYMEASURE 32
(1) Overview 32
(2) Measures Directly Affecting Imports 34
(i) Registration andnotification requirements 34
(ii) Tariffs 34
(iii) Rules oforigin 42
(iv) Preshipment inspection 42
(v) Customs valuation andclearance 43
(vi) Import surcharges andspecial duties 43
(vii) Levies andother charges 44
(viii) Import prohibitions 45
(ix) Import licensing 45
(x) Import quotas 46
(xi) State trading 46
(xii) Import cartels 47
(xiii) Standards, technical regulations andsimilar measures 47
(xiv) Government procurement 51
(xv) Local content requirements 52
(xvi) Anti-dumping andcountervailing dutyactions, andsafeguard measures 53
(3) Measures Directly Affecting Exports 54
(i) Registration andnotification requirements 54
(ii) Export taxes andsurcharges 54
(iii) Minimum prices 55
(iv) Export prohibitions 55
(v) Export licensing andother controls 55
(vi) Export restraint arrangements andexport quotas 56
(vii) Export cartels 56
(viii) Countertrade 57
(ix) Export subsidies 57
(x) Export incentives 57
(xi) Export financing 59
(xii) Export marketing assistance 60
(xiii) Export performance requirements 60
(xiv) Export insurance 60
(xv) GSPbenefits 60
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Page
IV. TRADE POLICIES AND PRACTICES BYMEASURE (CONT 'D)
(4) Measures Affecting Production andTrade 61
(i) Investment promotion 61
(ii) Regional assistance 64
(iii) Adjustment assistance 64
(iv) Pricing andmarketing arrangements 65
(v) Assistance forresearch anddevelopment 65
(vi) Competition policy 65
(vii) Intellectual property rights 66
(viii) Environmental measures 70
V. TRADE POLICIES AND PRACTICES BYSECTOR 71
(1) Overview 71
(2) Agriculture, Forestry andFisheries 72
(i) Rice andother cereals 77
(ii) Natural rubber 78
(iii) Livestock anddairy farming 79
(iv) Fresh fruitandvegetables 80
(v) Oilseeds 81
(vi) Beverage crops 81
(vii) Tobacco 82
(vii) Fishandshellfish 82
(ix) Forestry andlogging 83
(3) Mining andEnergy 84
(i) Mining 84
(ii) Energy 85
(4) Industry 87
(i) Food products 90
(ii) Beverages andtobacco products 93
(iii) Textiles andclothing 93
(iv) Leather andfootwear 95
(v) Wood products andfurniture 96
(vi) Paper products andprinting 97
(vii) Chemicals 97
(viii) Petroleum refining andproducts 98
(ix) Rubber andplastic products 100
(x) Pottery, glass andmineral products 100
(xi) Basic andfabricated metal products 101
(xii) Machinery 103
(xiii) Transport equipment 105
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Page
V. TRADE POLICIES AND PRACTICES BYSECTOR (CONT 'D)
(4) Industry (cont'd)
(xiv) Professional andscientific equipment, other manufactured products 107
(5) Services 108
(i) Tourism 112
(ii) Financial services 113
(iii) Telecommunications 116
(iv) Transport 116
VI. TRADE DISPUTES AND CONSULTATIONS
(1) GATT andWTO Dispute Settlement 119
REFERENCES 116
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CHARTS
Page
I. THE ECONOMIC ENVIRONMENT
I.1 Trend ofexport/GDP ratio, 1990-95 4
I.2 Government revenues, 1989 and1994 7
I.3 Prices andmoney supply (M2) growth rates, 1989-94 7
I.4 Exchange rateoftheThai baht, 1987-94 (1stquarter) 9
I.5 Product composition ofThailand 'strade, 1989 and1994 10
I.6 Intra-industry trade byregion, 1985-93 11
I.7 Direction ofThailand 'strade, 1989 and1994 12
III. TRADE-RELATED ASPECTS OFINVESTMENT POLICIES
III.1 Netforeign direct investment inflows andprivate business investment, 1988-94 28
III.2 Foreign direct investment projects applying forpromotion byregions, 1992 and1994 28
IV. TRADE POLICIES AND PRACTICES BYMEASURE
IV.1 Applied tariff structure ofThailand, 1995 35
IV.2 Investment projects approved forBOIincentives, bysector, 1994 63
V. TRADE POLICIES AND PRACTICES BYSECTOR
V.1 Footwear industry exports ofThailand, 1990-94 96
V.2 Tourism andhotel revenue inThailand, 1990-94 112
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TABLES
Page
I. THE ECONOMIC ENVIRONMENT
I.1 Basic economic andsocial indicators ofThailand, 1970-93 1
I.2 Economic performance ofThailand, 1980-94 2
I.3 GDP composition bysectoral origin (percentage ofGDP) 3
I.4 Investment inThailand 6
I.5 Balance ofpayments ofThailand, 1990-94 8
III. TRADE-RELATED ASPECTS OFINVESTMENT POLICIES
III.1 Foreign direct investment flows intoThailand, bycountry, 1988-94 29
III.2 Foreign direct investment flows intoThailand, bysector, 1988-94 30
III.3 Foreign direct investment flows from Thailand, bysector, 1988-94 30
IV. TRADE POLICIES AND PRACTICES BYMEASURE
IV.1 Reforms ofapplied m.f.n. tariffs inThailand, 1990-94 36
IV.2 Minimum andcurrent access commitments byThailand under theUruguay Round, 1995-2004 38
IV.3 GSTP trade preferences provided byThailand 42
IV.4 Products subject toimport surcharges orspecial duties, 1995 44
IV.5 Listofproducts removed from import controls asofFebruary 1992 46
IV.6 Standards-related legislation inThailand, 1995 48
IV.7 Regulatory requirements forproducts controlled bytheThailand Food and
Drug Administration, 1995 50
IV.8 Applied export duties andsurcharges inThailand, 1995 54
IV.9 Listofproducts removed from export controls asofFebruary 1992 55
IV.10 Exports under GSP, 1991-94 60
IV.11 Major Thai exports thatdonotreceive GSP benefits 61
IV.12 Investment promotion inThailand, 1995 61
IV.13 Statistics onsuppression ofintellectual property rights violations inThailand, 1993-95 67
IV.14 Trademark andpatent statistics forThailand, 1990-94 68
V. TRADE POLICIES AND PRACTICES BYSECTOR
V.1 Agricultural output inThailand byvalue at1988 prices, 1990-95 73
V.2 Exports ofagricultural andfisheries products byThailand, 1990-93 74
V.3 Aggregate measure ofsupport reduction commitments byThailand, 1995-2004 75
V.4 Marketing assistance bytheMarketing Organization forFarmers, 1991-93 77
V.5 Regulatory schemes forpetroleum exploration andproduction inThailand, 1971-95 86
V.6 Gross output andvalue added inThailand asapercentage oftotal manufacturing,
1990-93 88
V.7 Exports ofelectrical andelectronic products byThailand, 1991-94 103
V.8 Motor vehicle production inThailand, 1985-94 105
V.9 Exports ofprecious gems andjewelry byThailand, 1992-94 107
V.10 Service sectors inThailand, 1990-95 108
V.11 Foreign exchange earnings ofservice sectors inThailand, 1990-94 109
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Page
V. TRADE POLICIES AND PRACTICES BYSECTOR (CONT 'D)
V.12 Principal laws, regulations andpolicies governing domestic service sectors inThailand 110
V.13 Services agreements ofThailand 111
APPENDIX TABLES
Page
AI.1 Manufactured exports from Thailand byproduct category, 1989-94 125
AI.2 Imports intoThailand byproduct category, 1989-94 126
AI.3 Thailand intra-industry trade withtheworld, 1985, 1990 and1993 126
AIII.1 Business activities andservices inThailand withrestrictions onforeign ownership, May 1995 127
AIV.1 Evolution since 1989 ofBoard ofInvestment (BOI) criteria forincentives 129
AIV.2 Thailand 's1995 AFTA exclusion list 134
AIV.3 Tariff preferences accorded toThai imports from Laos 137
AIV.4 Excise taxes imposed inThailand, 1995 138
AIV.5 Products subject toimport licensing inThailand, August 1995 139
AIV.6 State-trading enterprises inThailand, 1995 142
AIV.7 "Specific controlled" food products inThailand administered bythe
Ministry ofPublic Health, 1995 143
AIV.8 Products subject toexport licensing inThailand, May 1995 144
AIV.9 Activities eligible forinvestment promotion inThailand 146
AIV.10 Machinery andequipment ineligible forBOItariff concessions 148
AIV.11 Time-frames forproject consideration andrelated procedures bytheBoard ofInvestment 150
AIV.12 Number oftrademark applications inThailand bycountry, 1983-94 151
AIV.13 Patent applications inThailand bytrading partner, 1980-94 152
AIV.14 Patents granted inThailand bycountry, 1980-94 153
AIV.15 Conditions forcompulsory licensing ofpharmaceutical products inThailand, 1995 154
AV.1 Index ofagricultural production inThailand, 1988-94 155
AV.2 Farm, wholesale andexport prices formajor agricultural commodities inThailand, 1993-94 156
AV.3 Thailand tariff rates byISIC category, 1995 and2004 157
AV.4 Agricultural support measures inThailand exempt from Uruguay Round reduction
commitments, 1991 160
AV.5 Gross output andvalue added inmanufacturing inThailand, 1990-93 162
AV.6 Merchandise imports andexports ofThailand by4-digit ISIC category, 1991-94 163
AV.7 Quantitative restraints imposed onThai textile exports, 1995 166
AV.8 Occupations closed toaliens under theRoyal Decree of1979 168
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SUMMARY OBSERVATIONS
1. Thailand overthepastfouryears has
made progress inimplementing more outward-
oriented policies, seeking toequalize incentives
between theexport anddomestic sectors.
Integral tothishasbeenashiftininvestment
incentives away fromexport promotion, anda
further opening oftheeconomy, increasing the
exposureofThaiindustrytointernationalmarket
forces andthuspromoting efficiency. However,
acertain lackoftransparency remains; for
example, thelastpublished tariffdates to1992.
2. Economic growth hasbeenrapid since
Thailand 'sprevious Trade Policy Review in
1991, ledinpartbyexternal demand. The
share ofexports inGDP hasincreased
continuously, from32percentin1990to41per
centin1994. Growth, however, hasledtoa
highdegree ofresource utilization, raising unit
costs. Consequently, manufacturing ismoving
away from lowvalue-added activities, and
Thailand isbecoming aproducer andexporter
ofmore technology intensive goods.
3. Thefastpaceofdevelopmenthasfurther
exposed infrastructural weaknesses and
exacerbated environmental problems. The
authorities areacting toovercome theresulting
bottlenecks invarious ways, including an
increase incompulsory education, incentives to
locate industry outside theBangkok areaand
new transport facilities. In1992, the
Government updated avariety ofenvironmental
regulationsandincreasedpenaltiesforpollution,
adopting the'polluter pays'principle.
(1) Thailand inWorld Trade
4. Thailand hasbeenoneoftheworld 's
fastest-growing economies sincethemid-1980s.
After averaging over11.5percentinthefour
years to1990, realGDP growth moderated to
somewhat over8percentinthenextfouryears.
Thisreflected mainly atightening offinancial
policies, astheauthorities sought toprevent an
overheating oftheeconomy. Nevertheless, since
1990unemployment hasdeclined towellunder3percent. Concurrently, thedeficit onthe
current account wasabout 6percentayear.
These deficits weremore thanfinanced byan
inflow offoreign capital, which together with
ahigh rateofdomestic savings supported
investment levels close to40percentofGDP.
Since 1990, international reserves haverisen
from some US$14 billion tomore than
US$34 billion byendJuly1995, equivalent to
about sixmonths ofimports ofgoods and
services.
5. Thailand 'ssustained economic growth
hasbeen underpinned byprudent financial
management. TheGovernment 'sbudget has
been insurplus since 1988. Disciplined
monetary policy hashelped tobring inflation
tounder 5percentayear, although recently
theratehasagain risen, partly asaresult of
adrought-induced surge infoodprices.
6. Thailand 'sintra-industry trade has
grown significantly, especially with ASEAN
countries; suchtrade isparticularly highin
precious stones andmetals, non-electrical
machinery, electrical machinery, andoffice
supplies. Inaddition, there hasbeen some
reorientation ofThailand 'sexports away from
Europe towards neighbouring Asia; theshare
ofASEAN countries andtheEastAsian NIEs
hasincreased toover25percent. Japan and
theUnited States remain Thailand 'slargest
individual trading partners, together withabout
38percentoftotaltrade in1994.
(2) Policy Framework
7. Thailand adopted anewConstitution in
December 1991, establishing aparliamentary
democracy under theKing asconstitutional
monarch. Executive authority isexercised by
theCabinet, chaired bythePrime Minister and
currently comprising 14Ministries. Cabinet
approves policy actions, which arenormally
formulated andimplemented bytheMinistries.
ThePrime Minister 'sOffice co-ordinates inter-
ministerial issues suchaspreparation ofthe
budget andThailand 'sfive-year plans.
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8. TheGovernment reviews trade policy
principally through theagency oftheNational
Economic andSocial Development Board inthe
Office ofthePrime Minister. TheGovernment
also seeks advice from the Thailand
Development Research Institute, aprivate body,
aswell asfrom relevant departments in
universities. Theprivate sector participates in
policy issues through suchorganizations asthe
Joint Public-Private Consultative Committee.
(3) Trade Policy Features andTrends
9. Thailand 'strade policy objectives are
outlined initsfive-year development plans and
implemented through legislation, notifications
andregulations. These policies haveevolved
overthepastdecades. Aninitial emphasis on
import-substitution wasfollowed fromthemid-
1970s byaswitch toexport orientation, which
helped fuelgrowth ofabout 7percentayear.
Thisbegan toexpose constraints andleadto
risingcosts,erodingtheexternalcompetitiveness
ofThailand 'slabour-intensive agricultural and
manufacturing base. Thus, since theearly
1990s, Thailand hassought tomoveitseconomy
inanoutward-oriented direction, towards a
more neutral balance ofincentives. Besides
tradeliberalization,animportantelementinthis
hasbeen aredirection oftheinvestment
incentives offered bytheBoard ofInvestment
(BOI) away fromexport promotion toregional
development, withallremaining export-related
incentives tobephased outby2002.
10. Thailand became amember ofGATT in
October 1982, andisafounding member ofthe
WTO. Itapplies atleastm.f.n treatment toall
WTO members. Thailand isalsoafounding
member ofASEAN, whose members agreed in
1992 toestablish theASEAN FreeTrade Area
(AFTA) by2008, adate thatin1994 was
advanced byfiveyears. In1993, ASEAN
brought intooperation theCommon Effective
Preferential Tariff (CEPT) asthecore
mechanism forimplementing AFTA: by2003
theaveragetariffonAFTAproductsisscheduled
tobeanestimated 2.45percent, compared to
Thailand 'scurrent rateonAFTA imports of19percent; andrates onmanufactures thatare
presently above 20percentwilldecline toa
maximum of5percent, thussharply reducing
intra-regional tariff peaks. Thailand also
receives GSPpreferences from27ofitstrading
partners; in1994, Thailand exported goods
worth about US$9.0 billion under GSP, some
34percentoftotalexports.
11. ThailandisamemberoftheAsia-Pacific
Economic Cooperation (APEC) forum. Almost
three-quarters ofThailand 'sexternal trade is
withAPEC members. Under the1994 Bogor
Declaration, APEC istoachieve fullandopen
trade andinvestment intheregion by2020.
12. Thailand encourages foreign direct
investment(FDI)throughtheBOI.Bothnon-tax
andtaxincentives, suchastaxholidays and
waivers ofduties onimported capital goods, are
offered aspartofgeneral investment policies.
With certain exceptions, foreign equity
participation maynotexceed 49percentof
registered capital; formany financial services,
themaximum equity limitis25percent.
(i) Recent evolution
13. Thailand hascontinued withthetariff
reform itbegan in1990. Measures initiated in
January 1995 willreduce themaximum tariff
from100percentto30percentinmostcases
andlower rates onsome 4,000 items, thus
cutting theaverage applied tarifffromabout 30
percentin1994 to17percentby1997; the
number oftariff rates willdecline from39to
6.Anotable exception isthemotor vehicle
sectorwheretheaveragetariffwillremainabout
38percent,withrates ranging to80percent.
14. Under Thailand 'sUruguay Round
commitments, virtually allagricultural tariffs
havebeenbound andthelevelofbindings in
industry increased from 2to68percent.
Agricultural bindings aregenerally atcurrently
applied rates, withthebound average todecline
bysome 33percentovertheimplementation
period to2004. Tariffication applies to23
agricultural product groups; todatethishas
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Page xiii
beenputintoeffect for12suchgroups withthe
remainder, including forunconcentrated milk,
garlic,pepperandcopra,duetobeimplemented
byend1995. Inindustry, bound rates areto
decline byanaverage of28percent. Domestic
support toagriculture willdecrease byabout
13percentinvalue terms by2004. Inthearea
ofservices, Thailand 'sschedule ofcommitments
asofend-July 1995covers 95activities and10
major sectors, including financial services,
tourism andtransport.
15. In1992, Thailand removed import
surchargesonmotorvehicles,whichhadranged
from 20to50percent. Since itsprevious
review,however,Thailandhasintroducedexcise
taxes onmotor vehicles, ranging from 27to
45percent. Exemptions fromthese taxes are
currently granted topassenger carsandcertain
trucks provided their manufacturer satisfies
local-content provisions. Oncountertrade,
Thailand 'spolicy isaimed atpromoting exports
andmitigating thetrade imbalance; itrequires
thatanyimported procurement valued above
Baht500millionbyStateenterprisesmustapply
countertrade measures.
16. Under Thailand 'sobligation tophase
outperformance requirements inconsistent with
theUruguayRoundAgreementonTradeRelated
Investment Measures (TRIMs), 14localcontent
measures wereabolished forinvestment projects
thatreceived approval afterApril 1993forBOI
incentives.However,localcontentrequirements
stillapply tosuchitems asdairy products and
motor vehicle engines; asubstantial number
ofprojects previously approved forBOI
incentives arealso obligated tocontinue
observing local-content requirements forafixed
timeperiod. Thailand 'sremaining localcontent
requirements aretobeeliminated bytheendof
1999.
17. Thailand accepted theUruguay Round
Agreement onTrade Related Aspects of
IntellectualPropertyRights(TRIPS),andintends
implementation within thetransition period
permitted todeveloping countries. Asof
September 1995, abilltosetupanintellectualproperty andinternational trade court wasin
theapproval process oftheNational Legislative
Assembly.
(ii) Type andincidence oftrade policy
instruments
18. Thailand'sappliedimporttariffsin1995
range fromzeroto100percent(excluding the
effect ofspecific rates), withasimple average
ofabout 23percent. Tariff peaks, upto
100percent,apply toimports ofcertain knitted
goods, footwear, rubber products andmotor
vehicles. Thehighest average tariffs arefor
distilled spirits andmaltliquors (60percent),
canned fisheries products (55percent), wine
andbeverages (about 54percent). Escalation
isnotageneral feature oftheThaitariff, but
issignificant insomesectors, including textiles,
paper andrubber products andbasic and
fabricated metals.
19. Specific rates apply tolessthan3per
centoftarifflines. However, alternative tariffs
apply onabout 50percent oflines for
agricultural rawmaterials andlivestock, and
onabout 30percentofthose forindustry.
Surcharges orspecial duties areimposed onfish
meal, wheat andmeslin flour, cornforanimal
feedandsheets andplates ofironandsteel.
Tariff concessions andexemptions areineffect,
butdetailed information ontheirapplicability
isnotavailable; totalestimated revenue losses
from exemptions andreductions oftariffs on
machineryandrawmaterialswas
Baht59billion in1994. The lack of
transparency inthisarea undermines the
transparency oftheThaitariff.
20. Import licensing inThailand hasbeen
reduced significantly sincetheprevious review,
butnon-automatic licensing continues toapply
toanumber ofimports, including fishmeal,
coffee beans, pepper, sugar, juteandcertain
gunny bags. Anumber ofproducts, suchas
liquified petroleum gas,kerosene, motorcycles
andcertain buses, aresubject toconditional
import prohibitions. Thailand 'sonlyremaining
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Page xiv
import quota isimposed ongarlic. Thaifood
standards andregulations, according tothe
authorities, aremostly inconformity with
CODEX andother international standards. As
ofApril 1995, 1,446 Thaiindustrial standards
had been published, ofwhich 41were
compulsory technical regulations.
21. Government procurement inThailand
isthrough various types oftenders ofthe
Ministry concerned; there isnocentralized
purchasing agency, andinformation isnot
availableontheamountordistributionbytender
ofgovernment procurement. Thaiproducts and
services, except construction, receive a
10percentprice preference inprocurement,
provided theymeettherequirements oftheThai
Industrial Standards Institute; certain
State-trading organizations getthesame
advantage inprocurement. TheGovernment is
currently privatizing orliquidating anumber of
its22State-trading organizations.
22. Thailand 'srestraints onitsexports of
textile andclothing thathadbeen negotiated
under theaegis oftheMFAwere"rolled over"
asthestarting point forthe10-year phase-out
oftheArrangement. Fortapioca products, the
Thaivoluntary export restraint waseliminated
following tariffication ofimports bythe
European Union. Quota andmonopoly export
arrangements forsugar werecancelled in1994.
23. TheExportImportBankofThailandwas
established inFebruary 1994, assuming
operation oftheexport refinancing facilities
formerly administered bytheBankofThailand.
ThePacking Credit Scheme, continues tobethe
main export refinancing facility forsupplying
exportcreditsthroughcommercialbanks;small-
scaleexporters havesomeaccess tocommercial
credits.
(iii) Sectoral policies
24. TheGovernment hasidentified agro-
industry andfood-processing, textiles and
garments,electronics,metal-working,
petrochemicals andironandsteelasindustrieswhereThailandhasaninternationalcompetitive
advantage; inthiscontext, government support
takes theform ofinvestment incentives. In
agriculture, government policies arecurrently
geared toincreasing productivity andmaking
higher value added products, while shifting
development emphasis totherural sector asa
whole, including thepromotion oflocal
industries.
Agriculture
25. Agricultural growth lagstherestofthe
economy, although exports remain substantial.
Thereduced availability ofnewfarmland and
weak commodity prices arethemain factors
behind thelower growth rate. Inrecent years
production hasbeenshifting away fromcoffee,
rice,cassava andpepper intosuchhigher value-
added activities suchascattle-raising, orchards
andfisheries.Insomeagriculturalsectors,such
assugar, labour shortages aredeveloping.
26. Agricultureisalow-productivitysector,
withasubstantial difference between its60per
centshare ofemployment and11percent
contribution toGDP. Thisisreflected inthe
accelerating income gapbetween thefarmand
non-farm sectors, fromaratioof1to8in1990
to1to11by1994. Measures toachieve
Thailand'sagriculturalpolicyobjectivesinclude
tariff protection for"sensitive" products, soft
loans tofarmers, thesupply ofinput factors at
either nocostoratreduced prices, providing
water supplies, encouraging research and
facilitating technology transfer. Investment
incentives areavailable from theBOIfora
variety ofagricultural activities.
27. Current applied tariffs foragricultural
rawmaterials andlivestock range fromzeroto
65percent, withasimple average of38per
cent. Forfisheries andforestry products,
applied tariffs range fromzeroto60percent,
withsimple averages of55and15percent.
Thailand 'sexceptions toUruguay Round
agricultural tariff bindings include certain live
animals, animal fatsandcoral. State-trading
organizations aretheexclusive recipients ofthe
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Page xv
import allocations under thein-quota partofthe
tariff quotas established foranumber of
products subject totariffication.
28. Domestic support levels willdropfrom
Baht21.8billion to19billion between 1995-
2004 asaresult oftheUruguay Round.
Thailand maintains export subsidies on
agricultural products inamanner, according
totheauthorities, consistent with those of
developing-countrymembersundertheUruguay
Round Agreement onAgriculture; no
information onthese subsidies wasavailable.
Thailand hasnoUruguay Round commitments
forthereduction ofsuchexport subsidies.
Industry
29. TextilesandclothingremainsThailand's
dominant manufacturing activity interms of
gross output, followed bymachinery (including
electronics), food products and transport
equipment. Manufacturing output expanded by
18percentin1991, 13percentin1992 and
11percentin1993,withvalueaddedincreasing
byslightly higher rates overthesame time
period. Manufactured imports expanded by
about 10percentin1992, 15percentin1993
and20percentin1994; exports expanded by
15,17and22percentoverthesame time
period.
30. Export competitiveness insomelabour-
intensive manufactured products suchasup-
scale garments, shoes andcanned seafood has
beenmaintained through quality improvements.
Production efficiency in"new" manufactured
items isreflected inasubstantial increase in
exports ofhightechnology products such as
electrical appliances, computers andcomputer
parts,integratedcircuitsandparts,transformers
andgenerators, optical instruments andvehicle
parts. Theimportance ofintra-industry trade
inradio, television andtelecommunications
equipment, Thailand 'smajor assembly
industries, means thatthisproduct group had
thelargest share ofbothimports andexports
in1994.31. Infrastructural weaknesses and a
shortage ofskilled labour areseen bythe
authorities asthegreatest hurdles tocontinued
manufacturing growth. TheGovernment has
increased fiscal expenditure, privatized state
enterprises andsought jointventures withthe
private sector toaddress theinfrastructure. In
addition, anincrease inthecompulsory
education levelwillbeimplemented nationwide
from1996, andscholarships willbeincreased
forstudies inareas suffering labour shortages,
suchasengineering andthesciences.
32. Approximately 80percent ofThai
industries are small and medium-sized
enterprises (SMEs). Fewlinkages existbetween
large firmsandtheSMEs, except insuchsectors
astextiles, butprospects areseen bythe
Government forincreased linkages inthe
electronics andautomotive sectors. Inaneffort
tohelppromote SMEs, theBOIin1993reduced
theminimum capital requirement forpromoted
projects toBaht1million.
Services
33. Services account fornearly halfof
Thailand 'sGDP andsome 30percentoftotal
employment; Thailand isamong theworld 'stop
twenty service traders. Themain source of
services income istourism, withremittances
fromoverseas labour following wellbehind.
34. Despite ownership limitations, FDIhas
flowed intosuch Thai services aspipeline
transport,telegraphandtelephone,andtourism.
TheauthoritiesareconvincedthattheGATSwill
promote expansion ofworld trade inservices;
however, theyfearthatThaifirms willnotbe
able tocompete, particularly infinancial
services, because ofweak capitalization anda
lackofexperience.
35. Toaddressconcernsover
competitiveness, BOIinvestment incentives are
authorized forasignificant number ofservices
activities. Inpower generation and
telecommunications, privatization isalsoan
important government priority.
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Page xvi
(iv) Emergency measures
36. Anti-dumping action wastaken in1994
against imports ofhydrogen peroxide from
India, with provisional andfinal duties of
30percentimposed inJune andNovember
1994, respectively.
(4) Trade Policies andForeign Trading
Partners
37. From Thailand 'sperspective, the
Uruguay Round results willbenefit theeconomy
through tariff reductions onexports, improved
long-term rules foragricultural products and
thephasing-out oftextiles andclothing quotas.
Thailand regards theGATS aspromoting
expanded world trade inservices byproviding
transparency andprogressive liberalization.
Despite overall satisfaction withtheRound,
Thailand hasanumber ofconcerns, including
theperceivedabsenceofmeaningfulconcessions
oncertain items; exclusion offisheries products
fromthenegotiations onagriculture; remaining
distortions inagricultural trade, despite
tariffication; andthereduction ofThailand 's
investment policy options under theTRIMS
Agreement.38. Thailand 'seconomy willbenefit from
thestrengthened trade rules agreed inthe
Uruguay Round, which together withunilateral
domestic liberalization, willresult inmore
completeintegrationintothemultilateraltrading
system. Trading partners willalsobenefit from
increased market access and greater
predictability asaresult ofboth domestic
reforms andThailand 'simplementation ofthe
Uruguay Round Agreements. However, further
progress interms oftransparency, including the
detailedandup-to-datepresentationofstatistical
information, mustalsobeencouraged.
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