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PRESS/TPRB/21
14December 1995
THAILAND 'SECONOMIC SUCCESS SETTOCONTINUE
ASEXPORTS KEEP GROWING
Thailand 'simplementation ofmore outward-oriented policies, which include placing export
anddomestic sectors onamore equal footing, havecreated amore openeconomy andhaveincreased
theexposure ofThailand 'sindustry tointernational competition. According toaWTO Secretariat report
onThailand 'stradepolicies andpractices, thecountry 'srapid economic growth hasledtoahighdegree
ofresource utilization andhigher unitcosts. Ithasalsoexposed infrastructural weaknesses and
exacerbated environmental problems. Consequently, manufacturing isnowmoving away from low
value-added activities tomore technology intensive goods. In1992, thegovernment updated avariety
ofenvironmentalregulationsandincreasedpenaltiesforpollution,adoptingthe"polluterpays"principle.
Thailand isoneoftheworld 'sfastest-growing economies. After achieving anaverage GDP
growth rateofmore than11.5percentfrom 1986 to1990, thegovernment, inaneffort toprevent
theeconomy from overheating, began totighten itsfinancial policies andmanaged toslowaverage
GDP growth down toslightly more than8percentfrom 1990 to1994.
Thereport attributes Thailand 'sstrong economic growth tothegovernment 'sprudent financial
management. Itspolicies haveresulted inagovernment budget surplus since 1988, aninflation rate
oflessthanfivepercentandanunemployment rateoflessthanthree percent. Theshare ofexports
inGDPhasrisencontinuously forthepastfouryears, from32percentin1990to41percentin1994.
Thailand hascontinued withitstariff reform which itbegan in1990. Measures initiated in
January 1995 willreduce themaximum tariff from100percentto30percentinmostcases andwill
lower ratesonsome 4,000 items, thereby cutting theaverage applied tariff from about 30percent
in1994 to17percentby1997. Onemain exception, states thereport, concerns automobiles where
theaverage tariff willremain about 38percent, withother ratesranging to80percent.
Thereport states thatunder Thailand 'sUruguay Round commitments, virtually allagricultural
tariffs havebeenbound. Tariffication applies to23agricultural product groups. Todate, tariffs are
ineffect for12suchgroups withtheremainder, including suchproducts asunconcentrated milk, copra,
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pepper andgarlic, tobeimplemented bytheendof1995. Thelevelofbindings forindustrial products
hasincreased fromtwoto68percent.Agricultural bindings aregenerally atapplied rates, while bound
ratesforindustrial products aresomewhat higher thanapplied rates. According tothereport, tariff
concessions andexemptions arecurrently ineffect, butdetailed information ontheirapplicability is
notavailable. Revenue losses from exemptions andreductions onmachinery andrawmaterials was
estimated in1994 tototal$2.3billion. By2003, theaverage tariff ofproducts intheASEAN
(Association ofSouth EastAsian Nations) FreeTrade Area(AFTA) aretofallto2.45percent,down
from thecurrent 19percenttariff which Thailand applies toimports from theregion.1
Trade inservices accounts fornearly halfofThailand 'sGDP andsome 30percentoftotal
employment. According tothereport, Thailand isamong theworld 'stoptwenty services traders. The
main source ofservices income istourism, withremittances from overseas labour adistant second.
Inspiteoflimits onownership byforeigners, foreign direct investment isstrong inpipeline transport,
telegraph andtelephone services andtourism. Thereport states thatThailand isconvinced thatthe
General Agreement onTrade inServices (GATS) willpromote theexpansion ofworld services trade.
Thailand, however, fearsthatdomestic firms willnotbeabletocompete withforeign service providers,
especially insuchareas asfinancial services, marked byweak capitalization andalackofbanking
experience. Thailand 'sschedule ofcommitments forservices covers 95activities and10major sectors,
including financial services, tourism andtransport.
Thailand hasaccepted theUruguay Round Agreement onTrade-Related Aspects ofIntellectual
Property Rights (TRIPs) andintends toimplement theagreement bytheyear2000. AsofSeptember
1995, abilltosetupanintellectual property andinternational tradecourtwasbefore Thailand 'sNational
Legislative Assembly.
Inworld trade, Thailand hascontinued toshiftmore ofitstradetotheseven ASEAN member
countries. Thereport states thatthere hasalsobeenare-orientation ofThailand 'sexports away from
Europe andtowards neighbouring Asia. Theshare ofThailand 'stradewithASEAN countries andthe
EastAsian newly-industrialized economies hasincreased tomorethan25percent.Japan andtheUnited
States remain Thailand 'slargest individual trading partners andaccounted forabout 38percentof
thecountry 'strade in1994. Thailand receives General System ofPreferences (GSP) advantages from
27ofitstrading partners. Lastyear, Thailand exported goods worth about $9billion under theGSP,
equalling some 34percentoftotalexports.
Thereport concludes thatThailand 'seconomy stands tobenefit from thestrengthened trade
rules agreed intheUruguay Round andfrom itsownefforts tofurther liberalize itseconomy. Such
developments willnotonlyhelpThailand achieve amore complete integration intothemultilateral
trading system butwillprovide increased market access opportunities forThailand 'strading partners.
Thereport alsoencourages Thailand tobemore transparent, especially inregard toproviding detailed
andup-to-date statistical information.
Notes toEditors :
TheWTO Secretariat 'sreport, together withareport prepared byThailand, willbediscussed bythe
WTO Trade Policy Review Body (TPRB) on19and20December 1995.
1ASEAN members: Brunei, Indonesia, Malaysia, thePhilippines, Singapore, Thailand andVietnam
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Page 4
TheWTO 'sTPRB conducts acollective evaluation ofthefullrange oftrade policies andpractices of
eachWTO member atregular periodic intervals andmonitors significant trends anddevelopments which may
have animpact ontheglobal trading system.
Tworeports, together witharecord oftheTPRB 'sdiscussion andoftheChairman 'ssumming up,will
bepublished induecourse asthecomplete Trade Policy Review ofThailand andwillbeavailable from theWTO
Secretariat, Centre William Rappard, 154ruedeLausanne, 1211 Geneva 21.
Thereports cover development ofallaspects ofThailand 'strade policies, including domestic lawsand
regulations, theinstitutional framework, trade practices bymeasure andbysector. Since theWTO came into
force, the"new areas" ofservices trade andtrade-related aspects ofintellectual property rights arealsocovered.
Attached arethesummary observations fromtheSecretariat andgovernment reports. Fullreports willbeavailable
forjournalists from theWTO Secretariat onrequest.
Since December 1989, thefollowing reports have been completed: Argentina (1992), Australia (1989
&1994), Austria (1992), Bangladesh (1992), Bolivia (1993), Brazil (1992), Cameroon (1995), Canada (1990,
1992 &1994), Chile (1991), Colombia (1990), Costa Rica (1995), Côte d'Ivoire (1995), Egypt (1992), the
EuropeanCommunities(1991,1993&1995),Finland(1992),Ghana(1992),HongKong(1990&1994),Hungary
(1991), Iceland (1994), India (1993), Indonesia (1991 and1994), Israel (1994), Japan (1990, 1992 and1995),
Kenya(1993),Korea,Rep.of(1992),Macau(1994),Malaysia(1993),Mauritius(1995),Mexico(1993),Morocco
(1989&1995),NewZealand(1990),Nigeria(1991),Norway(1991),Pakistan(1995),Peru(1994),thePhilippines
(1993), Poland (1993), Romania (1992), Senegal (1994), Singapore (1992), Slovak Republic (1995), South Africa
(1993), SriLanka (1995), Sweden (1990 &1994), Switzerland (1991), Thailand (1991), Tunisia (1994), Turkey
(1994), theUnited States (1989, 1992 &1994), Uganda (1995), Uruguay (1992) andZimbabwe (1994).
TRADE POLICY REVIEW BODY
THAILAND
Report bytheSecretariat -Summary Observations
Thailand overthepastfouryears hasmade progress inimplementing more outward-oriented
policies, seeking toequalize incentives between theexport anddomestic sectors. Integral tothishas
beenashiftininvestment incentives awayfromexport promotion, andafurther opening oftheeconomy,
increasing theexposure ofThaiindustry tointernational market forces andthuspromoting efficiency.
However, acertain lackoftransparency remains; forexample, thelastpublished tariff dates to1992.
Economic growth hasbeenrapid since Thailand 'sprevious Trade Policy Review in1991, led
inpartbyexternal demand. Theshare ofexports inGDP hasincreased continuously, from 32per
centin1990to41percentin1994. Growth, however, hasledtoahighdegree ofresource utilization,
raising unitcosts. Consequently, manufacturing ismoving away fromlowvalue-added activities, and
Thailand isbecoming aproducer andexporter ofmore technology intensive goods.
Thefastpaceofdevelopment hasfurther exposed infrastructural weaknesses andexacerbated
environmental problems. Theauthorities areacting toovercome theresulting bottlenecks invarious
ways, including anincrease incompulsory education, incentives tolocate industry outside theBangkok
areaandnewtransportfacilities.In1992,theGovernmentupdatedavarietyofenvironmentalregulations
andincreased penalties forpollution, adopting the'polluter pays'principle.
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Thailand inWorld Trade
Thailand hasbeenoneoftheworld 'sfastest-growing economies since themid-1980s. After
averaging over11.5percentinthefouryears to1990, realGDPgrowth moderated tosomewhat over
8percentinthenextfouryears. Thisreflected mainly atightening offinancial policies, asthe
authorities sought toprevent anoverheating oftheeconomy. Nevertheless, since 1990unemployment
hasdeclined towellunder 3percent. Concurrently, thedeficit onthecurrent account wasabout 6
percentayear. These deficits weremore thanfinanced byaninflow offoreign capital, which together
withahighrateofdomestic savings supported investment levels close to40percentofGDP. Since
1990, international reserves haverisen fromsome US$14 billion tomore thanUS$34 billion byend
July1995, equivalent toabout sixmonths ofimports ofgoods andservices.
Thailand 'ssustained economic growth hasbeenunderpinned byprudent financial management.
TheGovernment 'sbudget hasbeeninsurplus since 1988. Disciplined monetary policy hashelped
tobring inflation tounder 5percentayear, although recently theratehasagain risen, partly asa
result ofadrought-induced surge infoodprices.
Thailand 'sintra-industry trade hasgrown significantly, especially withASEAN countries;
suchtrade isparticularly highinprecious stones andmetals, non-electrical machinery, electrical
machinery, andoffice supplies. Inaddition, there hasbeensome reorientation ofThailand 'sexports
away from Europe towards neighbouring Asia; theshare ofASEAN countries andtheEastAsian
NIEshasincreased toover25percent. Japan andtheUnited States remain Thailand 'slargest individual
trading partners, together withabout 38percentoftotaltrade in1994.
Policy Framework
ThailandadoptedanewConstitutioninDecember1991,establishingaparliamentarydemocracy
under theKing asconstitutional monarch. Executive authority isexercised bytheCabinet, chaired
bythePrime Minister andcurrently comprising 14Ministries. Cabinet approves policy actions, which
arenormally formulated andimplemented bytheMinistries. ThePrime Minister 'sOffice co-ordinates
inter-ministerial issues suchaspreparation ofthebudget andThailand 'sfive-year plans.
TheGovernment reviews tradepolicy principally through theagency oftheNational Economic
andSocial Development Board intheOffice ofthePrime Minister. TheGovernment alsoseeks advice
fromtheThailand Development Research Institute, aprivate body, aswellasfromrelevant departments
inuniversities. Theprivate sector participates inpolicy issues through suchorganizations astheJoint
Public-Private Consultative Committee.
Trade Policy Features andTrends
Thailand'stradepolicyobjectivesareoutlinedinitsfive-yeardevelopmentplansandimplemented
through legislation, notifications andregulations. These policies haveevolved overthepastdecades.
Aninitial emphasis onimport-substitution wasfollowed from themid-1970s byaswitch toexport
orientation, which helped fuelgrowth ofabout 7percentayear. Thisbegan toexpose constraints
andleadtorising costs, eroding theexternal competitiveness ofThailand 'slabour-intensive agricultural
andmanufacturing base. Thus, since theearly 1990s, Thailand hassought tomove itseconomy in
anoutward-orienteddirection,towardsamoreneutralbalanceofincentives.Besidestradeliberalization,
animportant element inthishasbeenaredirection oftheinvestment incentives offered bytheBoard
ofInvestment (BOI) away fromexport promotion toregional development, withallremaining export-
related incentives tobephased outby2002.
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Thailand became amember ofGATT inOctober 1982, andisafounding member oftheWTO.
Itapplies atleastm.f.n treatment toallWTO members. Thailand isalsoafounding member ofASEAN,
whose members agreed in1992 toestablish theASEAN FreeTrade Area (AFTA) by2008, adate
thatin1994wasadvanced byfiveyears. In1993, ASEAN brought intooperation theCommon Effective
Preferential Tariff (CEPT) asthecoremechanism forimplementing AFTA: by2003theaverage tariff
onAFTA products isscheduled tobeanestimated 2.45percent,compared toThailand 'scurrent rate
onAFTA imports of19percent;andratesonmanufactures thatarepresently above 20percentwill
decline toamaximum of5percent,thussharply reducing intra-regional tariff peaks. Thailand also
receives GSPpreferences from 27ofitstrading partners; in1994, Thailand exported goods worth
about US$9.0 billion under GSP, some 34percentoftotalexports.
Thailand isamember oftheAsia-Pacific Economic Cooperation (APEC) forum. Almost three-
quarters ofThailand 'sexternal trade iswithAPEC members. Under the1994 Bogor Declaration,
APEC istoachieve fullandopentrade andinvestment intheregion by2020.
Thailand encourages foreign direct investment (FDI) through theBOI. Bothnon-tax andtax
incentives, suchastaxholidays andwaivers ofduties onimported capital goods, areoffered aspart
ofgeneral investment policies. With certain exceptions, foreign equity participation maynotexceed
49percentofregistered capital; formany financial services, themaximum equity limitis25percent.
Recent evolution
Thailand hascontinued withthetariff reform itbegan in1990. Measures initiated inJanuary
1995 willreduce themaximum tariff from100percentto30percentinmostcases andlower rates
onsome 4,000 items, thuscutting theaverage applied tariff fromabout 30percentin1994to17per
centby1997; thenumber oftariff rateswilldecline from39to6.Anotable exception isthemotor
vehicle sector where theaverage tariffwillremain about 38percent,withratesranging to80percent.
Under Thailand 'sUruguay Round commitments, virtually allagricultural tariffs havebeen
bound andthelevelofbindings inindustry increased from 2to68percent. Agricultural bindings
aregenerally atcurrently applied rates, withthebound average todecline bysome 33percentover
theimplementation period to2004. Tariffication applies to23agricultural product groups; todate
thishasbeenputintoeffect for12suchgroups withtheremainder, including forunconcentrated milk,
garlic, pepper andcopra, duetobeimplemented byend1995. Inindustry, bound ratesaretodecline
byanaverage of28percent. Domestic support toagriculture willdecrease byabout 13percentin
value terms by2004. Intheareaofservices, Thailand 'sschedule ofcommitments asofend-July 1995
covers 95activities and10major sectors, including financial services, tourism andtransport.
In1992, Thailand removed import surcharges onmotor vehicles, which hadranged from 20
to50percent. Since itsprevious review, however, Thailand hasintroduced excise taxes onmotor
vehicles, ranging from27to45percent.Exemptions fromthesetaxesarecurrently granted topassenger
carsandcertain trucks provided theirmanufacturer satisfies local-content provisions. Oncountertrade,
Thailand 'spolicy isaimed atpromoting exports andmitigating thetrade imbalance; itrequires that
anyimported procurement valued above Baht500million byStateenterprises mustapply countertrade
measures.
UnderThailand'sobligationtophaseoutperformancerequirementsinconsistentwiththeUruguay
Round Agreement onTrade Related Investment Measures (TRIMs), 14localcontent measures were
abolished forinvestment projects thatreceived approval afterApril 1993forBOIincentives. However,
localcontent requirements stillapply tosuchitems asdairy products andmotor vehicle engines; a
substantial number ofprojects previously approved forBOIincentives arealsoobligated tocontinue
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observing local-content requirements forafixed timeperiod. Thailand 'sremaining local content
requirements aretobeeliminated bytheendof1999.
Thailand accepted theUruguay Round Agreement onTrade Related Aspects ofIntellectual
PropertyRights(TRIPS),andintendsimplementationwithinthetransitionperiodpermittedtodeveloping
countries. AsofSeptember 1995, abilltosetupanintellectual property andinternational tradecourt
wasintheapproval process oftheNational Legislative Assembly.
Type andincidence oftrade policy instruments
Thailand 'sapplied import tariffs in1995range fromzeroto100percent(excluding theeffect
ofspecific rates), withasimple average ofabout 23percent. Tariff peaks, upto100percent,apply
toimports ofcertain knitted goods, footwear, rubber products andmotor vehicles. Thehighest average
tariffs arefordistilled spirits andmaltliquors (60percent), canned fisheries products (55percent),
wineandbeverages (about 54percent). Escalation isnotageneral feature oftheThaitariff, butis
significant insomesectors, including textiles, paper andrubber products andbasicandfabricated metals.
Specific ratesapply tolessthan3percentoftariff lines. However, alternative tariffs apply
onabout 50percentoflinesforagricultural rawmaterials andlivestock, andonabout 30percent
ofthose forindustry. Surcharges orspecial duties areimposed onfishmeal, wheat andmeslin flour,
cornforanimal feedandsheets andplates ofironandsteel. Tariff concessions andexemptions are
ineffect, butdetailed information ontheirapplicability isnotavailable; totalestimated revenue losses
fromexemptions andreductions oftariffs onmachinery andrawmaterials wasBaht59billion in1994.
Thelackoftransparency inthisareaundermines thetransparency oftheThaitariff.
Import licensing inThailand hasbeenreduced significantly sincetheprevious review, butnon-
automatic licensing continues toapply toanumber ofimports, including fishmeal, coffee beans, pepper,
sugar, juteandcertain gunny bags. Anumber ofproducts, suchasliquified petroleum gas,kerosene,
motorcycles andcertain buses, aresubject toconditional import prohibitions. Thailand 'sonlyremaining
import quota isimposed ongarlic. Thaifoodstandards andregulations, according totheauthorities,
aremostly inconformity withCODEX andother international standards. AsofApril 1995, 1,446
Thaiindustrial standards hadbeenpublished, ofwhich 41were compulsory technical regulations.
Government procurement inThailand isthrough various types oftenders oftheMinistry
concerned; there isnocentralized purchasing agency, andinformation isnotavailable ontheamount
ordistribution bytender ofgovernment procurement. Thaiproducts andservices, except construction,
receive a10percentprice preference inprocurement, provided theymeet therequirements ofthe
ThaiIndustrial Standards Institute; certain State-trading organizations getthesame advantage in
procurement. TheGovernment iscurrently privatizing orliquidating anumber ofits22State-trading
organizations.
Thailand 'srestraints onitsexports oftextile andclothing thathadbeennegotiated under the
aegisoftheMFA were"rolled over" asthestarting pointforthe10-year phase-out oftheArrangement.
Fortapiocaproducts,theThaivoluntaryexportrestraintwaseliminatedfollowingtarifficationofimports
bytheEuropean Union. Quota andmonopoly export arrangements forsugar werecancelled in1994.
TheExport Import Bank ofThailand wasestablished inFebruary 1994, assuming operation
oftheexport refinancing facilities formerly administered bytheBankofThailand. ThePacking Credit
Scheme, continues tobethemain export refinancing facility forsupplying export credits through
commercial banks; small-scale exporters havesome access tocommercial credits.
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Sectoral policies
TheGovernment hasidentified agro-industry andfood-processing, textiles andgarments,
electronics, metal-working, petrochemicals andironandsteelasindustries where Thailand hasan
international competitive advantage; inthiscontext, government support takes theformofinvestment
incentives. Inagriculture, government policies arecurrently geared toincreasing productivity and
making higher value added products, while shifting development emphasis totheruralsector asawhole,
including thepromotion oflocalindustries.
Agriculture
Agricultural growth lagstherestoftheeconomy, although exports remain substantial. The
reduced availability ofnewfarmland andweak commodity prices arethemainfactors behind thelower
growth rate. Inrecent years production hasbeenshifting away fromcoffee, rice,cassava andpepper
intosuchhigher value-added activities suchascattle-raising, orchards andfisheries. Insomeagricultural
sectors, suchassugar, labour shortages aredeveloping.
Agriculture isalow-productivity sector, withasubstantial difference between its60percent
share ofemployment and11percentcontribution toGDP. Thisisreflected intheaccelerating income
gapbetween thefarmandnon-farm sectors, fromaratioof1to8in1990to1to11by1994. Measures
toachieve Thailand 'sagricultural policy objectives include tariff protection for"sensitive" products,
softloans tofarmers, thesupply ofinput factors ateither nocostoratreduced prices, providing water
supplies, encouraging research andfacilitating technology transfer. Investment incentives areavailable
from theBOIforavariety ofagricultural activities.
Current applied tariffs foragricultural rawmaterials andlivestock range fromzeroto65per
cent,withasimple average of38percent. Forfisheries andforestry products, applied tariffs range
fromzeroto60percent,withsimple averages of55and15percent. Thailand 'sexceptions toUruguay
Round agricultural tariff bindings include certain liveanimals, animal fatsandcoral. State-trading
organizations aretheexclusive recipients oftheimport allocations under thein-quota partofthetariff
quotas established foranumber ofproducts subject totariffication.
Domestic support levels willdropfromBaht21.8billion to19billion between 1995-2004 as
aresultoftheUruguayRound.Thailandmaintainsexportsubsidiesonagriculturalproductsinamanner,
according totheauthorities, consistent withthose ofdeveloping-country members under theUruguay
Round Agreement onAgriculture; noinformation onthese subsidies wasavailable. Thailand has
noUruguay Round commitments forthereduction ofsuchexport subsidies.
Industry
Textiles andclothing remains Thailand 'sdominant manufacturing activity interms ofgross
output, followed bymachinery (including electronics), food products andtransport equipment.
Manufacturing output expanded by18percentin1991, 13percentin1992and11percentin1993,
withvalue added increasing byslightly higher ratesoverthesametimeperiod. Manufactured imports
expanded byabout 10percentin1992, 15percentin1993and20percentin1994; exports expanded
by15,17and22percentoverthesame timeperiod.
Export competitiveness insome labour-intensive manufactured products such asup-scale
garments, shoes andcanned seafood hasbeenmaintained through quality improvements. Production
efficiency in"new" manufactured items isreflected inasubstantial increase inexports ofhightechnology
products suchaselectrical appliances, computers andcomputer parts, integrated circuits andparts,
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transformers andgenerators, optical instruments andvehicle parts. Theimportance ofintra-industry
trade inradio, television andtelecommunications equipment, Thailand 'smajor assembly industries,
means thatthisproduct group hadthelargest share ofbothimports andexports in1994.
Infrastructural weaknesses andashortage ofskilled labour areseenbytheauthorities asthe
greatest hurdles tocontinued manufacturing growth. TheGovernment hasincreased fiscal expenditure,
privatized stateenterprises andsought jointventures withtheprivate sector toaddress theinfrastructure.
Inaddition, anincrease inthecompulsory education levelwillbeimplemented nationwide from1996,
andscholarships willbeincreased forstudies inareas suffering labour shortages, suchasengineering
andthesciences.
Approximately 80percentofThaiindustries aresmall andmedium-sized enterprises (SMEs).
Fewlinkages existbetween largefirms andtheSMEs, except insuchsectors astextiles, butprospects
areseenbytheGovernment forincreased linkages intheelectronics andautomotive sectors. Inan
effort tohelppromote SMEs, theBOIin1993reduced theminimum capital requirement forpromoted
projects toBaht1million.
Services
Services account fornearly halfofThailand 'sGDPandsome 30percentoftotalemployment;
Thailand isamong theworld 'stoptwenty service traders. Themain source ofservices income is
tourism, withremittances from overseas labour following wellbehind.
Despite ownership limitations, FDIhasflowed intosuchThaiservices aspipeline transport,
telegraph andtelephone, andtourism. Theauthorities areconvinced thattheGATS willpromote
expansion ofworld trade inservices; however, theyfearthatThaifirms willnotbeabletocompete,
particularly infinancial services, because ofweak capitalization andalackofexperience.
Toaddress concerns overcompetitiveness, BOIinvestment incentives areauthorized fora
significant number ofservices activities. Inpower generation andtelecommunications, privatization
isalsoanimportant government priority.
Emergency measures
Anti-dumping action wastaken in1994against imports ofhydrogen peroxide fromIndia, with
provisional andfinalduties of30percentimposed inJuneandNovember 1994, respectively.
Trade Policies andForeign Trading Partners
From Thailand 'sperspective, theUruguay Round results willbenefit theeconomy through
tariff reductions onexports, improved long-term rules foragricultural products andthephasing-out
oftextiles andclothing quotas. Thailand regards theGATS aspromoting expanded world trade in
services byproviding transparency andprogressive liberalization. Despite overall satisfaction with
theRound, Thailand hasanumber ofconcerns, including theperceived absence ofmeaningful
concessions oncertain items; exclusion offisheries products from thenegotiations onagriculture;
remainingdistortionsinagriculturaltrade,despitetariffication;andthereductionofThailand'sinvestment
policy options under theTRIMS Agreement.
Thailand'seconomywillbenefitfromthestrengthenedtraderulesagreedintheUruguayRound,
which together withunilateral domestic liberalization, willresult inmore complete integration into
themultilateral trading system. Trading partners willalsobenefit fromincreased market access and
greater predictability asaresult ofbothdomestic reforms andThailand 'simplementation oftheUruguay
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Round Agreements. However, further progress interms oftransparency, including thedetailed and
up-to-date presentation ofstatistical information, must alsobeencouraged.
TRADE POLICY REVIEW BODY
THAILAND
Report bytheGovernment -Summary Extracts
Asoneofthefastest growing economies intheworld, Thailand haslongrecognized the
importance oftradepolicy initsdevelopment. Trade measures havebeeninstrumental instrengthening
thecompetitiveness ofdomestic industries tocompete intheworld market. Being anopeneconomy,
Thailand hasparticipated actively invarious international forums suchastheUruguay Round of
multilateral tradenegotiations, theAsia-Pacific Economic Cooperation forum (APEC), andtheASEAN
FreeTrade Area.
Since itsaccession totheWorld Trade Organization on1January 1995, theThaiGovernment
hasimplemented various measures incompliance withitscommitments intheWTO. Thetariffsystem
hasbeenrestructured while alawwasenacted inaccordance withtheTRIPs agreement, tobefollowed
bynumerous other lawswhich arebeing drafted. Most oftheservices sector areontheverge of
liberalization. Inaddition, quantitative restrictions onmany agricultural products havealready been
dismantled andreplaced bytariff measures inlinewiththeprocedure prescribed intheagriculture
agreement. Inshort, Thailand hastrieditsutmost toquickly andsincerely implement itscommitments
intheWTO.
Thailand isalsoenthusiastically participating invarious regional cooperation schemes. As
acountry intheAsia-Pacific region, Thailand closely follows developments inAPEC andwillendeavour
toensurethatthisforumwillremainconsistentwithmultilateralism,theconceptenshrinedinthecreation
oftheWTO. Asoneoftheleading economics inASEAN, Thailand proposed theestablishment of
AFTA andcontributes considerably initsactualization process. Inaddition, thecountry isengaged
invarious sub-regional cooperation withitsneighbours, hoping thatthiswould bring about affluence
totheregion inthefuture.
Insummary, Thailand hasrealized theimportance offreeandopen trade tothecountry 's
development. Thus itshallcontinue touphold itsbelief inliberal trade aswellasconduct itstrade
policy inatransparent andfairmanner. With this,Thailand hopes toachieve thedouble benefits of
attaining economic prosperity andremaining asignificant player intheworld trade arena.
THE ECONOMIC AND TRADE ENVIRONMENT
Economic Developments 1992-1994
After fourconsecutive years ofrapid expansion averaging over10percentperannum, the
Thaieconomy appeared toreturn toamoresustainable path. Thailand 'sGross Domestic Product (GDP)
MOREPRESS/TPRB/21
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moderated to8.4.percentin1991 duetocautious monetary andfiscal policies andaslow-down in
private consumption andinvestment.
In1992, thepaceofThailand 'seconomic expansion moderated further inresponse tothe
slowdown intheworld economy andthedomestic political uncertainty earlyintheyear. Theeconomy
grew by7.9percent, slightly lessthanin1991 butstillrelatively highbyregion 'sstandard. Many
important monetary andfiscal measures wereimplemented, inparticular, theabolition ofinterest rate
ceilings, therelaxation offoreign exchange control, thebroadening inthespectrum ofbusiness operated
byfinancial institutions, thepromulgation oftheSecurities andExchange ActB.E.2535 (1992), the
modification ofthetaxstructure andthesubstitution, ofthevalue added taxforthebusiness tax.
In1993, therewasanoverall improvement intheThaieconomy withagrowth rateof8.4per
cent. Theexpansion wasunderpinned bybuoyant domestic demand, particularly private investment,
andsupported byastrong performance inmanufactured exports. However, inthefirsthalfofthe
year, thepaceofeconomic expansion wasconstrained byseveral factors including depressed farm
prices, alacklustre performance oftheagricultural sector, anddelays inbudgetary disbursements and
large-scale investment projects.
Inanattempt tofurther deregulate theThaifinancial system, theThaigovernment established
theBangkok International Banking Facility (BIBF) inMarch 1993 andpermitted commercial banks
andfinance andsecurities companies toundertake newbusinesses. These measures aredesigned to
pavethewayforThailand tobecome aregional financial centre. Furthermore theExport-Import Bank
(EXIM Bank) wassetupin1993toprovide comprehensive financial services tobusiness enterprises.
In1994, theThaieconomy recovered strongly forthesecond consecutive yearfromthetrough
of1992. Inlinewiththepickupintheworld economy, economic growth accelerated to8.7percent,
drivenbystrongexportsandrobustdomesticspending.Majorfactorscontributingtotherapideconomic
growth in1994 weretheimprovement intheeconomies oftheThailand 'smajor trading partners and
theassociated riseinthedemand forThaiexports, anincrease inbothpublic andprivate investment
andthebuoyant agricultural sector.
TRADE POLICY DEVELOPMENTS 1992-1995
AsThailand 'seconomic performance hasbecome increasingly dependent oninternational trade,
theprimary goalofThailand 'strade policy istoready thecountry foragreater roleintheworld
community. Thus, thegovernment hasemphasized measures suchasconducting liberal economic policy
throughafreeandopenmarketmechanism,liberalisingtradedomesticallyandencouragingaconstructive
andcompetitive economic structure.
TheUruguay Round
Thailand hasbeenactively involved intheUruguay Round negotiations withanobjective to
assuregreatertradeliberalizationthroughreducingoreliminatingtariffandnon-tariffbarriers,improving
theeffectiveness oftherules governing international trade, bringing about fairness andtransparency
intheworld market andpreventing newtrade barriers thatmayobstruct international trade.
Ingeneral,ThailandiscontentwiththesuccessfulconclusionoftheUruguayRoundnegotiations.
Thailand believes thattheestablishment oftheWTO andtheimprovement ofinternational trade rules
andnegotiations would create amore stable economic environment inwhich greater transparency and
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predictability would beconducive toprogressive liberalization ofworld trade. With thisbelief, the
country became the59thfounding member oftheWTO on28December 1994.
Thelegal status oftheURagreements aresimilar toother international agreements which
Thailand hadsigned. Prior tosigning aninternational agreement, itmustbeensured thattheagreement
isconsistent withitsdomestic law. Inorder toratify theWTO agreements, Thailand enacted the
Protection oftheWTO 'sOperations Actandamended theCustoms Tariff Regulation B.E.2531.
Toimplement itscommitments made under theAgriculture Agreement, Thailand hastoreduce
anaverage of24percentoftariffs onagricultural products. Itwillalsoeliminate non-tariff barriers
for23agricultural products andconvert these NTBs intotariff measures inaccordance withthe
tariffication process. Thailand hasalsocommitted toreduce almost 4,000 items or70percentoftariff
concessions onindustrial andfisheries products, resulting intheaverage reduction of28percent.
Inservicessector,Thailandhassubmittedascheduleofmarketaccesscovering95activitiesand10major
sectors.
Thailand, however, realizes thattherealsuccess oftheURnegotiations doesnotdepend solely
ontheexistence ofeffective disciplines andrulesgoverning theworld tradesystem. AllWTO members
must honour theircommitments andbesincere inimplementing theirobligations.
END