WORLD TRADE WT/TPR/M/9/Rev.11
8February 1996
ORGANIZATION(96-0477)
Trade Policy Review Body
19-20 December 1995
TRADE POLICY REVIEW
THAILAND
MINUTES OFMEETING
Revision
Chairman: H.E. Mr.N.Osorio Londoño (Colombia)
Page
I. INTRODUCTORY REMARKS BYTHE CHAIRMAN 2
II. OPENING STATEMENT BYTHE REPRESENTATIVE OFTHAILAND 3
III. STATEMENT BYTHE FIRST DISCUSSANT 7
IV. STATEMENT BYTHE SECOND DISCUSSANT 9
V. STATEMENTS BYMEMBERS 11
VI. REPLIES BYTHE REPRESENTATIVE OFTHAILAND
AND ADDITIONAL COMMENTS 14
VII. CONCLUDING REMARKS BYTHE CHAIRMAN 19
1English only.WT/TPR/M/9/Rev.1
Page 2Trade Policy Review
I. INTRODUCTORY REMARKS BYTHE CHAIRMAN
1. TheTrade Policy Review ofThailand washeldon19and20December 1995. TheChairman
welcomed thedelegation ofThailand, headed byAmbassador Danai Tulalamba, andthediscussants,
Ambassador Wade Armstrong (New Zealand) andMr.Jorge Riaboi (Argentina).
2. TheChairman recalled thepurpose oftheTrade Policy Reviews andthemainelements ofthe
procedures forthismeeting. Thereport bytheGovernment ofThailand wascontained in
document WT/TPR/G/9 andthatoftheWTO Secretariat indocument WT/TPR/S/9; themainissues
toberaised bythediscussants werecontained indocument WT/TPR/W/12. Copies ofwritten questions
submitted byfourdelegations (theEuropean Union, Hong Kong, Japan andNewZealand) hadbeen
transmitted tothedelegation ofThailand. Iffullreplies could notbeprovided during themeeting,
supplementary written replies should beprovided later.
3. Recalling thatintergovernmental organizations would attend meetings oftheGeneral Council
through decisions taken onthebasisoftheadhocarrangements, theChairman proposed thattheTrade
Policy Review Body invite theFAO, EFTA, IMF, OECD, UNCTAD andtheWorld Bank, which
hadrequested observer status, toitsnextmeeting.Thailand WT/TPR/M/9/Rev.1
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II. OPENING STATEMENT BYTHE REPRESENTATIVE OFTHAILAND
4. Therepresentative ofThailand saidthathiscountry recognized theimportance oftheTrade
PolicyReviewMechanism,asitenabledThailandtoexaminecloselyitsowntradepoliciesandpractices,
aswellasthose ofother WTO members. Thailand believed thatgreater transparency andbetter
understanding ofWTO member trade policies would helplessen thefriction andmisunderstanding
thatexisted intheinternational trading environment.
5. After having experienced double-digit growth from1987to1991, theThaieconomy returned
toamore moderate yetsustainable path, withgrowth averaging around 8percent, overtheperiod
1992-95. Atthestartof1995, itwasforecast thattheThaieconomy would attain an8.8percentgrowth
rate. However, duetonatural calamity, theanticipated growth ratewasrevised downward toaround
8.5percent. Bytheyearend,theinflation ratewasexpected torisemarginally to5.6percent,the
trade deficit wasexpected todecline to6.1percentofGDP, while thecurrent account deficit was
estimated tobearound 6.5percent. Thewidening tradedeficit was,however, more thancompensated
byastrong netcapital inflow, leaving thebalance ofpayments comfortably insurplus; international
reserves continued torise,tooverUS$36 billion, approximately 6.6months ofimports.
6. Since Thailand 'sacceptance ofArticle VIIIoftheIMFArticles ofAgreement, which resulted
incomplete liberalization ofcurrent account transactions, anumber ofliberalization measures hadbeen
implemented. These included freer repatriation ofdividends andproceeds from sales ofstocks by
foreigners, andtheintroduction andexpanded useofnon-resident Bahtaccounts. Theattractiveness
ofThailand 'sfinancial market wasreflected inastrong andsustained capital account surplus.
7. From 1990to1995exports grewatanaverage annual rateof18.8percent,while theaverage
import growth ratewas14.6percent. In1995theexport value exceeded Baht1billion, representing
over1percentofworld trade. Over85percentofexports weremade upofmanufacturing products,
raising theirshare to30percentofGDP. Theservices sector, nevertheless, continued toenjoy the
largest share ofGDPat50percent,while theagricultural sector represented only10percentofGDP.
8. Although economic expansion mayhavebeenremarkable overthepastseveral years, resource
utilization hadbeenhighandThailand hadencountered anumber ofproblems intheprocess, such
asinadequate infrastructure, ashortage ofskilled labour, disparity inincome andenvironmental
degradation. Theadjustment measures toredress these problems werecarefully incorporated intothe
current national economic andsocial development plan,thepriorities being toachieve amore equitable
income distribution, maintenance ofasustainable growth rate,decentralization ofeconomic activity
torural areas, human resource development, environmental conservation andoptimal utilization of
national resources.
9. Thailand hadalsocontinued withanumber ofeconomic reforms, aswellasimplementing trade
andfinancial liberalization policies. TheGovernment wasdetermined tocontinue itsliberalization
efforts, withaviewtoenhancing thecountry 'sefficiency andcompetitiveness ininternational trade.
Inthisrespect Thailand hadbeenactively involved intheUruguay Round negotiations, withtheaim
ofimproving theeffectiveness oftherulesgoverning international trade andbringing about afairand
freertrading environment.
10. SinceitsaccessiontotheWTOon1January1995,Thailandhadimplementednumerousmeasures
incompliance withitsUruguay Round commitments. Inaccordance withtheAgreement onAgriculture,
Thailand hadtariffied 23agricultural products. Administrative procedures concerning theallocation
ofthese respective tariff quotas for1995hadbeencompleted andpublicly announced bytheMinistryWT/TPR/M/9/Rev.1
Page 4Trade Policy Review
ofCommerce. Intheservices sector, Thailand hadsubmitted aschedule ofmarket access covering
95activities andtenmajor sectors. Inaddition, tariff ratesonalmost 4,000 industrial andfisheries
products hadbeenreduced, representing 70percentoftotaltariff lines.
11. Thailand hadcontinued withitsnational tariff reform, begun in1990; thetariff reforms
announced inDecember 1994 would cuttheaverage applied tariff ratefrom about 30percentto
17percentby1997, reducing tariffcategories from39tosix.Since Thailand 'sprevious Trade Policy
Review, products under import licensing havedecreased significantly duetotradeliberalization, with
totalcoverage down from 83items to31items. Theimport surcharge onmotor vehicles hadbeen
removed, andthescope ofexport licensing narrowed from 53to36product groups.
12. Inrecent years, Thailand 'sinvestment régime hadbeenfurther liberalized inlinewiththe
Government 'sefforts toalleviate income disparity. Stronger emphasis wasplaced onindustrial
decentralization toencourage ruraldevelopment, andtocomply withobligations under TRIMS and
theAgreement onSubsidies andCountervailing Measures. Therevised investment promotion policy,
effective since 1993, incorporated twomajor changes: theremoval ofexport conditions attached to
anumber ofactivities aswellaslocalcontent requirements oneightproducts; andadditional incentives
toencourage newinvestment andfactory relocation inregional areas. Thailand wasdivided intothree
investment zones. Zone 1,which comprised Bangkok andfiveneighbouring provinces, received the
leastincentives, whereas themostremote area, Zone 3,wasgranted themaximum incentives. Joint
venture criteria forprojects applying forinvestment promotion hadbeenprogressively relaxed, by
removing theexport requirement previously imposed onprojects inZone 3.
13. Onintellectual property rights (IPR), theGovernment hadfocused itsattention onboth
enforcement andpromotional aspects. Significant achievements were theseries ofenactments and
amendments ofintellectual-property-related laws: theTrademarks Actof1991, thePatent Act(No.2)
of1992 andtheCopyright Actof1994. Thiswascomplemented bythemove tosetupaspecialized
court onintellectual property andinternational trade; thedraftlawhadpassed thefirstreading by
Parliament andwasscheduled forthesecond andthirdreadings inMarch andApril 1996, respectively.
14. Inthefinancial sector, liberalization hadledtomodernization ofthedomestic financial system.
TheFinancialSystemMasterPlan,withtheobjectivesofenhancingefficiency,strengtheningthesolvency
andquality oftheportfolios offinancial institutions, channelling credit andfinancial services toregional
andprovincial areas, increasing domestic savings anddeveloping Thailand intoaregional financial
centre, wasbeing implemented andresults could already beseen. Examples included thelaunching
in1993 oftheBangkok International Banking Facility (BIBF), Thailand 'soffshore banking facility,
andthesetting upoftheExport-Import Bank inFebruary 1994 toreplace theoperation oftheexport
refinancing facility formerly administered bytheBank ofThailand.
15. Asafounding member ofASEAN, Thailand hadplayed aninstrumental rôleinlaunching the
ASEAN FreeTrade Area(AFTA) in1993. Theintent ofAFTA wastoreduce intra-regional tariffs
onallmanufactured items, including capital goods andprocessed agricultural products, to0-5percent,
andtoremove non-tariff barriers bytheyear2003, advancing thedeadline from2008. Attherecent
summit meeting, ASEAN members hadmade further progress byextending preferential trade
arrangements toinclude trade inservices, unprocessed agricultural products andgreater cooperation
onIPR.WiththeentryinJuly1995ofVietNamasthenewest member, ASEAN anticipated expanding
itsfuture membership toinclude allSouth-East Asian countries.
16. Inpromoting economic dialogue through theAPEC framework, Thailand 'spolicies towards
APEC would bemade compatible withcommitments under theWTO. Thailand stressed theimportanceThailand WT/TPR/M/9/Rev.1
Page 5
ofvoluntary economic liberalization under theconcept ofopen regionalism. Attherecent summit
inOsaka, APEC leaders announced initial action plans forliberalization andthefacilitation oftrade
andinvestment. Forexample, Thailand hadannounced thatitwould advance implementation oftariff
reductions agreed intheUruguay Round commitments, improve specific commitments infinancial
services, andbring forward implementation oftheTRIPS Agreement.
17. RegardingThailand'sprospectiveliberalizationprogrammes,theGovernmentplannedtoadvance
theimplementation dateofcommitments infinancial services. Forexample, anumber offoreign banks
withBIBF licences would begranted fullbranch status in1996, inlieuof1997, aspledged under the
WTO.Intheservicessector,theGovernmentplannedtoliberalizeandderegulatethetelecommunication
sector by1998. Thiswould bedonethrough thereform oftelecommunications lawsandregulations,
inorder tofacilitate andencourage agreater rôlefortheprivate sector.
18. Theinsurance sector would alsobeextensively liberalized, withthenumber oflicences for
newdomesticinsurancecompaniestobeexpandedasthefirststage.Inthesecondstage,theGovernment
would allow foreign companies toincrease theirshareholding ininsurance firms, from thepresent
25percentlimitupto49percent. Inthefinalstage, theinsurance sector would befullyliberalized
toforeign investors. TheGovernment wasalsorevising theAlien Business Lawwhich, ineffect, would
further liberalize thedomestic services sector, particularly intheareaofprofessional practices.
19. Under theUruguay Round Agreement onCustoms Valuation, Thailand andother developing
countries wereallowed fiveyears forfullconformity. Desiring tobring forward itsimplementation
oftheAgreement, Thailand would endeavour tobring itscustoms valuation practices intoconformity
withtheAgreement by1997.
20. Before concluding, therepresentative saidhewanted topoint outanumber ofissues whose
factual information differed fromthatoftheSecretariat 's.Withregard totheobservation thatthelatest
publication oftariff rates wasonlyuptotheyear1992, thereby raising concern overtheissue of
transparency, hewished toclarify thatforevery tariffmodification theMinistry ofFinance wasobligated
bylawtomake apublic announcement, followed bypublication intheRoyal Gazette. Alltariff
modifications were systematically compiled andcould bereferred toattheMinistry ofFinance.
21. Concerning tariffbindings inagriculture, thebindings byThailand fullycovered allagricultural
products. Thenon-availability ofinformation onexport subsidies could beexplained bythefactthat
Thailand maintained noexport subsidies atthetimeoftheSecretariat report, except intheform of
thePacking Credit. Thelatter wasfullyconsistent, intheory andpractice, withtheprovision under
theAgreement onAgriculture which allowed fortheuseofexport credits applied inconformity with
theinternationally agreed disciplines. With regard totheSecretariat statement thatallimporters in
Thailand mustberegistered withtheMinistry ofCommerce, therewasnosuchrequirement. Importers
needonlytoapply forimport licensing forproducts subject toimport restrictions.
22. Withreference totheobservations made bytheSecretariat onThailand 'sinvestment incentive
schemes, transparency hadalways beenanimportant feature initsinvestment promotion policy, as
evident bytherelevant details contained inthevarious publications which werepublicly available and
hadbeenmade available totheSecretariat. Itshould benoted thatthecriteria usedingranting investment
incentives, aswellasthelistofeligible activities, werespelled outintheSecretariat report. Investment
projects thatmetthesetcriteria would begranted incentives accordingly. Moreover, dataontariff
concessions wereavailable andhadbeennotified totheWTO. Inthiscontext therepresentative pointed
outthattheBoardofInvestment,whichsetinvestmentpromotionpolicies,wasatripartitebodyconsisting
ofrepresentatives from thepublic andprivate sectors aswellasfrom academia.WT/TPR/M/9/Rev.1
Page 6Trade Policy Review
23. Ongovernment procurement, there wasnocentralized agency inThailand. Government
purchases wereusually made through tenders issued bytheMinistry oragency concerned. Inprinciple
andinpractice, procurement procedures wereobserved inatransparent andconsistent manner. Future
government policy alsocalled forareform ofprocurement regulations. Inthisrespect, technical
assistance fromtheWTO Secretariat would greatly facilitate Thailand 'sprocurement reform process.
24. Lastly, there remained other factual errors intheSecretariat Report, andtherepresentative
requested thataseparate addendum containing alistofcorrections becirculated bytheSecretariat to
themembers.
25. Therepresentative oftheSecretariat, asking toreply tothestatement oftherepresentative of
Thailand alleging factual errors intheSecretariat report, saidthatanyremaining errors wereofgreat
concern totheSecretariat, andthanked theThairepresentative forhisclarifications. AllSecretariat
reports weresubmitted tothecountry under review forfactual verification, andthatthishadbeendone
inthecaseofThailand. TheSecretariat report therefore reflected thecomments made byThailand,
together withtheinformation available inWTO documents, andonthisbasistheSecretariat stood by
thestatements made initsreport. Anynecessary changes would, however, beincorporated intothe
finalpublished report.Thailand WT/TPR/M/9/Rev.1
Page 7
III. STATEMENT BYTHE FIRST DISCUSSANT
26. Thefirstdiscussant(AmbassadorWadeArmstrong)saidthatThailand'sveryimpressiveeconomic
progress demonstrated thevalue ofpolicies which, intheirgeneral thrust, wereintended tobeoutward
looking, welcoming offoreign investment andoriented toward theprogressive removal ofbarriers
totrade andtoward thedevelopment ofefficiency, competitiveness andtransparency. HowThailand
wasmeeting those objectives would beassessed inthecourse ofthetrade policy review.
27. Thailand hadcontributed tothemultilateral trading system through therôleitplayed inthe
Uruguay Round. Thishadledtovaluable progress towards liberalization, forexample inthearea
oftariff binding.
28. ConcerningThailand'seconomicsituationandpolicies,thediscussantstatedthattradingpartners
would probably beinterested intheoutlook fordomestically generated savings ratesandhowthey
would contribute toongoing investment andgrowth. Secondly, there would beinterest inwhether
increased consumer spending waslikely togenerate newimport opportunities across abroader range
oftariff lines. Noting thatthecurrent account deficit hadaveraged about 5.5percentofGDP over
theprevious threeyears, aswellasThailand 'sexpectation forthecurrent account tobeinsurplus after
theyear2000, thediscussant saiditwasnotclear, strong capital flows notwithstanding, whether there
wereanyadverse implications inthecurrent account situation forthesetting oftrade policy andthe
paceatwhich liberalization waspursued.
29. Thesteps taken bytheGovernment toimprove productivity were commendable, andhad
obviously produced positive results. Thediscussant wasintrigued, however, astowhyprice controls
needed tobemaintained onthreeitems (pork, refined sugar andcooking gas),andwhatthelonger-term
outlook was. TheSecretariat report alsoraised questions overtheextent towhich Thailand 'strade
policy lawsandactions weremarked bydiscretion rather thanpredictability. Areas where thereport
identified thecontinued useof"flexible" approaches included: thesystem oftaxconcessions andduty
drawbacks associated withexport incentives; import licensing requirements, where theprotection of
domestic industry remained themostcommon justification, although thescope ofsuchmeasures had
decreased significantly; anduseofthe"check price" system incustoms valuation.
30. Onasectoral basis, thediscussant saiditwould beinteresting toknow where theThai
Government foresaw thebestfuture growth prospects inemployment, andwhether itenvisaged external
competition extending toallsectors orexcluding sensitive areas. Observing thatThailand maintained
atariffprofile which appeared tobehigher thantheASEAN average, hestated thattotheextent Thailand
could narrow anytariffdifferences withother ASEAN countries itwould reduce thepotential fortrade
andinvestment diversion.
31. Inagriculture, which accounted for60percentofemployment and11percentofGDP, as
comparedwith30percentforthemanufacturingsector,thetendencyforincreasedgovernmentassistance
bywayofsoftloansandinputsubsidies wasamatter forcareful scrutiny, given theunfortunate outcomes
inmany countries where Governments hadattempted toshelter theagricultural sector fromtherealities
ofthemarketplace. Thailand would presumably needtomake surepolicies towards basic agriculture
didnotundermine competitiveness infoodprocessing andother agro-industries.
32. NotingtheexternalorientationofmuchofThailand'sservicessector,thediscussantsaidprospects
forliberalization would clearly beafocalpoint ofinterest. Particularly noteworthy wereindications
thatThailand wasconsidering opening upaccounting, engineering andconsultancy services togreater
foreign participation. Efforts currently underway toliberalize Thailand 'stelecommunications servicesWT/TPR/M/9/Rev.1
Page 8Trade Policy Review
by1998prepared Thailand formaking avaluable contribution tothesuccessful conclusion ofthecurrent
WTO negotiations inthissector. Anearly move tojointhenegotiations asafullparticipant could
alsoreinforce Thailand 'sdomestic efforts atliberalization. Similarly, theintention toopenuptheThai
shipping sector togreater foreign involvement alsooffered interesting prospects.
33. Thailand 'sposition among theworld 'stop20traders inservices suggested ithadmuch togain
fromtheliberalization ofinternational services trade andfromtheincorporation ofthesector intothe
multilateral disciplines oftheGATS. Asacontribution towards thisliberalization, Thailand could
reconsider itscurrently suspended m.f.n. exemption infinancial services, following theexpiration of
thepresent interim agreement. Another important areawascross-border services, where Thailand
generally hadyettomake binding commitments initsGATS schedule.
34. ThediscussantobservedthatinwardforeigninvestmenthadobviouslybenefitedfromThailand's
outward policy orientation. Itwasvaluable thatThailand wasworking torationalize andclarify its
regulations inthearea. Transparency wasalsoimportant withregard tofuture intentions, including
anyplans forprogressive removal, within thetransition period, oftheTRIMS listed inThailand 's
notification totheWTO.
35. Thailand 'sinvolvement ininternational trade wasmarked bythebreadth andbalance ofits
principaltradingrelationships.Thailandalsohadextensiveinstitutionallinksandwasaleaderinregional
cooperation through theASEAN FreeTrade AreaandinAPEC. Theimplications forThailand 'strade
policy ofitsparticipation intheASEAN Common External Preferential Tariff (CEPT) wereofbroad
interest.Thailand WT/TPR/M/9/Rev.1
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IV. STATEMENT BYTHE SECOND DISCUSSANT
36. Thesecond discussant (Mr.Jorge Riaboi) saidthatthepredominant feature ofThailand 'strade
policy wasthat,despite different views orreservations thatmight beheldabout particular modalities
ontheimplementation ofsomecommitments, themeasures taken orbeing elaborated bytheGovernment
were clearly aimed atmeeting alltheobligations entered intounder themultilateral trading system.
37. Thailand 'spolicies appeared toreflect apotential conflict between import substitution andpolicy
reforms topromote exports, attract investment, etc.Inaddition, therewasanotable degree ofprudence
inadministering theshiftfrom theformer tothelatter. Thisduality wascharacteristic ofasociety
inwhich growth andadjustment hadnotafforded equal opportunities foraccess anddevelopment to
thepopulation asawhole, especially tosectors depending ontraditional production suchasagriculture.
Therisksanduncertainties inherent within policy reforms might explain thegradual, andoccasionally
restricted, approach adopted bytheThaiGovernment inundertaking andimplementing itscommitments
under theUruguay Round.
38. When considering thetariff concessions made byThailand, itshould beborne inmind that
itwasnotpossible within theWTO framework toresolve either theargument overthemethods deemed
eligible forquota administration under theminimum access formula northeargument overthemethods
toensure thatthese measures areconsistent withGATT 1994 provisions. Taking intoaccount that
Thailand hadchosen tousetenders foradministering itsTRQs, itmustberecognized thatthiswas,
among thesystems discussed within theWTO framework, themostcompatible wayofhandling import
quotas forentities involved inState trading. Inregard toabove-quota imports oftariffied products,
itwasimportant tostress thatactual applied ratesinThailand werewellbelow thenominal ratesagreed
under theUruguay Round.
39. Twofeatures thattheGovernment intended tochange andwhich atpresent werenotconsistent
ormight notbeconsistent withWTO rulesweretheideathatmarket access possibilities should only
beopened uponcethedomestic supply ofparticular products wasexhausted andtheconcept thatthese
were "necessary goods" suchasmedical equipment. Thediscussant alsostated thatexport credits,
intheory, should beincluded within thedefinition ofexport subsidies. Thescope, nature andreal
impact ofThailand 'sinvestment incentives might alsobeassessed inthelightofsuchWTO measures
astheAgreement onSubsidies andCountervailing Measures.
40. Intheareaofstandards andnon-tariff measures, itwould behelpful ifThailand could confirm
thatitsdomestic rulesandpractices wererelated tothose oftheInternational Office ofEpizootics and
theSecretariat oftheInternational Convention onPlant Protection.
41. Inservices, Thailand hadmade specific commitments under theGATS fortenimportant sectors
but,ingeneral, hadadopted acautious andrestrictive attitude towards market access andownership
rights forsuchservice sectors asbanking, insurance, telecommunications andtransport. Thediscussant
noted thatgradual deregulation andincreased international participation inthese sectors could provide
animpetus fortheGovernment 'sobjective ofestablishing Thailand asamajor financial andtransport
centre intheAsiaregion.
42. Theeconomic signals provided byThailand 'stradepolicies invited reflection ontheconsistency
between thekeyeconomic instruments chosen tocarry outtrade policies andtheobjectives ofthe
country 'seconomic model, especially theintention tobroaden theinternational competitiveness of
traditional sectors andtoincorporate newsectors fortheproduction ofgoods andservices. There
waslittledoubt thattheformulation ofThailand 'strade policies could nothelpbutbeinfluenced byWT/TPR/M/9/Rev.1
Page 10Trade Policy Review
political andcultural factors, thecontinuing current account deficit andthelegitimate frustration felt
byThailand andother Cairns countries thatitdidnotobtain important concessions during theUruguay
Round from major members ofthemultilateral trading system.
43. Inconclusion, thediscussant questioned whether amore neutral system ofresource allocation,
together withamorerapidrhythm ofadjustment, should notbesought soastomeetThailand 'sobjective
ofenhancing penetration inglobal markets.Thailand WT/TPR/M/9/Rev.1
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V. STATEMENTS BYMEMBERS
44. Members oftheTPRB thanked theThairepresentative andthediscussants fortheiropening
statements, andthanked Thailand andtheSecretariat fortheirrespective reports. Members commended
Thailand foritsrapid economic growth andcontinued liberalization measures, butnoted that
infrastructural weaknesses andlabour shortages remained keyconstraints. FDI-related ownership
limitations werequestioned, andfurther liberalization urged. Thailand 'srecent deregulatory measures
intelecommunications werewelcomed, andmany delegations expressed thehopethatThailand would
assume fullparticipation intheongoing WTO telecommunications andmaritime transport negotiations.
45. Therepresentative ofMalaysia (speaking onbehalf ofASEAN) saidthatoneofthebenefits
oftheUruguay Round forThailand wasinmarket access andimproved rules onagriculture, and
therefore thefaithful implementation oftheresults bytrading partners wasimportant forThailand 's
trade. ForASEAN asawhole, therecent ASEAN Summit reaffirmed theregion 'scommitment to
liberalism andopenregionalism.
46. Therepresentative noted Thailand 'scommitment toreduce itsaverage tariff to17percent
by1997, andexpected thattheaverage would fallevenlower inthefuture. Further liberalization of
thefinancial, securities, insurance andtelecommunications sectors wasalsoforeseen andwelcomed.
WTO-consistent legislation onanti-dumping andcountervailing measures, although delayed, would
soonbepassed. Recent intellectual property rights legislation wasapositive step; however, ASEAN
regretted thepressure placed onThailand inthisareabysome trading partners. Therepresentative
observed thatThailand, anddeveloping countries ingeneral, would require technical assistance inregard
tospecific aspects ofUruguay Round implementation. Headded thattheeffects ofexchange rate
fluctuations wereverymuch atrade-related issue, anddeserved tobecarefully studied bytheWTO.
47. TherepresentativeofAustraliacommendedthepositivedevelopmentsinThailand'stradepolicies,
butnoted thatmore needed tobeachieved, especially anacceleration ofthepaceofliberalization.
Specific concerns werenoted inAustralia 'swritten questions. Among thepositive developments were
continuing tariffreform, reduction ofimport licensing, thereplacement ofthesystem ofbusiness taxes
withaVATandThailand'scommitmentagainstnewdiscriminatorymeasuresconcerningforeignfinancial
institutions. Therepresentative alsowelcomed Thailand 'scommitment toASEAN 'spolicy ofopen
regionalism.
48. Therepresentative ofCanada stated thatThailand 'sprudent monetary policy should facilitate
continued tradeliberalization, andthatregional development policies wereworking well. Infrastructural
constraints werealsobeing remedied. Therepresentative observed, however, thatThailand hadnot
mettheUruguay Round target ofaone-third reduction inbound industrial tariffs, andthatcertain
agricultural products appeared toremain unbound. TheAlien Business Law, landownership limits
andotherrestrictions remained important constraints onFDI,andforeign access inthefinancial services
sector wastoolimited. Additional effort wasurged toreduce thetimeperiod required forobtaining
import licences. Concerning IPR,therepresentative hoped thatthenewlegislation would improve
enforcement.
49. TherepresentativeofHongKongcommendedThailand'scommitmenttothemultilateraltrading
system, andurged thattheprotection ofspecific industries beresisted asstructural changes progressed.
Specific concerns wereexpressed overremaining tariff peaks intextiles, withtheireffect ofshielding
theindustry from competition, andFDI-related restrictions oncommercial presence andownership
limits.WT/TPR/M/9/Rev.1
Page 12Trade Policy Review
50. Therepresentative oftheUnited States praised Thailand 'sactive Uruguay Round participation
andpaceofimplementation. Concern wasexpressed, however, overremaining tariffpeaks, especially
those inproducts where Thailand wasinternationally competitive. Heasked whether ASEAN would
notify AFTA tariff reductions under Article XXIV, rather thanunder theEnabling Clause. The
representative observed thatStatetrading remained extensive, andnoted thecontinued useofimport
surcharges. Heurged thatFDIownership limitations beremoved.
51. Therepresentative saidthatThailand 'scommitments intheservices area,especially financial
services, needed improvement, andnoted theespecially restrictive shareholding limits ininsurance
andbanking.Detailswererequestedonprivatizationinbasictelecommunications,aswellastheexpected
completion dateforIPRlegislation. Thewritten questions submitted onThailand 'slabour policies
were alsonoted.
52. Therepresentative oftheEuropean Union stated thatThailand wasaremarkable example of
thebenefits ofoutward-looking policies, andcommended itsprudent macroeconomic management.
Thailand wasgradually moving toward amore opentrade régime, hesaid,butprogress todatewas
mixed. Tariff peaks andtariff escalation remained incertain sectors, andliberalization hadoccurred
onaselective basis, excluding mostrecently, forexample, theautomotive sector. Therepresentative,
noting thatinmany casesindustrial tariffbindings wereabove currently applied rates, saidthatThailand
could havedonemore intheUruguay Round. Healsourged thattariff concessions andexemptions
beremoved.
53. Therepresentative saidthatThailand 'simport prohibitions ongranite andmarble werenolonger
justified andshould beremoved. Customs valuation continued tobeaproblem, withapplication of
the"check price" system described asarbitrary; fullimplementation oftheUruguay Round measures
oncustoms valuation wasimportant. Standards-related requirements imposed highcostsonfoodand
pharmaceuticalimports.Governmentprocurementregulationswerenotalwaystransparent;membership
intheAgreement onGovernment Procurement wasurged.
54. Thailand 'sinvestment policies hadbeenliberalized, butequity andlandownership restrictions
remained. Theoccupational restrictions under theAlien Business Lawwerenotonanm.f.n. basis,
andtherepresentative urged thattherevised Lawextend toothers thebenefits currently granted only
totheUnited States. Regarding IPR,concern wasexpressed overpipeline protection, aswellasthe
enforcement oftrademarks andcopyrights. Inservices trade, further liberalization wasurged.
55. Therepresentative ofJapan observed thatThailand 'sgoodeconomic performance hadpermitted
liberalization measures toproceed. Heexpressed concern, however, overFDIownership restrictions
andtheuseofpreferences ingovernment procurement forThaiproducts andState-trading enterprises.
Thailand wasurged toderegulate oreliminate these practices, andtofurther increase transparency.
Therepresentative stated thatJapan would alsopaycareful attention toThailand 'simplementation of
itsUruguay Round obligations, including theelimination ofremaining localcontent restrictions, and
IPRreforms.
56. Therepresentative ofHungary stated thatThailand 'shighgrowth showed thatanopentrade
environmentwasavitalfactorforsuccess.Althoughcommendingtheliberalizationwhichhadoccurred,
therepresentative saidthattransparency should befurther improved, forexample bypublishing acurrent
consolidated tariffschedule. Thailand 'scommitment tofurther liberalization, including intheservices
sector, waswelcomed.Thailand WT/TPR/M/9/Rev.1
Page 13
57. Therepresentative ofKorea praised Thailand 'stariffreductions, butnoted thattheautomotive
sector hadbeenexcluded from themost recent phase ofliberalization. Heexpressed concern over
Thailand 'scustoms valuation practices, andasked about theprogress ofthegovernment committee
examining theissue. Healsoexpressed concern about thepreference margins ingovernment
procurement, andwasoftheviewthatThailand 'srequirements under theBangkok International Banking
Facility (BIBF) forpaid-up capital were toostrict.
58. Therepresentative ofIndiaobserved thatThailand 'sexport-oriented growth policy hadyielded
gooddividends, andthataconservative monetary policy andstrictfiscal discipline werethecornerstone
ofThailand 'ssuccess. Infrastructure constraints andtheshortage ofskilled labour, however, required
attention. Intheshort term, Thailand could draw upon theskilled labour available inIndia, thereby
contributing totheprogress oftheregion.WT/TPR/M/9/Rev.1
Page 14Trade Policy Review
VI. REPLIESBYTHEREPRESENTATIVEOFTHAILANDANDADDITIONALCOMME NTS
59. TheChairman invited therepresentative ofThailand tofocus hisresponse onthreemainthemes:
(i)theeconomic environment; (ii)thetrade régime; and(iii)sectoral policies.2
Economic environment
60. Therepresentative ofThailand saidthehighThaidomestic savings ratewasexpected toimprove
further overthemedium term, assisted bysuchfactors astheGovernment 'splanned establishment
afterOctober 1996 ofacentral provident fund. Most ofThailand 'scurrent account deficit hadbeen
induced byprivate investment forthepurpose ofexpanding andupgrading productive capacity; they
were notthought aconstraint tofurther liberalization. Growth prospects inemployment were seen
asespecially strong inmanufacturing andexport-oriented sectors.
61. Thailand 'slimits onforeign equity participation were notinconsistent withanyofitsWTO
obligations, andtherewasnosector inwhich foreign participation wasprohibited. Thailand wasalso
intheprocess ofrevising legislation tofurther liberalize theinvestment régime; theinsurance sector,
forexamplemightbeopenedtofullforeignparticipation.Currently,therewerenoownershiplimitations
onmanufacturing projects locating intheZone 3investment region.
62. Infinancial services, Thailand considered itsschedule fairinthelightofitslevelofdevelopment
andthelevelofliberalization bytrading partners atthesamelevelofdevelopment. Inabout fouryears,
theWTO Council forTrade inServices would review Thailand 'sm.f.n. exemption concerning the
Treaty ofAmity between Thailand andtheUnited States. Regarding theminimum levelofpaid-up
capital under theBIBF, thisrequirement needed tobeviewed from bothaprudential andaliquidity
management perspective, including BISstandards.
63. Thailand was considering participating intheWTO Negotiating Group onBasic
Telecommunications asafullmember. Withrespect totheNegotiating Group onMaritime Transport
Services, Thailand wasalready afullmember andtookpartintheregional caucus under thatnegotiating
group.
64. Theremaining localcontent requirements, including those imposed ontheautomotive sector,
weredeemed crucial tothecountry 'seconomic development; nonetheless, theyweretobeeliminated
bytheendof1999. Thailand didnotmaintain anyTRIMS other thanthelocalcontent requirements
which were tobephased out. Thaiprojects andforeign projects meeting thejointventure criteria
wereentitled tothesame investment incentives. Restrictions onlandownership wereneither unique
toThailand norinconsistent withWTO obligations.
65. ASEAN hadnotified AFTA under theEnabling Clause, andintended tomaintain itsrights
under thisClause. AttheASEAN summit inDecember 1995, members agreed toexpand AFTA
coverage toinclude agricultural products, andbrought forward thetarget dateforcompleting AFTA
to2003 from 2008. NTB andquota restrictions would beremoved starting January 1996. Further
AFTA details were available from theThaiMission totheWTO.
2Answers tosome ofthewritten questions submitted toThailand arealsogiven intheresponses bytheThai
representative, asindicated insubsequent footnotes.Thailand WT/TPR/M/9/Rev.1
Page 15
66. TheChairman asked whether therewereanylimits imposed byThailand onprofit remittances
byforeign-owned entities, andtheninvited comments from themeeting.
67. Thefirstdiscussant saidhewaspleased thatThailand 'scurrent account deficit wasnotseen
asaconstraint tofurther liberalization, butexpressed concern fortheuseofinput subsidies andrelated
measures. Hewelcomed theGovernment 'sstatement onefforts toreview theAlien Business Law,
andurged thatownership restrictions berelaxed. Hehoped Thailand would participate fullyinthe
ongoing telecommunications negotiations.
68. Thesecond discussant noted thatvolatility inacountry 'sbalance ofpayments could be
distortionaryintermsofitseconomicmodel.RegardingThailand'sAmityTreatywiththeUnitedStates,
heasked howtheTreaty related toArticle IIoftheGeneral Agreement. Oncountertrade, heobserved
thatpractical problems existed, interms ofoverall WTO rights andobligations, asaresult ofthenon-
m.f.n nature ofsuchcontracts. Concerning Thailand 'sinvestment incentives forsixlargely sectoral
priority areas, thediscussant noted possible concerns under Article VIIIprovisions.
69. Therepresentative ofJapan welcomed thepossibility ofThailand becoming afullparticipant
intheWTO telecommunications negotiations. Healsoasked whether aschedule hadbeenestablished
forthephasing-out ofThailand 'sremaining local-content requirements.
70. Therepresentative oftheUnited States, observing thatThailand 'sgoalofbecoming aregional
financial centre might suggest revising thecurrent equity limitations, urged thatsuchrevisions bemade
intimefortherenegotiation oftheWTO Financial Services Agreement scheduled forend-1997.
71. Therepresentative oftheEuropean Union saidhewould welcome details ontheAlien Business
Lawrevisions when available. OnThailand 'sregional development policies, heasked whether any
policies other thaninvestment incentives wereinplace. Regarding balance-of-payment fluctuations,
therepresentative stated thataliberal investment régime wasthebestdefence. Hehoped thatany
measures taken inaregional context would remain consistent withmultilateralism.
72. Therepresentative ofNewZealand asked whether aschedule existed forrevisions oftheAlien
Business Law. Expressing appreciation thatallremaining TRIMS were tobeeliminated, the
representative asked whether details were available onthescheduling ofthephase-out.
73. Therepresentative ofThailand replied that,since 1991, norestrictions hadbeenplaced on
remittances, subject toa10percentwithholding tax. Oncountertrade measures, allgovernment
purchases above thethreshold level were examined forpossible countertrade "leverage," butno
requirement hadactually beenimposed todate. Oncorporate taxincentives, Thailand wasallowed
aneight-year phase-out period under theUruguay Round agreements, andwasmoving progressively
towards removing theincentives. Regarding TRIMS, therepresentative saidthatallremaining measures
would bephased-out in1999, andthatnoschedule existed foraprogressive phase-out. Inrespect
ofAPEC, Thailand would accelerate some scheduled Uruguay Round reductions onanm.f.n. basis
aspartofits"down payment" in1996.
Trade régime
74. Therepresentative ofThailand saidthattheproblem oftariff peaks andtariff escalation was
common among member countries, andthere remained nodefinitive answer. Automobiles werethe
onlyimported itemnotcomplying withthenewtariff structure; nonetheless, thetariff peakinthe
sector hadalready fallen from 200to80percent. Therepresentative saidthatThailand consideredWT/TPR/M/9/Rev.1
Page 16Trade Policy Review
itstariff reductions under theUruguay Round asbalanced compared tothose oftrading partners.
Subsequent tariff reductions, however, would beonaunilateral basis.
75. Thailand wasintheprocess ofbringing customs evaluation intoconformity withtheAgreement
onCustoms Valuation by1997, twoyears ahead ofitsUruguay Round commitment. Concerning
conditional import prohibitions andnon-automatic licensing, Thailand hadnotified thesemeasures under
therelevant notification procedure, withthejustification ofGATT Article XVIII asadeveloping country
andGATT Article XXtoprotect health orpublic morals.
76. Government procurement procedures werecurrently being reviewed tostreamline procedures
andtobeinaccordance withinternational practices. Membership intheAgreement onGovernment
Procurement would beconsidered induecourse. Thailand 'scurrent countertrade policy wasintended
tosupplement normal trade practice, andwasnotamajor trade policy. Countertrade proposals did
notconstitute amajor criteria forselecting goods andservices providers.
77. ThedraftbillsoftheBusiness Competition ActandthePriceStabilisation ofGoods andServices
Actmight beputintoforce bytheendof1996.3According tothedraftbilloftheBusiness Competition
Act,pricefixing,cartels,businessboycotts,outputrestrictions,marketallocationsandexclusivedealings
would beprohibited.
78. Thereason Thailand hadnotified onlythree ofits22State-trading enterprises totheWTO
wasthatonlythese enterprises were granted privileges regarding imports orexports; thefunctions
oftheremaining enterprises were outside thescope ofGATT Article XVII.2Concerning import
surcharges, therepresentative saidthattheBoard ofInvestment nolonger imposed surcharges tooffset
dumping,andthatallanti-dumpingactionswerecurrentlyundertakenaccordingtotherelevantCommerce
Department Notification, which hadbeenreviewed under theWTO inDecember 1995.2
79. Thefirstdiscussant welcomed Thailand 'splanned conformity, twoyears ahead oftheUruguay
Round deadline, withtheAgreement onCustoms Valuation. Regarding tariffs, hesaidthatthe
publication ofthefulltariff schedule onaregular basis wasimportant.
80. Thesecond discussant observed thatinformation oncompetition policy hadalready been
introduced intotheSecretariat reports, andthatGATT Article XVIII, asdiscussed inthecontext of
current account-related measures, wasoneoftheWTO 'smost difficult areas. GATT Article XVII
issues were alsoproblematic, andother WTO members hadalsoerred inthisarea.
81. Therepresentative ofJapan asked forclarification ontheuseofpreferences ingovernment
procurement.
82. Therepresentative ofThailand replied thatThailand hadnoplans toremove thegranting of
a10percentmargin ofpreference ingovernment procurement toproducts meeting Thaidomestic
standards.
83. Therepresentative ofAustralia requested additional details ofAFTA liberalization, notably
anyplans toreduce thedifferential between m.f.n. andAFTA rates, andurged thatThailand publish
anapplied ratetariff schedule, including alisting ofUruguay Round-related changes. Sheasked if
Thailand intended toreduce automobile tariffs tothesix-rate structure outlined inthecurrent tariff
3Response towritten question.Thailand WT/TPR/M/9/Rev.1
Page 17
reforms. Therepresentative alsoasked whether thetariffreforms reduced tariffescalation, andwhether
Thailand hadaplanforphasing outtheexcise taxexemption currently granted toautomobiles meeting
localcontent requirements.
84. TherepresentativeoftheEuropeanUnionsaidthatThailand'sautomotivesectorwasanexample
ofselective liberalization, andasked howlonginfant industry protection would berequired forsuch
products asgranite andmarble. Healsoasked whatthecurrent AFTA rules oforigin were.
85. Therepresentative ofThailand replied thattheprohibition onmarble imports wascurrently
under review. AFTA rules oforigin weregenerally based oncumulation; rulesoforigin regarding
textiles were based oneither substantial transformation orcumulation. Regarding APEC, the
representative saidhehoped thatliberalization would evolve onanm.f.n. basis.
86. Therepresentative oftheUnited States asked forclarification ofwhether ASEAN intended
tonotify AFTA under GATT Article XXIV.
87. Therepresentative ofThailand replied thattherewasnointention byASEAN tonotify AFTA
under GATT Article XXIV.
88. Therepresentative oftheUnited States strongly suggested thatAFTA should benotified under
theGATT Article.
89. Therepresentative ofThailand saidthatthelocal content exemption forexcise taxes would
beeliminated in1999.
Sectoral policies
90. Therepresentative ofThailand stated thatThailand hadbound allitsagricultural tariffs. Perhaps
therewasaquestion ofclassification, however, asThailand regarded certain unbound items asfishery
products.
91. Onthequestion ofconsistency between theTRIPS Agreement andThailand 'splanned eight-year
transitional period formodifying theIndustrial Estate Authority ofThailand Act,therepresentative
saidthattheeight-year period wasactually inresponse tothetimeperiod permitted under theAgreement
onSubsidies andCountervailing Measures.4
92. Asadeveloping country, Thailand hadanobligation under theTRIPS Agreement toenact the
Protection ofPlant Varieties Billwithin tenyears aftertheWTO Agreement entered intoforce. It
wastooearly togivedetails oftheBill,asitwascurrently inthedrafting stage. TheBillwould,
however, beconsistent withtheTRIPS Agreement, andwould beeffective afterthegrace period.3
93. Fordetailsofconditionsregardingthecompulsorylicensingofpharmaceuticalproducts,members
were referred toTable AIV.15 oftheSecretariat Report.3
94. Thefirstdiscussant, observing thatextensive IPR-related legislative changes byThailand were
required, urged thatThailand concretely specify theschedules forimplementation, aswellasconsider
thebenefits forThailand ofearly liberalization.
4Response towritten questions.WT/TPR/M/9/Rev.1
Page 18Trade Policy Review
95. Therepresentative ofCanada saidthatnotwithstanding theThairepresentative 'searlier reply
certain agricultural tariffs nonetheless appeared toremain unbound, andrequested clarification.
96. Therepresentative ofThailand replied thatallagricultural tariffs, including those under the
heading "other items," were indeed bound, except forthepossibility ofnewitems which might be
introduced under thatheading inthefuture. Thesecond discussant noted thatchanges inconsumption
patterns could notbeprecluded, indicating thattariffs inalllinesshould becompletely bound inorder
toavoid future uncertainty onrates.
97. Therepresentative ofJapan enquired whether theIndustrial Estate Authority ofThailand Act
hadanyconnection withtheTRIPS Agreement.
98. TherepresentativeofThailandrepliedthattheActhadnoconnectionwiththeTRIPSAgreement.Thailand WT/TPR/M/9/Rev.1
Page 19
VII. CONCLUDING REMARKS BYTHE CHAIRMAN
99. Thismeeting oftheTrade Policy Review Body hasnowcompleted thesecond review of
Thailand 'strade policies andpractices. These remarks, which aremade onmyownresponsibility,
summarize themain points ofthediscussion. They arenotintended tosubstitute forthecollective
evaluation andappreciation ofThailand 'strade policies andpractices. Details ofthediscussion will
bereflected intheminutes ofthemeeting.
100. Thediscussion developed under three main themes: (i)theeconomic environment; (ii)the
trade régime; and(iii)sectoral policies.
(i) Theeconomic environment
101. Thailand 'srapid economic growth wasthebackground toalldiscussions. Members remarked
onthepositive contribution prudent macroeconomic policies andahighdomestic savings ratehadmade
tothegrowth ofinvestment andthefacilitation oftrade liberalization. Inflation, although recently
rising, hadbeenkeptatlowlevels; thecomplex system ofbusiness taxes hadbeenreplaced bya
value-added tax,andinfrastructural constraints were gradually being remedied.
102. Thailand 'sconsistently higheconomic growth rates since theprevious review were also
recognized asdirectly linked toitsoutward-oriented policies. Theshifttoamore neutral incentive
structure oftrade andinvestment incentives wascommended. However, some members noted the
adverse effects oncompetitiveness ofrapidly rising wages; thispressure might bealleviated bymore
rapid market opening. Inthisconnection, limits onmostforeign equity participation andonforeign
landownership were seenasremaining constraints.
103. Members observed thatThailand 'scurrent account deficits hadbeenmore thancovered by
capital inflows; however, some concern wasexpressed overthepotential adverse implications of
continued deficits forthepaceofliberalization andsome external vulnerability.
104. Members commended Thailand 'sstrong support forASEAN 'spolicy of"open regionalism";
however, asThailand 'stariffs seemed tobehigher thantheASEAN average, some concern was
expressed overpossible tradeandinvestment diversion. Thailand wasalsoasked whether preferential
tariff reductions under AFTA would benotified totheWTO under Article XXIV.
105. Inreply, therepresentative ofThailand saidthatheexpected thesavings ratetofurther improve
overthemedium term. Thiswould helpsustain thecurrent rateofinvestment andinturnhelpeconomic
growth.Headdedthatthecurrentaccountdeficitalsopartlyreflectedbothimportsforprivateinvestment
toupgrade domestic production capacity andtherecent rapid tradeliberalization, some ofwhich went
beyond thecommitments Thailand hadmade under theWTO. Thailand would continue withits
outward-oriented strategy ofequalizing incentives between export anddomestic sectors, thusenhancing
efficiency. Inthisrespect, limitations onforeign direct investment werenotinconsistent withanyThai
commitments under theWTO. However, Thailand hadembarked uponaneffort torevise itsrelevant
legislation withaviewtoliberalizing theinvestment régime.
106. With respect toASEAN, therepresentative ofThailand noted thattheAFTA regional
co-operation scheme hadbeennotified under theEnabling Clause; Thailand retained itsrights under
theClause. Atarecent ASEAN summit inBangkok, ithadbeenagreed toexpand AFTA 'scoverage
andtobring forward thetarget dateforitscompletion byfiveyears to2003. ASEAN hadalsoentered
intoanagreement oncooperation inservices andTRIPS, which wasdesigned tocomplementWT/TPR/M/9/Rev.1
Page 20Trade Policy Review
liberalization andintellectual property protection agreed intheWTO. Apoint wasmade byone
delegation concerning thenotification ofAFTA under Article XXIV.
(ii) Thetrade régime
107. Thailand wascommended fortheprogress made inimplementing itsUruguay Round
commitments, including thetariffication ofagricultural products. However, Thailand hadnotfully
achieved aone-third reduction inbound industrial tariff levels and,inmany cases, currently applied
tariffs were already below finalbound rates.
108. Members alsonoted thatThailand 'stariff retained peaks andescalation incertain sectors.
They stressed theneedforfurther streamlining andmore rapid liberalization. Thailand wasrequested
topublish aconsolidated schedule ofapplied tariffs.
109. Theimportance ofpredictability andtransparency insuchareas astaxconcessions, duty
drawbacks andtrade-related investment measures wasemphasized; onemember urged theremoval
oftariff concessions andexemptions. Some members, asserting thatcustoms valuation continued to
beapplied inanarbitrary manner, urged fullimplementation oftherelevant WTO Agreement and
sought information ontheprogress ofthegovernment committee appointed tostudy customs valuation.
110. Itwasrecognized thatThailand hadmade good progress inreducing thescope ofimport
licensing. Remaining prohibitions onsome items werenevertheless noted. Concern wasexpressed
overthecontinued useofimport surcharges andthescope ofStatetrading. Members queried theneed
forthepolicy change inJune1995imposing certain countertrade requirements asameans ofreducing
thecurrent account imbalance.
111. Therewerequestionsconcerningthetransparencyofgovernmentprocurementandthepreferences
granted toThaigoods andservices (with theexception ofconstruction) andtoState-trading agencies;
ThailandwasurgedtobecomeamemberoftheAgreementonGovernmentProcurement.Somemembers
stated thatstandards regulations applied toimports offoods andpharmaceuticals wereexpensive and
time-consuming andasked Thailand toconfirm thatdomestic rules andpractices wereinconformity
withthoseoftheInternational Office ofEpizootics andtheInternational Convention onPlantProtection.
Amember asked when newThailegislation oncompetition policy would come intoeffect andwhat
thescope ofthelegislation would be.
112. Members praised Thailand 'sefforts tostrengthen itslegalframework forintellectual property,
andhoped thatthenewlegislation andtheestablishment ofanintellectual property courtwould improve
enforcement. Pipeline protection forpharmaceuticals wasanongoing concern.
113. Inreply, therepresentative ofThailand saidthatThailand 'stariffrestructuring wasinlinewith
theinternationalization ofitseconomy; average rateshadfallen substantially andtariffescalation had
declined. Thailand hadmade substantial tariff concessions under theUruguay Round followed by
unilateral reductions. Allchanges intariffs wererequired bylawtobepublished intheRoyal Gazette
andcompilations wereavailable onrequest totheMinistry ofFinance, while planned reductions under
AFTA were available inpublication form.
114. Thailand wasintheprocess ofbringing itscustoms valuation practices intolinewiththeWTO
Agreement by1997, twoyears ahead ofitsUruguay Round commitments.Thailand WT/TPR/M/9/Rev.1
Page 21
115. Remaining conditional import prohibitions andnon-automatic import licensing werejustified
under theinfant-industry provisions ofArticle XVIII andunder Article XXoftheGATT. OnTRIMS,
therepresentative ofThailand noted thatThailand waseligible forafive-year transition period but
hadalready started theprocess leading toconformity withWTO obligations byphasing outthelocal
content requirements oneightproducts; allother suchrequirements would beeliminated byend-1999.
116. Countertradewassupplementarytonormaltradepractice;procedureswerecleanandtransparent
andapplied toimports overBaht500million.
117. Government procurement wasnormally made through tenders bytheMinistry concerned;
purchasing methods andprocedures were under review withaview tostreamlining. International
competitive bidding applied toprojects overBaht1million. Thailand would consider membership
oftheGovernment Procurement Agreement induecourse.
118. ThenewBusiness Competition Act,covering thepromotion offreeandfaircompetition,
prevention ofmonopolies andprotection ofsmall andmedium-sized business andnewmarket entrants,
should come intoforce bytheendof1996. Itshould prohibit suchpractices asprice-fixing, cartels,
business boycotts, restrictions onoutput, market allocation andexclusive dealing.
119. ThailandnolongerimposedBOI-relatedanti-dumpingsurcharges;newanti-dumpingregulations
were reviewed inDecember 1995 bytheWTO Committee.
120. Thailand wasintheprocess ofdrafting legislation onprotection ofplantvarieties, totakeeffect
under theten-year grace period provided intheTRIPS Agreement. Patent protection wasavailable
foragricultural chemical products. Compulsory licensing conditions forpharmaceutical products were
laiddown inthePatent Actandrelated Ministerial regulations. Details weregiven ofprotection under
copyright andpatent provisions. Enforcement ofintellectual property rights should befacilitated with
thecreation oftheIntellectual Property Court, withnewrules. Atpresent, preliminary measures were
available through court injunctions.
(iii) Sectoral policies
121. Members pointed outthattariff peaks ofover200percentwere applied tosome tariffied
agricultural products, while thetariff average forthesector wassignificantly higher thaninothers.
TheysoughtclarificationofThailand'stariffbindingsinagriculture.Theapparenttendencyforincreased
government assistance toagriculture, inthefaceofdeclining inter-sectoral competitiveness, should
becarefullyscrutinized.MemberswelcomedThailand'sstatementthatnoexportsubsidieswereapplied,
butexpressed concern overthepotential effects ofsubsidized export credits.
122. Inindustry, members observed thattheautomotive sector remained protected, andnoted that
automobiles were notincluded inthemost recent tariff reductions programme. Import surcharges
hadbeeneliminated, butlargely replaced bynewexcise taxes. Tariff peaks ontextiles shielded elements
oftheindustry from international competition.
123. Thailand appeared tobetaking acautious andrestrictive approach toopening market access
forservices. Limits onforeign equity holdings wereregarded asexcessively strict forareas suchas
bankingandinsurance.Thecommitmentnottoimposenewdiscriminatorymeasuresonforeignfinancial
institutions waswelcomed. Thailand wasasked toprovide details ofliberalization measures inthearea
ofbasic telecommunications, andurged toparticipate fullyintheongoing telecommunications and
maritime transport negotiations.WT/TPR/M/9/Rev.1
Page 22Trade Policy Review
124. Members welcomed indications thatThailand wasconsidering theliberalization ofaccounting,
engineering andconsultancy services. They regarded thecurrent Alien Business Lawasaserious
constraint toservices trade andinvestment, andurged that,aspartoftheexpected revisions tothe
Law, advantages presently extended onlytotheUnited States beextended toother trading partners.
Some members urged thatThailand takegreater advantage oftheforeign skilled labour available in
theregion.
125. Inreply, therepresentative ofThailand saidthatallagricultural tariffs werebound; thefew
unbound items inHSchapters 1-24were regarded asfalling intothefisheries sector. Automobiles
were theonlyimported industrial itemnotfullyinlinewiththenewtariff structure, although rates
hadfallen sharply andimports hadgrown rapidly.
126. Intheareaofservices, Thailand thought itsSchedule appropriate inthelightofitsownstage
ofdevelopment andincomparison toother partners atthesame level. Foreign equity participation
limits weretheresult ofnegotiations andwereinfullcompliance withGATS Article XX.Thailand 's
m.f.n. exemption infinancial services wasinconformity withitsrights under GATS andtheSecond
Annex onFinancial Services. Them.f.n. exemption fortheTreaty ofAmity withtheUnited States
would bereviewed intheCouncil forTrade inServices inabout fouryears. Thailand wasverylikely
toparticipate asafullmember inthenegotiations onbasic telecommunications.