This week the
Thai government announced that it would enter into the Trans Pacific
Partnership (TPP) FTA talks. The
Thai cabinet voted to support a formal announcement of Thailand’s participation
during US President Obama’s visit to Thailand this weekend.
I think this is a positive
step forward for US-Thai relations, ameliorating some of the friction left over
from the suspended US-Thailand FTA talks (I say “suspended” rather than
terminated, because so long as the US-Thailand FTA talks remain suspended, the
US-Thailand treaty of amity remains in force; this very important agreement
gives US investors better treatment, a key investment advantage for the US in
Thailand). Thailand’s participation
will be a strong expression of US commitment to a long-standing ally in the
region.
However, nothing about the
TPP, which involves a large number of diverse countries, is ever easy.
Thailand’s impending participation is no different.
First, the participation of
Thailand may introduce into the TPP talks perhaps the trading partner with the
most internal angst about the TPP, other than the US itself. The Thai
constitution requires consultations with parliament and public hearings before
the government can negotiate and conclude an FTA. This is a legacy of the suspended US-Thailand
FTA talks. Thailand has a large number
of FTA opponents in the NGO community, as well as in the opposition parties,
and they will be vocal this time as well.
The Thai business community, which has been reacting with “Thai
anxiety” to the ASEAN Economic Community, will also be split on its
merits. Expect a new cottage industry in
TPP workshops in Thailand soon.
Second, Thailand’s
participation means that four of the ASEAN-6, plus Vietnam, will be TPP
negotiating parties. This will put
pressure on the remaining ASEAN-6 members Indonesia and the Philippines to join
the TPP talks. Yet both countries have
great difficulties with the depth and breadth of the TPP’s scope. Both countries would benefit from the
economic and regulatory rigors the TPP would offer, but domestic interests in
both countries will be against entering the talks. The impending election season in Indonesia
makes it that much more difficult for the country.
Third, Thailand’s
participation may complicate the politics involved in ASEAN’s Regional
Comprehensive Economic Partnership (RCEP) talks, if not the mechanics. I say
the latter because the intended scope of the RCEP and existing scope of the TPP
talks will be rather different. RCEP
will likely be more modest but achievable, especially when compared with the
TPP. Hence mechanically it will be quite
possible for the soon-to-be five ASEAN members in the TPP talks to participate
in the RCEP talks as well, and eventually (!) they can be unified under APEC. Politically, this may be a different matter,
particularly since the RCEP talks involve China, Korea, Japan and India, who
are not part of the TPP and currently not interested in the TPP either. This may change if and when Japan joins the
TPP talks; the current Japanese government supports joining the talks (as does
the opposition) but Japan is now headed for an election and anything could
result.
Finally, for the US, the
addition of Thailand into the TPP talks brings with it all of the issues that
arose during the US-Thailand FTA talks.
Expect automobiles, intellectual property and agriculture to be major
issues, with automobiles being most prominent (due to Thailand’s large auto
industry) and a newish issue for the TPP.
The intensity of opposition and concern in the US may be a good thing,
as it could force the Obama administration to work with Congress to get Trade
Promotion Authority (TPA). Without TPA,
the TPP’s implementing legislation could suffer from the death of a thousand
amendments in Congress.
All in all, Thailand joining
the TPP talks is a good thing, but the move brings with it more considerations
and complications. Just wait until Japan
shows up. Then we’ll have a real barnburner.
