Thailand eyes the Trans-Pacific trade pact but many observers suggest that there is a lot of work to do before the country would be accepted. There is also the overarching concern about whether the Thai economy is ready for more external competition.

As trade ministers from eleven countries gathered in Auckland this week to officially sign the Trans-Pacific Partnership (TPP) agreement in Auckland, it remains unclear whether Thailand will eventually join the club. The US ambassador to Thailand in comments late in 2015 seemed to encourage the possibility.

Thailand Deputy Prime Minister expresses interest in TPP trade pact
Thailand’s Deputy Prime Minister Somkid Jatusripitak on a visit to Japan in October 2015 when he said Thailand was ‘highly interested in the new TPP – Trans-Pacific Partnership trade pact

The combined market created by the partnership of nations will represent 40% of world trade. However, the conditions that Thailand would have to meet would be onerous.

Japanese investors encourage Thailand to join the TPP

This week also saw a group representing Japanese investors in Thailand urge the Thai authorities to join the partnership. This was at a forum organised by Thailand’s Joint Standing Committee on Commerce, Industry and Banking and the Japan Chamber of Commerce and Industry (JCCI).

At the forum concerns were expressed at Thailand’s high labour costs and the Thai government was urged to increase capital expenditure to speed up infrastructure development.

US Ambassador offered encouragement to Thailand to sign up for the trade pact promising that internal politics would be ‘no barrier’ to joining

The US ambassador to Thailand had specifically promoted the idea of Thailand joining the Trans-Pacific Partnership or TPP when it was unveiled in October 2015 by the United States and 11 other participating countries from Asia and the Americas in Chile.

The partnership and economic community will encompass over 800 million people.

Interestingly, at that time,  the US ambassador held out the prospect that Thailand’s internal political climate would not be a barrier to the country becoming the thirteenth member of the community which comprises 40% of global GDP.

US Ambassador’s message came amid a spat with conservatives over Thailand’s Lese Majeste law

The US ambassador underlined his personal belief that politics and free trade are two separate issues and requested the Thai government to take a close look at the TOP standards that Thailand would have to meet in order to join the pact.

The US ambassador’s comments at a reception near the US embassy in Bangkok in December 2015 during which the top US diplomat deflected questions about his speech to the Foreign Correspondents Club on November 25th 2015 which caused an uproar when the diplomat seemed to comment on Thailand’s Lese Majeste Law.

This incident led to widespread criticism, protests and calls for him to be recalled and replaced by a range of conservative groups throughout Thailand.

US ambassador holds out TPP as a way forward for Thailand to bolster co-operation and growth

Mr Davis insisted that he was not particularly interested in addressing political matters but suggested that it is his wish that Thailand can return to democracy so Thailand and the United States of America can resume full cooperation at that time.

Since then Thailand and the United States have conducted a strategic review of all areas of cooperation between the two countries.

Thailand is the oldest ally that Washington has in Asia although there are concerns that Thailand is becoming more aligned with China since the coup in 2014.

TPP does not include China

The Trans Pacific Partnership pact does not include China and Mr Davis was asked by reporters what he thinks of the relationship between Thailand and China. ‘I don’t worry about Thailand’s relationship with Beijing.

It is a good thing for Thailand to have a relationship with China,’ the ambassador said.

Thailand ‘highly interested’ in TPP although there are a multitude of political, grassroots challenges

At the end of November 2015, Thai Deputy Prime Minister Somkid Jatusripitak said in Tokyo that the Thai government was studying the trade agreement and that the chances were that Thailand would apply for membership.

He said that Thailand was ‘highly interested’ in joining the TPP but further examination was required by expert bodies in Thailand.

However, an analysis by one of Thailand’s leading banks Kasikorn Bank suggests that the route to joining the TPP for Thailand could be difficult as the United States rules out negotiating with countries ranked Tier 3 in its annual report on Human Trafficking.

There are also real concerns about the impact of such a pact on Thailand’s economy and in particular on agriculture and the industrial sector which would have to agree to key tenets of the pact which may open the country to increased external competition.

However, Thailand’s Prime Minister Prayuth Chan Ocha told reporters also late last year that it is likely that Thailand would join the TPP but at that time also expressed his unhappiness at that time regarding the ambassador’s remarks at the Foreign Correspondents Club in Bangkok on the Lese Majeste Laws.

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Further reading:

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