The Thai government stance on the pesticide ban has drawn support from many quarters in Thailand. The ban is seen by many as a health issue that goes beyond economic considerations. However, the current situation leaves the prime minister and Thailand’s economic planners facing two serious problems, one being the threat to Thailand’s US exports and the second, the prospect of chaos and higher costs within the farming sector which underpins Thailand’s economy.
Thailand’s government and officials are still grappling with the shock announcement from Washington of a withdrawal of duty-free status on a range of over 570 Thai export products on Saturday. Despite denials from some sources, it does appear that the move, coming out of the blue from this US President may be linked to Thailand’s expedited move last week to ban controversial pesticides and chemicals despite what were unequivocally strong representations from US authorities at the highest level delivered to the Thai government on Friday the 18th October last via a multitude of channels.
Thai officials and business leaders have been left reeling by the announcement made early on Saturday that the US government was withdrawing preferential duty treatment on over 570 different types of Thai exports from wood products to Thailand’s lucrative fishing and cuttlefish exports to the United States.
Shock moves following years of progress on human trafficking and co-operation with US authorities
There has since been a concerted effort to deny speculation that the sudden US move which came out of the blue, was retaliation for Thailand’s snub of US representations on the pesticide ban. The move certainly went against the grain following years of progress by Thailand in improving its status with US authorities in relation to human trafficking and copyright protection.
The timing of the announcement is also significant coming exactly a week after the United States made representations to Thailand’s government and ministers on the pesticide ban and days after those representations were effectively ignored.
The American representations were made via two letters, one from the Under Secretary at the US Department of Agriculture Ted McKinney requesting a delay to the controversial pesticide ban that was unanimously approved by a government committee on Tuesday at a meeting that was brought forward.
Primary reason quotes a 4-year-old complaint made by US trade union body
It may not be confirmed but it does appear that the two issues are linked since the reason given for Friday’s decision is based on a lack of workers rights and union representation for workers within Thailand’s fishing fleet.
This claim is related to a formal 2013 complaint against Thai authorities lodged by the powerful AFL CIO, representing the US trade union movement. This was again pushed aggressively in 2015 at the height of international media coverage and controversy relating to slave labour in Thailand’s fishing fleet that also led to a European threat to bar Thai fisheries exports.
PM’s reform the fishing industry stamping out abuses praised by the European Union
In a concerted campaign, driven personally by Thailand’s premier Prayut Chan ocha, extensive reforms were carried out within the fisheries sector, reforms and regulations which to this day are still vigorously opposed by many working within the lower tier of Thailand’s struggling fishing industry. The moves were subsequently praised by EU officials as a blueprint for other countries on how to reform and reorganise fisheries to stamp out abuses.
Thailand’s exports to the United States worth just under ฿1 trillion, 2nd biggest market
Thailand exported just short of $32 billion to the United States last year according to Bloomberg financial data and the Ministry of Commerce in Bangkok.
That’s nearly ฿1 trillion making it Thailand’s second-largest export market to China which is worth ฿1.25 trillion. There is a particular concern for $1. 3 billion or ฿30.5 billion worth of these exports which the US can easily replace with alternative suppliers to the United States especially as Thailand’s exports are already overpriced due to the strong baht. Now they will also be burdened duty charges if the move is confirmed and goes into effect on April 25th 2020.
The full extent of the impact is still being studied by the Thai Commerce Ministry which is preparing to give a briefing on Monday.
Thailand is also an important market for the USA
Thailand is also an important export market for the United States being the super power’s twentieth most important export zone. One of the letters from the US embassy in Bangkok on the 18th October made it clear to the Thai government that the pesticide ban would adversely impact or ‘disrupt’ $1.7 billion or ฿52 billion of US exports to the kingdom.
Action was taken by US President Donald Trump
The announcement of the move came directly from US president Donald Trump who is known for his brash, unpredictable and combative style of doing business having previously blindsided other international partners such as Mexico, China, Turkey and the European Union on trade disagreements and other matters of contention.
Such moves have also always been impromptual and decisive bypassing normal bureaucratic procedures. This US President uses duties and tariffs as his diplomatic tool of choice.
Thailand ignored the US request for a delay
The US representatives were effectively ignored and the pesticide ban went ahead just days afterwards despite its significant trade impact on US businesses. Indeed, Thai officials on Friday before the shock announcement from the United States were reported to have been nettled by the intervention represented by the letters from the US officials. Many commentators praised the government’s lack of response to the Americans while castigating the US manufacturers of the widely used chemicals and pesticides.
Given this and the sudden, unexpected nature of Friday’s action and the spurious pretext, it would be very naive indeed to insist that the two matters are unrelated even if such a link is categorically denied at an official level.
US President sent a letter to Congress on Friday
On Friday, the US President sent a letter to the Vice President and the Speaker of the House of Representatives which gave as the reason for the move the failure of Thailand to ‘afford workers in Thailand internationally recognized worker rights.’
This came without any prior warning that the issue was something previously of immediate concern to US officials.
Export boss confused over the US move
The Chairwoman of the Thai Shippers Council, Ghanyapad Tantipipatpong, over the weekend said the move was confusing in the light of ongoing progress Thai authorities had been making working in cooperation with US authorities on human rights including human trafficking. ‘Thailand has been on Tier 2 in the US Human Trafficking in Persons report since the country was upgraded from Tier 3 in mid-2018,’ she explained noting that the kingdom has gone as far as any developing country in combatting such matters.
6 months to discuss the matter with US authorities
Thai officials are pointing out that there are 6 months in which to treat with the American side before the new duties on Thai exports to America come into effect. This may start at the up and coming ASEAN summit where the United Dates will be represented at a high level.
On his visit to New York in September, the Thai prime minister had invited the US president to attend the summit and it was reported that the invitation had been accepted but since then there has not bee any confirmation of his proposed visit.
Thai officials preparing for a briefing on Monday
Over the weekend, Pimchanok Vonkorpon, the director-general of the trade policy and strategy office at the Ministry of Commerce said: ‘I need more time to assess the impact as we just got the list of affected products,’ while Keerati Ratchano the head of the foreign trade department announced the briefing for Monday morning.
Disastrous year for Thai exporters just got worse
Thailand’s exports have contracted sharply this year. The most recent figures are for September which showed a 1.4% reduction from the same period last year. The overall drop projected by economists to the end of the year is 5.3 %.
The reasons for the contraction include the disruption to close Thai Chinese supply networks brought on the US-China trade war and world trade tensions depressing overall demand. Another significant factor has been the constantly appreciating baht which hit a record high against the US dollar on Friday, hours before the shock announcement from Washington.
The impact on Thailand’s exports if the withdrawal of duty-free status goes ahead is bound to be significant in a market which was one of the brighter spots for Thailand’s already hindered export drive.
Farmers seeking an Administrative Court injunction
Meanwhile, bodies representing Thai farmers are readying to apply for an injunction to the Administrative Court this week to halt the ban on the chemicals and pesticides at the heart of the controversy. These are paraquat, chlorpyrifos and glyphosate.
A state of distress over the pesticide ban
Farmers are in a clear state of distress as the controversy has now become a political matter at both national and international level.
There have been strong expressions of support for the Thai prime minister also over the weekend, who is now seen being hailed as standing up to the might of the United States by a large body of public opinion including both Thai nationalists and ironically leftwing academics as well as.
Already shops have begun to discount the products fearing the December 1st ban will now certainly go ahead
Farmers claim key committee failed to heed the prime minister’s guidance in a making a decision
Sukan Sangwanna, the Secretary-general of the Federation of Safe Agriculture said on Saturday that six farming lobbies including growers of sugar cane, tapioca, oil palm, rubber and fruits would lodge legal proceedings to halt the ban based on the improper nature and conduct of a key committee that farming groups claim effectively railroaded the ban through the state bureaucracy.
Farmer groups will argue that the way the pesticide ban was implemented was not conducive to proper public policy and the matter was not considered objectively and impartially nor in compliance with guidance issued by the prime minister.
‘No concrete measures’ for farmers or alternative to the pesticides mean increased labour costs
Mr Sukan also warned that there has been no preparation for the ban which will leave Thai farmers facing substantial losses and hardship across the country. ‘There are currently no concrete measures to provide alternative pesticides or weed killing machines to affected farmers by the government, which means farmers have to take care of the weed, pest problems by hiring additional labourers themselves,’ he complained. ‘In the end, the ban on the three chemicals will only increase the production costs.’
Committee that recommended the ban was to have been representative of all stakeholders
The farmer’s groups are focusing on a committee chaired by Deputy Agricultural Minister Mananya Thaiseth, a Bumjiathai minster and one of the most ardent and passionate supporters of the ban.
The committee was to be comprised of representatives of importers of the chemicals, Thai consumers, farmers and government officials to consider whether to recommend a ban or not on the instructions of the Thai prime minister.
This process was expedited by the minister and a report delivered promptly which supported the ban with sources suggesting that the decision of the committee was a unanimous one.
No importers on the committee or representatives of real growers says farming leader
However, Mr Sakan over the weekend had a different impression. ‘There was no presence of importers at the meeting, while representatives of farmers only came from the organic agriculture group and lacked the presence of farmers of economic crops who rely on these three chemicals,’ the farmers representative revealed. ‘I hope that the court will consider halting the ban until the issue is thoroughly studied by related parties and suitable supporting measures are ready.’