Thai expert warns barter deals with China and Russia risk US backlash, hurt rice exports and farmers, and weaken competitiveness as baht surges and a vital US trade pact stalls, with Bangkok weighing arms-for-rice swaps despite valuation and corruption fears.
A leading Thai trade expert has taken issue with the barter trade policy being pursued by Minister of Commerce Suphajee Suthumpun, in particular, where it entails the sale of Thai agricultural produce for weapons systems. Ath Pisalvanich warns that it is naive to think the policy will not have dangerous political consequences in a world of rising geopolitical tensions. He also warns that it will undermine the country’s competitiveness and certainly not benefit farmers who are looking for higher prices. This comes as Thailand has yet to finalise its critically important trade deal with the United States.
A leading Thai academic and trade expert has warned the government about expanding barter deals with other nations. In particular, he focused on proposed arrangements with Russia and China linked to Thai agricultural exports.
Ath Pisalvanich urged Thai policy planners to continue using dollar-value trading systems. He said this approach was essential as geopolitical tensions intensify across the region. Moreover, he stressed that Thailand depends on predictable international markets. At the same time, he cautioned that barter mechanisms could expose the country to new risks.
Mr. Ath spoke while Thailand remains in negotiations with the United States to finalise a trade agreement. The deal was provisionally reached last August under the previous Pheu Thai-led government.
Rising tensions complicate Thailand’s talks with the United States and regional neighbours
However, the talks were reportedly suspended after hostilities between Thailand and Cambodia in November. Earlier, Prime Minister Anutin Charnvirakul threatened to cancel the Thai-Cambodian Peace Declaration.
That pact was negotiated with the assistance of Malaysia and the United States. Furthermore, it was signed in October in the presence of President Trump.
Meanwhile, fears over barter trade have emerged alongside a sharply rising Thai baht. The currency has been driven higher by market movements linked to gold transactions. In addition, analysts point to possible illicit money flows affecting exchange rates.
As a result, Thailand is facing severe difficulty marketing rice abroad. The appreciation of the baht has reduced the effective price of Thai shipments. Consequently, exporters report falling margins and weaker competitiveness.
Commerce ministry advances plan for rice-linked exchange with Chinese defence purchases
Against this backdrop, the Ministry of Commerce appears to be advancing discussions with China on a barter scheme. The ministry is headed by Minister Suphajee Suthumpun.
Under the reported plan, Thailand would purchase arms and defence equipment from China. In return, China would receive shipments of Thai rice instead of cash payments. Nevertheless, officials have not released detailed contract terms.
This week Mr. Ath reiterated his opposition to the approach in clear terms. He stated that such deals would not benefit Thai farmers. Instead, he argued the system would draw Thailand away from established international markets.
Moreover, he warned that the country’s ability to compete would be weakened. He described the proposal as a retreat from modern trade practice.
Academics examining the issue have pointed to broader structural dangers. They say the potential benefits do not outweigh the long-term costs. Mr. Ath described barter trade as an ancient form of exchange. Nevertheless, he noted it is still used by many countries today. Most of these are developing or underdeveloped economies. In particular, states under United States sanctions rely on this method.
China and Russia identified as key users of barter outside the global dollar trade system
He identified China and Russia as the principal users of barter mechanisms. Both nations are geopolitical rivals of Washington. Neither country possesses a globally accepted alternative currency to the US dollar.
Therefore, they turn to barter as an alternative trading channel. Mr. Ath said Thailand must recognise this political reality before committing to any scheme.
Turning specifically to Thailand, he called for a careful balance between barter and dollar-based trade. Officials must determine the appropriate proportion for each agricultural product.
He asked directly who would gain from these transactions. Most importantly, he stressed that farmers themselves would not be the sellers. The structure of Thai agricultural exports is controlled by middlemen. Because of this, farm-gate prices are likely to remain low or unchanged.
Mr. Ath listed several concrete problems that could arise from the policy. First, he cited the risk of geopolitical retaliation from the United States. Thailand could face economic sanctions or diplomatic pressure. In addition, Bangkok might be forced to choose sides between China and the United States. Such pressure would carry further consequences for foreign policy.
Expert lists risks from valuation disputes to corruption and loss of foreign currency income
Second, he said barter trade reflects declining Thai competitiveness. Thai agricultural goods, he argued, struggle to compete on open global markets. Consequently, officials look to non-market solutions.
Third, he pointed to serious valuation difficulties within barter contracts. Questions would arise over which market price should be used. Disputes could also arise over quality grades and delivery dates.
Fourth, he warned that reduced dollar earnings could weaken foreign currency reserves. Thailand relies on steady inflows to maintain financial stability. Fifth, he highlighted the risk of corruption in large procurement deals. Thailand’s purchasing system has faced transparency concerns in the past. Therefore, complex barter contracts could increase vulnerabilities.
Reporters recalled earlier remarks by Minister Supajee Suthamphan regarding the policy. She confirmed her intention to continue developing barter trade mechanisms. The proposal would involve exchanging ten to twenty per cent of agricultural exports. Those goods would be traded for weapons and military equipment. However, the timeline for implementation has not been disclosed.
Strong baht and weak rice demand add pressure as officials weigh barter trade direction now
The debate comes as Thai rice exports encounter heavy headwinds. Orders from traditional buyers have slowed in recent months. At the same time, regional competitors offer cheaper grain on world markets. Vietnam and India continue to expand their market share. Consequently, Thai exporters say the strong baht leaves them at a disadvantage.
Government sources confirm that defence purchase talks with China are continuing. The value of any rice-for-arms exchange remains unclear.
Top Commerce Ministry official warns that any US trade deal must wait for new parliament and cabinet
Warning for incoming government that it may face a clash between the United States and China in Asia
Exports grew further in October but Thailand posts largest trade deficit since 2023, Baht still strong
Likewise, no official assessment of long-term costs has been published. Business groups have asked the Commerce Ministry for clarity on the direction of policy. They warn that uncertainty is affecting investment decisions.
Mr. Ath concluded with a direct assessment of the current policy drift. Barter trade, he said, is typically used by constrained economies under pressure.
Thailand, in contrast, has long relied on open dollar-based markets. Instead, the new approach risks isolating the kingdom from major trading partners. The government must now decide its course amid rising geopolitical strain.
Join the Thai News forum, follow Thai Examiner on Facebook here
Receive all our stories as they come out on Telegram here
Follow Thai Examiner here
Further reading:
Top Commerce Ministry official warns that any US trade deal must wait for new parliament and cabinet
Asean Summit on Monday and Tuesday seen by United States as pivotal to restoring border peace
War to continue says PM Anutin. Dismisses President Trump’s ceasefire talk as a ‘misunderstanding’
Confusion after Trump’s 20 minute phone call with PM Anutin. US side claimed a ceasefire was agreed
