Thailand hits back: Abandoning EU free trade deal hurts Europe, too

Thailand's Bhumibol Bridge - named after the reigning monarch - in downtown Bangkok. [MikeBahnken/Flickr]

EXCLUSIVE / Thailand has hit back in its dispute with Brussels over the shelved free trade agreement with the EU, arguing that it hurts European businesses, not just the military junta in Bangkok.

And the military regime insisted it was fully on course for a return to democracy, after the coup which overthrew prime minister Yingluck Shinawatra in 2014, throwing trade negotiations with Brussels into disarray.

Speaking at a forum for business leaders in Brussels, the kingdom’s deputy chief of mission warned investors, “We can talk so much about trade sanctions, delaying FTA [Free Trade Agreement] and so on, but that not only affect the interests of Thailand it also affects the interests of the European business people here as well. So I think this point should be by all our European partners here taken into consideration.”

A long-planned FTA with Thailand was nearing the end of lengthy negotiations when the junta under General Prayuth Chan-ocha seized power in May 2014.

Brussels had hoped to make Thailand just the third ASEAN state – after Singapore and Vietnam – to sign a bilateral FTA with the 28-member bloc.

>>Read: ‘Zero chance’ of Thailand FTA under junta, Commission says

But EURACTIV revealed exclusively in November that, having shelved the negotiations, there was now no chance of Brussels ratifying such a deal whilst the junta was in power.

Under Trade Commissioner Celia Malmström ’s new Trade for All policy human rights and civic freedoms must play a part in all trade negotiations.

Malmström’s deputy,  Miguel Ceballos Baron, told EURACTIV that parliament would “never” ratify such an agreement, even if the Commission negotiated one, following street protest and social media activism in the wake of the TTIP negotiations.

Speaking before an invited audience of business leaders planning investments in Thailand, Ms Chartsuwan said: “First, trade and investment are for mutual benefit. It is not only for the benefit of Thailand it is also for the benefit of our European partners here.

“We can talk so much about trade sanctions, delaying FTA and so on, but that not only affects the interests of Thailand it also affects the interests of the European business people here as well. So I think this point should be by all our European partners here taken into consideration.”

Business interest in Thailand up since coup

Indeed, the Thai representation was at pains to point out that – despite the suspended Brussels FTA –business inquiries under the junta had actually gone up since the coup.

Duangjai Asawachintachit, Deputy Secretary General of Thailand Board of Investment (BOI), told the meeting: ““Fortunately, investors were not too harsh on us [after the coup], given our situation, because  … actually in 2014, [when] the change [of government] took place, the BOI hit the highest records ever in our 50-year history.

“Normally we would receive around 1,600 project applications a year, but in 2014 we received 3,100 projects.”

She added, “If you look back at what has happened in Thailand, we’ve been through many things, but one thing that’s very noticeable is that it’s never had any impact on our economic policies.

“I’ll give you an example. The BOI was planning a major revamp of its policies, our guidelines, for years. Actually, the package was ready for the board to approve before the changes in the administration. We actually presented exactly the same package, and it got approved.

“The key message is still the same, because we know we need to make our economic system accommodating no matter what.”

>>Read: MEPs condemn Thai junta

Both government officials were careful not refer to the coup in direct terms, instead using phrases such as “the changes in administration”.

Despite scepticism abroad about the regime’s lengthy timetable for a return to elections – which forsees a constitution-drafting process, followed by consultations, followed by a referendum, followed by elections in 2017 – Chartsuwan insisted the process was on course.

She told EURACTIV, “The first draft constitution has been released last Friday. This is consistent with the timeframe set since last year, and we are now gathering comments from sectors to amend this draft constitution and then the national referendum still be held around July this year. We are sticking to this schedule, this timeframe. And after this there will be time to issue an election law, and then the election will be held the middle of next year. It is still in the process of the timeframe.”

However, EURACTIV had asked specifically if the Thai authorities could guarantee investors – and EU insitutions – there would be a return to “free and fair elections”.

Chartsuwan added, “I would not prejudge result of the national referendum. This is the view of the Thai people. We have to see the result of the referendum before saying anything.”

Professor Tim Forsyth, an expert on Thailand’s politics at the London School of Economics, told EURACTIV, “Is the constitution just a way for the elite to hang on? Most analysts would say yes.

“The same questions remain: ie the constitution is aimed to prevent the red/yellow [shirt] gridlock of before. But the root causes of protest remain – entrenched power, and how to fix that without protests.”

In addition to the issue of the FTA, Thailand is also facing an imminent decision from the EU on its key fishing sector. A ‘red card’ from Brussels over abuses of so-called ‘Illegal, Unregulated and Unreported” fishing would see a total ban on Thai imports into Europe.

Thailand is the third biggest fish exporter in the world – a key industry along with tourism, agriculture and automobile manufacturing.

The new Thai ambassador to Belgium and the EU, Busaya Mathelin, was unable to make the event due to a diary clash.

The team of financial experts from the ministry outlined the tax breaks – up to 8 years exemption from corporate income tax, with a possible 50% reduction after that – and advertising Thailand as a site for new “clusters” of innovation, such as robotics, automation, digital and medical tech.

  • July 2016: Proposed referendum date on the new constitution.
  • Mid-2017: Proposed national elections.

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