20.11.2016 Author: Dmitry Bokarev

Thailand Between the TPP and the EAEU

34231231231On February 4th, 2016 the Trans-Pacific Partnership Agreement (TPP) was signed. After ratification of the Agreement by all countries, which will take at least two years, a huge free trade zone uniting Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the USA, Vietnam will be formed in the Asia-Pacific region. According to forecasts made by the founders of the TPP, its territory eventually will incorporate up to 25% of world trade. What’s more, the major player there will be the United States and trade will be carried out under their rules. TPP is an attempt by the USA to maintain its economic dominance in the Asia-Pacific region and create a worthy competition to China. In an ideal scenario, the Americans would like to see all the countries of Southeast Asia in the Partnership but so far thing have not run as smoothly as they expected. Currently the only ASEAN members to join the TPP are Vietnam, Malaysia and Singapore. There is one more candidate from ASEAN: Thailand. However, if it enters into the TPP, then the terms for joining would be different from those which the United States would be like them to be.

Thailand expressed its interest in the TPP as early as 2012, when there were preliminary negotiations; however, subsequently it has not taken any steps in this direction. This would not please the Americans, because Thailand is one of their major trading partners. The USA accounts for over 20% of the exports and 14% of the imports of Thailand. That’s a lot of money: the annual imports of Thailand come to about $150 billion. All of these indicators could significantly increase if the country joined the TPP. Let’s not forget about the relatively cheap labour in Thailand that attracts a great deal of foreign investors to its territory. So, it is not surprising, that the USA is very interested in Thailand’s joining the TPP. Japan is also very much interested in this. The Land of the Rising Sun is the second major player in the TPP and the main exporter of products to Thailand. The Japanese share of Thai imports amounts to over 22%. It is well known that there are more than a thousand Japanese or Thai-Japanese Joint Ventures currently operating in Thailand. It is obvious that cooperation with Japan is extremely important to the economy of the Thailand.

On February 2, 2016, two days before signing the TPP agreement, Prime Minister of Thailand General Prayut Chan-o-cha met with a delegation of the Japanese Chamber of Commerce headed by its Chairman Akio Mimura. Japanese business representatives addressed the Government of Thailand with a request to join the TPP. They stated that it would significantly contribute to strengthening and developing Thai-Japanese economic cooperation. Meanwhile, the delegates added that they wanted to continue to increase the number of Japanese companies in Thailand as they are satisfied with the tax policy of the country. After the meeting, Prayut Chan-o-cha said that it was very important and it contributed to the growth of trust between the Government of Thailand and Japanese investors.

However, after that meeting Thailand still did not join the TPP. Moreover, at that time the Thai Government was already in talks about joining the Eurasian Economic Union (EAEU), i.e. the association of developed countries of the former Soviet Union, headed by Russia, and one of the potential competitors of the TPP. Incidentally, at that time Vietnam, another important member of ASEAN, which then joined the TPP, had already decided to create a free trade zone with the EAEU.

In April 2016 Prayut Chan-o-cha visited Russia. He said Thailand would like to create a free trade zone with the EAEU.

In May 2016, Mr. Don Pramudvinai, Minister of Foreign Affairs, said that the country is ready to join the EAEU. He announced that the Thai Government had considered all the opportunities that the creation of a free trade zone with the EAEU would bring and found them very attractive. Moreover, all EAEU member states would also benefit from this. Besides, Mr. Don Pramudvinai said that Russia will help Thailand to join the EAEU, and that Thailand’s application is already in the preparation stage. It it is worth remembering that Russia is also a major trading partner of Thailand and the annual trade turnover between them is about $4.6 billion. What’s more, there are great prospects for growth; and therefore it is quite possible that Russia and the EAEU may become major partners for Thailand. In conclusion, the Head of the Thai Foreign Ministry said that his country would soon begin direct negotiations on joining the EAEU after settling some internal issues.

On June 1st, 2016 the media published a statement made by the Thai Deputy Prime Minister for Economic Affairs Somkit Chatusriphithak that Thailand was still ready to join the TPP, but only after a series of public hearings to be held throughout the year. Both supporters and opponents of joining would be given the floor. It was also reported that a Committee headed by the Thai Minister of Commerce, whose aim will be to decide whether membership in the TPP is beneficial to Thailand, will be formed. Then Prayut Chan-o-cha said that it was first necessary to protect the rights of Thai citizens. It is well known that many Thai companies are opposed to joining the TPP, as trade rules imposed by the USA will seriously hurt them. Thai farmers are actively protesting. It is worth taking this into consideration as the agricultural sector employs about 60% of the country’s population.

The question of Thailand joining the TPP still remains on the table. It is difficult to regard the statement by the Prime Minister that it will take place a year after the public discussion as a promise. It could be that Thailand is currently seeking to glean as many preferences as possible from the USA and Japan. All the while continuing its rapprochement with the EAEU. If Thailand joins the EAEU and makes it its major partner, the United States and Japan would be faced with big losses. Even if Thailand subsequently joins the TPP as well, the USA would no longer be able to control it completely. The Americans would have to cooperate with Thailand, taking into account its interests; otherwise it would completely turn away from them, and would fully concentrate on the EAEU. It is the same with Vietnam, which has already joined both the TPP and the EAEU. Thailand and Vietnam are among ASEAN’s most developed countries, and if they break with the TPP, the other ASEAN countries may follow. However, control over South-East Asia is necessary for the United States in order to contain China’s economic expansion.

Thus, the TPP project is not going as the USA had wanted. They hoped to create a strong economic union where they would run the show. This union was supposed to be a tool for the USA to exert economic and political influence in the Asia-Pacific region, which would lead to weakening China and the EAEU thereby once again becoming the world economic leader. However, it transpired that countries such as Thailand and Vietnam are not a group of states dependent on the United States, but independent trading partners. In all likelihood, the TPP countries can earn good money through mutual trade with each other. However, it seems that the USA will not succeed in gaining global economic dominance through the TPP.

Dmitry Bokarev, political observer, exclusively for the online magazine “New Eastern Outlook

 


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