Thailand in free trade frenzy, but who benefits?

23 Jun, 2004

Prime Minister Thaksin Shinawatra told fruit growers last year free trade with China would open up a giant market with insatiable demand.
Nine months later, fruit trader Bantoon Jiraratanakul is still waiting to see the benefits.
He had hoped to sell more longan, a round yellowish-brown fruit with white sweet flesh, to China under a limited "early harvest" free trade deal that scrapped tariffs on fruit and vegetables last year.
Instead, Bantoon expects to sell less to China this year. He blames Chinese taxes and non-tariff barriers.
"This is not what we have hoped for. My longan exports to China this year will probably fall to 20 containers (400 tonnes) from 70 to 80 containers in previous years," said Bantoon, a fruit exporter in northern Chiang Mai province.
Exports of Thai longan to China and Hong Kong rose only slightly during January-April from the same period of 2003.
While fruit exports to China have not increased as much as Thailand had hoped, fruit dealers are also angry that prices for home-grown litchi, onion and garlic have plunged at home because of cheaper Chinese imports.
Critics say the fruit fallout is a sober warning to Thais expecting huge benefits as Thailand rushes to secure free trade deals with the United States, Australia, New Zealand, as well as other Asian neighbours.
Thai and Chinese officials spent less than four months negotiating the limited Free Trade Agreement (FTA) - too fast to iron out problems, say critics of the deal.
"The government should not have undercut its bargaining power by setting a negotiating deadline. Thaksin's policy is to hop onto the bandwagon and let Thai exporters face any consequences later," said Rangsan Manarangsan, an economics professor at Thammasat University in Bangkok.
"The FTAs are mostly for serving his ego. He is determined not to trail Singapore by taking this initiative," Rangsan said, referring to the island nation's recent deals with Japan, the United States, Australia and New Zealand.
Thaksin, a telecoms-tycoon-turned politician who faces a general election in early 2005, has tried to build an image of a leader who gets things done quickly.
His government has set an ambitious target to sign bilateral FTAs with at least 10 countries in five years.
A Thai-Australian FTA will be inked in July and take effect in January 2005. The deal, the biggest Thailand has agreed with any country, is facing fierce opposition from the dairy industry worried about competition from cheap Australian products.
Separate FTA talks with the United States and New Zealand are being launched this month. A Thai-US deal is expected to be wrapped up in one to two years.

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