Recalibrating Thai-US ties (once again)

It is about time for Thailand to discard the two-century-old euphemism about enduring Thai-US ties and be brutally realistic. It is about time for a blunt question — what can Thailand offer to reduce its soaring trade surplus of US$43 billion with the US? If Thai negotiators don’t come up with any interesting offers, then the tariff for exported goods from Thailand to the US will be 36% across the board after Aug 1.

- Kavi Chongkittavorn

Currently, negotiations between Washington and the government are progressing. The outcome, expected next month, will have far-reaching impacts beyond trade and the economy. The deal will directly affect the stability of this weak government. From a broader perspective, the tariff figure will serve as a barometer of future Thai-US relations in this era of geopolitical turbulence.

It is worth noting that Deputy Prime Minister and Finance Minister Pichai Chunhavajira has instructed related ministries to prepare the Thai agricultural and industrial sectors for the impact of US tariffs, but he has yet to explain why and how. Mr Pichai was quoted as saying that local industry has to upgrade and realign itself with global trends and become more competitive.

Mr Pichai revealed that the US plans to require a local content requirement in products sold in the US of as much as 80% to prevent transhipped goods from entering its market under false rules of origin. He reiterated that Thailand must proactively negotiate to protect mutual and sustainable interests, while urgently addressing three key issues.

First, Thailand must present concrete and enforceable measures to reduce the trade surplus. Secondly, the country needs to provide broader market access to US goods. Third, Thailand needs to remove non-tariff barriers (NTBs). Among Asean members, Thailand has the toughest sanitary and phytosanitary (SPS) measures and other regulatory frameworks intended to protect consumers, agriculture and the environment.