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05BANGKOK1026 AMBASSADOR BOYCE CALLS ON THAI COMMERCE MINISTER

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“26694”,”2/9/2005 5:01″,”05BANGKOK1026″,

 

“Embassy Bangkok”,”CONFIDENTIAL”,””,

 

“This record is a partial extract of the original cable.

 

The full text of the original cable is not available.

 

“,”C O N F I D E N T I A L SECTION 01 OF 03 BANGKOK 001026

 

SIPDIS

 

DEPT FOR EAP AND EAP/BCLTV

DEPT PLEASE PASS TO USTR

COMMERCE FOR JKELLY

 

E.O. 12958: DECL: 02/09/2015

TAGS: PREL, PGOV, EAGR, ECON, EINV, ETRD, ASCH, ID, TH, Ambassador\’s Calls

SUBJECT: AMBASSADOR BOYCE CALLS ON THAI COMMERCE MINISTER

 

Classified By: Ambassador Ralph L. Boyce. Reason: 1.4 (b) and (d)

 

1. (C) Summary. Ambassador Boyce paid his first official

call on Thai Commerce Minister Watana Muangsook on February

4, 2005. A beaming Watana predicted a landslide for the

ruling party on February 6, saying it was vindication of

Prime Minister Thaksin Shinawatra\’s hands-on \”CEO style.\”

Watana also observed the US response to the December 26

Tsunami disaster had \”won many friends\” in his country. The

 

SIPDIS

Ambassador applauded Thailand\’s strong economic growth. The

Minister noted current high rice prices were a boon and said

quality trumps cheap prices in the export market. Watana

said the Royal Thai Government (RTG) looked to increase

economic growth through domestic spending. Following

elections, the Ambassador was hopeful Free Trade Agreement

talks could be re-energized. Watana said if he was in charge

\”they\’d be done by now,\” and affirmed Thailand\’s commitment

to concluding an FTA. Watana said he appreciated the USG\’s

reduction of the anti-dumping shrimp tariff and the \”changed

circumstances\” reassessment currently underway following the

Tsunami disaster. Watana concluded the meeting by updating

 

SIPDIS

the Ambassador on the Ford and Gregory and Cook commercial

disputes, saying he would keep the Ambassador apprised of

future developments. End Summary.

 

ELECTIONS: MINISTER PREDICTS A LANDSLIDE

 

2. (C) A buoyant Commerce Minister Watana Muangsook

predicted a 370-seat landslide for the ruling Thai Rak Thai

(TRT) party in the February 6 elections. Watana estimated

that the TRT would win 31 of Bangkok\’s 37 seats outright, and

would pick up another 2-3 seats in four more hotly contested

Bangkok constituencies. (Note: TRT actually appears to have

won 32 Bangkok seats. End Note.) Ambassador Boyce noted

TRT\’s 2001 election win was unprecedented in three ways: TRT

fielded much younger candidates, Bangkok voted like the rest

of the country, and the party won a majority. (Note: A rerun

of disputed seats later deprived TRT of its overall majority.

End note.)

 

3. (C) The Commerce Minister countered that these

\”revolutionary\” firsts in 2001 were now outdone by the TRT

being the first party to complete a full term, and

expectations Prime Minister Thaksin Shinawatra would be the

first PM elected to a second term. Watana said he expected

the Election Commission (EC) would endorse the results on

March 6, allowing the convening of parliament and election of

a Speaker on March 7. The Minister said the end of the

election period now cleared the way for action on many

fronts, adding that PM Thaksin would visit the country\’s

trouble plagued south soon after the vote.

 

THE US AND THAI IMAGES

 

4. (C) The Ambassador commented on negative Thai perceptions

of the US following the 1997 financial crisis. Watana

downplayed any lingering feelings of unhappiness, commenting

\”Thais tend to forget the bad.\” He noted the US response to

the December 26 Tsunami disaster had \”won many friends\” and

improved America\’s image in the country. The Ambassador

observed that the Tsunami had highlighted Thailand\’s position

as a regional leader, noting that no one had questioned

Thailand\’s selection as a base for regional relief efforts.

 

THE ECONOMY: \”LET THEM EAT RICE…\”

 

5. (C) Ambassador Boyce applauded Thailand\’s 22 percent GDP

growth over the last four years, only outpaced by China, and

an amazing feat considering the economic crisis less than a

decade earlier. The Minister remarked that economic

indicators were good for agricultural commodities rice and

tapioca. Watana noted rice is now priced at USD 300 per ton,

a boon for Thai exports given Asia\’s inelastic demand.

 

…AUSTRALIA IS THE MODEL, INDONESIA

 

6. (C) Watana noted the common belief is that exporting

cheap goods was the best way to increase exports but he

disagreed. He said quality is a better strategy than cheap

prices, along with convenience and other factors. The

Ambassador cautioned that demand was a paramount

consideration, suggesting that you can\’t sell what people

don\’t want. The Minister explained RTG\’s strategy to

increase export-reliant Thailand\’s domestic market as an

engine for economic growth. Comparing Thailand to Australia,

Watana noted the latter has just 20 million people (one third

Thailand\’s population) and exports amounting to just 80

percent of Thailand\’s, but three times its GDP. Similarly,

Chile\’s 15 million people had a per capita income more than

three times Thailand\’s 62 million. Watana said the key to

duplicate their success was developing domestic demand: \”You

need to give the poor money so that they have money to

spend.\” The Ambassador replied that loans rather than

giveaways might be a more sustainable strategy. The

Ambassador also pointed out that Australia might not be the

best economic model for Thailand. Watana noted he was very

impressed with Indonesia\’s new Trade Minister, Ms. Mari

Pangestu, noting that she is the only non-Muslim in the

cabinet. He noted with envy the size of Indonesia\’s

potential domestic market.

 

FTA: LETS GET THIS THING DONE

 

7. (C) The Ambassador noted the Thai public\’s generally

negative perception of a prospective US free trade agreement

and that he therefore understood the RTG\’s efforts to keep

the politically sensitive issue out of the press while

contesting the election. Ambassador Boyce expressed hope

that with the election over, both sides could begin a

concerted campaign to highlight the mutual benefits an FTA

would bring. The Ambassador noted that while most Thais

believe the treaty will put them at a disadvantage, the

reality is that both countries would greatly benefit from an

FTA. The Ambassador expressed his hope that with elections

over the RTG leadership would not lose momentum in pursuing

an FTA.

 

8. (C) Minister Watana explained that responsibility for

the US-Thai FTA lay with a special commission chaired by

Finance Minister Dr. Somkid Jatusripitak. Watana noted that

although Commerce staff are on the negotiating team, \”my

people are not in charge,\” as when his Permanent Secretary

Mr. Karun Kittasatporn (also present) was chief negotiator

for the successfully completed Thai-Australia FTA. Watana

pronounced that if Commerce was in charge of the US-Thai FTA

negotiation, \”It would be done by now.\” Trade Negotiation

Director General Ms. Apiradi Tantraporn noted that while the

full negotiation rounds had been postponed, smaller

negotiating groups were meeting, such as the recent textile

round in Bangkok, and the investment group meeting in

Washington D.C. next week. She said Thailand is \”fully

committed\” to see the negotiations through.

 

ANTI-DUMPING TARIFF ON THAI SHRIMP

 

9. (U) Minister Watana expressed appreciation for the US

reduction of the average anti-dumping import tariff on Thai

frozen shrimp from 6.03 percent 5.95 percent. (Note: Among

the six countries subject to the shrimp tariff, Thailand is

the largest exporter at USD 956.8 million worth in 2003. The

Commerce Ministry\’s Foreign Trade Department believes the

reduction will help strengthen Thailand\’s competitiveness in

the US prawn market. End Note.) The Ambassador explained

that the US International Trade Commission (ITC) was

reviewing the tariff in light of changed circumstances

stemming from the December 26 Tsunami disaster. The

Ambassador noted that the Embassy Economic Counselor was

currently in the south to assess damage done to the Thai

shrimp industry. The Ambassador said that the ITC

determination would likely take a few months. The Minister

voiced his gratitude for the Embassy\’s efforts.

 

FORD CUSTOMS PROBLEM

 

10. (C) Ambassador Boyce asked the Minister for an update on

the Ford customs issue. (Ford owes the RTG USD 12 million in

unpaid customs duties over a two-year period. Thailand\’s

Department of Special Investigations (DSI) is pursuing a

criminal case against Ford, accusing the company of evading

the duties in an attempt to defraud the RTG. Ford has said

it was a good faith error and wants to pay the duties owed,

but is unwilling to accept any direct or implied admission of

criminal activity. In an October 21 meeting between PM

Thaksin and Ford executives (which Watana attended), the PM

seemed to agree with Ford\’s argument and asked his staff to

resolve the matter. In a November 18 follow-up meeting,

Justice Minister Pongthep Thepkanjana (who also attended the

previous meeting), argued the criminal case was clear and

would not be dropped. In a December 2004 meeting with former

Ambassador Johnson, Watana pledged to resolve the matter,

though probably not until after elections. Ford has seen no

interest in compromise during recent meetings with Finance

Ministry (responsible for customs matters) officials and

believes criminal warrants will soon be issued. The Japanese

Embassy was told by the Finance Deputy Minister that there is

nothing he can do.) Watana noted he had met with Ford

Executives several times and that the Prime Minster had told

Ford in his meeting that he hoped the problem could be solved

amicably. Watana said he expected to travel to the US in

March or April, implying that the Ford case would figure

prominently in his travel plans.

 

GREGORY COOK – PTT DISPUTE

 

11. (SBU) Minster Watana also offered an update on the

dispute between American company Gregory and Cook and 70

percent RTG-owned oil company PTT (Petroleum Authority of

Thailand) Public Company Ltd. (PTT). (Gregory and Cook formed

a joint venture (IGC) with a Singaporean company (IPCO) in

1994 to construct two gas pipelines for the then 100 percent

RTG owned state oil enterprise, but in 1995 a dispute arose.

The Court of Arbitration of the International Chamber of

Commerce awarded IGC USD 25.3 million in 2002, but PTT has

yet to provide payment. In 2003 the USG facilitated

discussions to reach a settlement; discussions were held but

to date PTT has not responded to IGC\’s December 2004

settlement offer.) After chronicling the background of the

case, Watana explained that US Commerce Secretary Evans had

asked him to mediate the dispute; Permanent Secretary Karun

noted that the presence of the Singaporean claimant added

further complexity in resolving the matter. Noting IGC\’s

desire to settle the dispute outside of court, the Ambassador

stated that meeting behind closed doors would go further to

resolve the dispute than a public airing in the Thai press.

Watana promised to keep the Ambassador apprised of further

developments in the case.

BOYCE

Written by thaicables

July 6, 2011 at 7:16 am

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