Non-membership of TPP ‘has huge negative effect’

Masahito Ambashi, an economist from the Economic Research Institute for Asean and East Asia, said the negative effects of the TPP could be “very big”, since the Kingdom was already deeply integrated into the global economic network.

Speaking at the “TPP and the Creation of the New World Trading System” conference, held by the Japan External Trade Organisation (Jetro) and other agencies yesterday, he said there could be a huge diversion of trade from Thailand – currently a centre for production networks in Asean – to Vietnam, a founding TPP member, which was already gaining global share in manufactured goods.

“In our simulation, we assume trade diversion can happen negatively for non-TPP members,” the economist added.

Twelve Pacific Rim countries, including the United States, Japan, Vietnam and Malaysia, signed the TPP agreement on February 6.

According to Japan’s Ministry of Economy, Trade, and Industry (METI), the trade pact promises to create a huge economic zone that accounts for 40 per cent of the world’s gross domestic product and 30 per cent of exports from Japan.

Daisuke Hiratsuka,  president of Bangkok Research Center of the Institute of Developing Economies under Japan External Trade Organisation (Jetro), said Thailand was coming to the end of its labour supply-driven economic development, as its labour force would start to decrease from 2020.

In a limited labour-supply assumption, he said, academic studies had suggested that countries should aim to increase their number of exporters and firms investing in overseas markets, climbing up the “smile curve” in global value chains, and improving global amenities and creating innovation hubs.

Naoaki Kashiwabara, deputy director of METI’s Economic Partnership Division, told the conference that the TPP could be used as a tool to help boost the number of companies, especially small and medium-sized enterprises, to expand their overseas footprints.

“Everyone has a chance to do business overseas, not only large corporations, not only manufacturers, but also service industries. Japanese hair salons or prep schools, for example, can expand to Asean,” he said.

Furthermore, Kashiwabara said, the TPP could also be used as a tool of economic growth, or to revitalise economies.

However, Kannikar Kijtiwatcha-kul, coordinator of FTA Watch, told the conference that the TPP would do more harm than good to Thailand as Supachai Panitchpakdi, the former director-general of the World Trade Organisation, had recently pointed out.

She described the country’s rush to join the pact as “racing to hell”.

Steven Wong Cheng Ming, deputy chief executive of Malaysia’s Institute of Strategic and International Studies, said many non-governmental organisations were “single-issue focused”, while the institute – which conducted a TPP study for the Malaysian government taking into account all aspects from national security to social welfare and economic prosperity issues – had found Malaysia’s national interest to be in the balance.

“The big TPP pay-off in our view is the [expected] greater inflow of investment,” he added.

Krisda Piampongsant, adviser to the Thai Chamber of Commerce, told the conference that the TPP was a “must” for Thailand.

“If not [Thailand does not join], we will probably lose our shirt,” he said.