PM orders action on forced labour and excess capacity over 12.5% US tariff
Six ministries have been directed to address forced labour and excess capacity as Thailand responds to a 12.5% US import tariff
- In response to a new 12.5% US tariff on its exports, Thailand's Prime Minister has ordered six ministries to prepare measures addressing forced labour and excess production capacity.
- The Labour Ministry will lead efforts to counter forced labour accusations by enforcing laws and establishing traceability systems to prove supply chains are not linked to it.
- The Commerce Ministry will address excess capacity by identifying vulnerable industries and shifting future government support away from subsidies that increase output towards those that improve productivity.
Prime Minister Anutin Charnvirakul has directed six ministries and the national police chief to prepare measures addressing forced labour and excess production capacity as Thailand responds to an additional 12.5% US tariff on its exports.
The Cabinet Secretariat issued an urgent instruction to the ministries of Finance, Foreign Affairs, Agriculture and Cooperatives, Commerce, Labour and Industry, as well as the commissioner-general of the Royal Thai Police, following a Cabinet meeting on July 27.
The United States imposed additional import tariffs on goods from 60 trading partners under Section 301 of the Trade Act of 1974. Thailand was placed in the 12.5% tariff group, a rate the government document described as higher than that faced by several of the country’s trade competitors.
The higher tariff will increase costs for Thai exports and could weaken their competitiveness in the US market. The government therefore instructed agencies to address conditions that Washington could use to determine tariff levels or justify further trade restrictions.
Labour Ministry leads forced-labour response
The Labour Ministry will lead work on forced labour in cooperation with the Commerce and Industry ministries and other relevant agencies.
Authorities were instructed to accelerate enforcement of related laws, regulations and official measures and ensure that they produce practical results.
They must also compile lists of products and industries considered at risk and establish origin-certification and traceability systems covering entire production chains.
The systems are intended to provide evidence that Thai products and their supply chains are not linked to forced labour when the government holds discussions with the United States and other trading partners.
Commerce Ministry to examine excess capacity
The Commerce Ministry will lead efforts to address excess production capacity alongside the ministries of Industry, Agriculture and Cooperatives and Finance, including the Customs Department.
The agencies must identify vulnerable products and industries and integrate information covering:
- production capacity;
- inventory levels;
- government subsidies;
- pricing structures;
- export volumes; and
- countries of origin.
They were also told to investigate false origin claims and the use of Thailand as a transshipment point to evade trade measures imposed by importing countries.
Support to focus on productivity rather than output
Future assistance for businesses should focus on improving productivity, reducing costs, developing technology, adding value to goods and increasing the use of domestically produced raw materials and components.
The government instructed agencies to avoid subsidies intended to expand production capacity or increase supplies beyond market demand, as such measures could expose Thailand to accusations of contributing to excess capacity.
All relevant agencies must prepare supporting information and response measures, identify the bodies responsible for each task and establish clear implementation timeframes.
The information will be used in trade negotiations with the United States and in measures intended to limit the potential impact on Thai exporters and businesses.
