Experts discuss pros and cons of TPP trade deal

THAILAND may have to consider joining the US-led 12-country Trans- Pacific Partnership (TPP) free-trade agreement in order to boost its international competitiveness for exports and foreign direct investment, top academics and government officials say.

Kejpiroon Kohsuwan, a senior trade negotiator at the Commerce Ministry, said the TPP free-trade agreement, which currently excludes Thailand, would negatively affect the export sector and foreign investment in the years after it is implemented.

Speaking at a seminar entitled “TPP Vs Asean: Thailand’s and Asean’s Position,” Kejpiroon, who is also director of Bureau of America, Pacific and International Organisations at the Department of Trade Negotiations, said Thailand has free-trade deals with all but three member countries – the US, Canada and Mexico.

A preliminary study shows that TPP’s rules of origin of goods traded among member countries, which also consist of Singapore, Malaysia, Vietnam, Brunei, Australia, Chile, Japan, New Zealand and Peru, would also hurt Thailand’s exports of upstream and intermediate products.

As a result, this could lead to the relocation of factories for downstream products from Thailand to other countries such as Malaysia and Vietnam, which are TPP member countries.

Kejpiroon said Thai and foreign investors would be tempted to move their factories out of Thailand due to TPP’s tax and rules-of-origin benefits.

Deputy Prime Minister Somkid Jatusripitak said earlier that the government is awaiting an in-depth study on the TPP’s pros and cons before making a decision about joining the FTA grouping.

It will take another year for the TPP agreement to be ratified by the governments of the 12 member countries.

Kejpiroon said one of the first detailed studies would be completed in January 2016.

At present, Thailand is a member of the Regional Comprehensive Economic Partnership (RCEP) framework, another FTA of 10-country Asean plus China, Japan, South Korea, India, Australia and New Zealand. A comparison shows that TPP member countries have a combined GDP of US$28.3 trillion compared to RCEP’s $22.8 trillion, representing 38 per cent and 29 per cent of world GDP, respectively.

Dr Prapat Thepchatree, director of Thammasat’s Centre for Asean Studies, said Thailand may have to join both FTA frameworks to avoid losing the benefits of TPP membership.

However, he said, the country should give more weight to RCEP and keep other options open because regional FTA arrangements would become more complex in the future.

Kejpiroon said the automotive, textile and food industries could be among those hit by not being in the TPP. Both Malaysia and Vietnam, who are members of TPP and RCEP, would have an advantage in terms of attracting foreign direct investment in the future.

But she said Thailand also had to study the potential negative consequences of TPP membership.