Identifier
Created
Classification
Origin
05BANGKOK1026
2005-02-09 05:01:00
CONFIDENTIAL
Embassy Bangkok
Cable title:  

AMBASSADOR BOYCE CALLS ON THAI COMMERCE MINISTER

Tags:  PREL PGOV EAGR ECON EINV ETRD ASCH ID TH 
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C O N F I D E N T I A L SECTION 01 OF 03 BANGKOK 001026 

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E.O. 12958: DECL: 02/09/2015
TAGS: PREL PGOV EAGR ECON EINV ETRD ASCH ID TH
SUBJECT: AMBASSADOR BOYCE CALLS ON THAI COMMERCE MINISTER


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

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

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E.O. 12958: DECL: 02/09/2015
TAGS: PREL PGOV EAGR ECON EINV ETRD ASCH ID TH
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

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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

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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