THAILAND: DEPUTY SECRETARY ZOELLICK'S MAY 4, 2005

C O N F I D E N T I A L SECTION 01 OF 05 BANGKOK 003283

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DEPARTMENT FOR D, EAP, EAP/BCLTV, EB, NEA, PM. HQ PACOM FOR
FPA (HUSO).

E.O. 12958: DECL: 05/04/2015
TAGS: OVIP PREL PGOV ECON MARR TH
SUBJECT: THAILAND: DEPUTY SECRETARY ZOELLICK'S MAY 4, 2005
MEETING WITH FM KANTHATI


Classified By: Ambassador Ralph L. Boyce. Reason: 1.5 (b,d)


1. (C) Summary: On May 4, 2005 Deputy Secretary Zoellick
met with Thai Foreign Minister Kanthati Suphamongkhon at the
Ministry of Foreign Affairs (MFA). In an 80-minute exchange,
they covered key areas for inclusion in the Free Trade
Agreement (FTA) negotiations, Thai endorsement of the
Proliferation Security Initiative (PSI) Statement of
Principles (SOP),the Thai interceptor aircraft purchase and
the F-16, the insurgency in southern Thailand, and Burma
(including the ASEAN Chair issue). They also briefly
discussed Indonesia, the East Asia Summit (EAS),China,
Japan, North Korea, shrimp, avian flu and tsunami relief.
End Summary.


2. (SBU) Deputy Secretary Zoellick congratulated FM
Kanthati on his appointment as foreign minister and noted
that close U.S.-Thai cooperation on delivering regional
humanitarian assistance in the aftermath of the tsunami had
strengthened bilateral ties. He said that the start of the
second terms of President Bush and Prime Minister Thaksin was
a good time to exchange views on key issues and move forward.


FREE TRADE AGREEMENT


3. (C) The Deputy Secretary said that a Free Trade
Agreement (FTA) was one important legacy that could be
achieved as both leaders looked towards the coming several
years. He recalled that on his last visit to Thailand as
USTR, PM Thaksin had made time while in the hospital for him
and they had launched discussions on an FTA. It was natural
that elections had slowed momentum a bit, but given the
strong history of friendship and partnership of the two
countries, and with strong leadership now in place, an
opportunity for renewed impetus presented itself. The U.S.
would like to conclude a comprehensive, gold-standard FTA
which, experience had shown, would send a signal to investors
and traders. Such an FTA could give an additional push for
growth and development in Thailand.


4. (C) The Deputy Secretary reviewed four sets of issues
that he planned to raise with PM Thaksin. He hoped there
would soon be new instructions to Ambassador Nitya
Pibunsongkram, the Thai FTA negotiator, to work on with new
USTR Rob Portman. The four areas were: Financial Services;
Services and Investment; Intellectual Property Rights (IPR);
and Environment and Labor. For each area, he noted awareness
of Thai sensitivities but explained the advantages that
Singapore and others had gained after taking on similar
commitments. The Deputy Secretary emphasized that upcoming
fourth round of FTA discussions in Montana, the home state of
Democratic Senator Baucus, Ranking Member of the Senate
Finance Committee, was an opportunity to garner political
support if the session went well. He also expressed pleasure
that the Small and Medium Enterprise (SME) sector was being
drawn into the talks. The Deputy Secretary said he was aware
of discussions about a Science and Technology accord and
agreement to work on an Open Skies agreement. He said he
hoped, together with the Prime Minister, to get the FTA back
on track and to combine it with these other areas of
cooperation into a good package.


5. (C) FM Kanthati responded that the Deputy Secretary's
points on the FTA were very much on Thai minds. He said that
the perception in the general public was that in negotiations
with a major power, Thailand would lose out. The RTG, he
said, had moved beyond the public mindset, but its experience
in dealing with Peru showed how powerful perceptions can be.
The Peruvian public had looked on Thailand as the "major
power" in that encounter. Kanthati added, however, that
Thailand had "no problem" in principle with the notion of a
comprehensive FTA. In FTA negotiations with China, Thailand
had chosen an "early harvest" approach concentrating on
fruits and vegetables but was looking at a more comprehensive
agreement with China as well.


6. (C) Kanthati confirmed that the banking industry is
concerned about the impact of opening Thai financial services
to competition. He noted that the Finance Ministry would be
involved in the next FTA round and opined that the
discussions "should move ahead." On IPR, Kanthati said there
was public concern that an FTA would increase the price of
pharmaceuticals and reduce access to medicine, especially for
drugs to treat HIV/AIDS and similar diseases. In general,
however, Thailand shared U.S. views on IPR and the need to
protect knowledge-based industries. Thai musicians, for
example, had to be protected from IPR violations, and the
government would like to see more Thai brands gain
international recognition. Kanthati said that involving SME
also fit well with what PM Thaksin had in mind and that
Thailand would welcome the chance to work with U.S. national
and state authorities to establish direct links with
different U.S. states in this area.


7. (SBU) Overall, Kanthati said, Thailand is faced with
strong domestic hesitation about FTA, but Ambassador Nitya
was doing a good job negotiating with the U.S. and explaining
back home what he was doing. The RTG wanted and needed a
successful FTA, but he emphasized that it must result "not
only in free trade but fair trade." Kanthati noted that if
aspects of the FTA impact on Thai laws, it will have to be
reviewed and approved by the Thai Parliament.


8. (C) The Deputy Secretary said that one of his key aims
was to address public attitudes and sensitivities on both
sides. Fair trade was a theme for many in the U.S. too.
There was concern about competition from Thai small truck
manufacturers, for example. Regarding access to medicines,
the important point was that nothing in our FTAs lessens the
commitments made in WTO/TRIPS, including the access to
medicines commitment made in August 2003. It might be
possible to amplify this point in a side letter, as we had
done in other FTAs.

PROLIFERATION SECURITY INITIATIVE (PSI)


9. (C) The Deputy Secretary expressed appreciation for
Thailand's strong cooperation on counter-terrorism and urged
the RTG to endorse the PSI Statement of Principles (SOP),
emphasizing that it did not obligate Thailand to do anything
but would set in place the framework for Thailand to
participate with us and others in PSI activities. He
outlined the importance of maritime security in Asia and
pointed out that North Korea had a history of transporting
WMD components on the region's waters. Kanthati said that
the RTG shared U.S. concerns about WMD and was in the process
of seeking Cabinet approval of the PSI SOP.
IRAQ


10. (C) The Deputy Secretary reviewed recent developments
in Iraq and underscored that 2005 is a key year for its
future. The Deputy Secretary provided an account of his
recent visit to Baghdad and Falluja and discussed formation
of the new Iraqi leadership, the positive signs of democratic
politics in action there, progress in Iraqi capabilities to
combat the insurgency, and the staying power of the Iraqi
government. He said that the U.S. and EU would convene a
conference on June 22 to consider further support for Iraq
and suggested that might be an opportunity for ASEAN and
others in Asia to engage as well. The Deputy Secretary
thanked Kanthati for Thailand's military support of Operation
Iraqi Freedom (OIF),and raised the letter sent by CJCS
General Myers asking Thailand to contribute staff officers to
man the OIF multinational headquarters.


11. (C) Kanthati did not respond directly to the matter of
CJCS Myers' request. He said that Thailand had been pleased
to send military engineers and medical personnel to Iraq to
help with humanitarian assistance and continued to think
about humanitarian support. One factor, he said, was making
sure that any Thai action did not have a negative impact on
the Muslim separatist violence in Thailand's South. He said
that Thailand wants to help and is willing to invite Iraqis
to train in Thailand. (Note: He was not specific about the
type of training. End Note.)

F-16 PURCHASE


12. (SBU) The Deputy Secretary urged that Thailand
favorably consider Lockheed Martin,s proposal to sell F-16s,
noting the firm,s readiness to include a counter trade offer
as part of its bid. He stressed the value of
interoperability; the F-16, alone among the competing
aircraft, could ensure that allied air forces would be able
to connect and communicate.


13. (SBU) Kanthati said that with the end of the Cold War
and the collapse of the Soviet Union, Sweden and Russia were
eager to be competitive in sales of their aircraft. The Thai
defense establishment was responsible for weighing the
options. Sweden and Russia were willing to offer barter
deals involving items such as Thai chicken, a high priority
of PM Thaksin, who was concerned about Thailand's current
account situation. Kanthati said that Thailand had questions
about the Lockheed Martin offer of offsets, because it was
difficult to price the value of offsets. He suggested that
U.S. interest in Thai chicken would be important to the final
recommendation by Defense. He closed by noting that the
competition was still open.

SOUTHERN THAILAND


14. (SBU) The Deputy Secretary said he was aware that PM
Thaksin had established a National Reconciliation Committee
(NRC) to address the separatist insurgency in the South. He
said that this seemed like an appropriate initiative and
asked FM Kanthati for his views on the South.


15. (SBU) Kanthati said there are grounds for optimism.
The RTG was listening to all sides and convoked an almost
unprecedented joint session of Parliament for extensive
discussions. PM Thaksin was deeply engaged. The problem,
Kanthati said, was not religion. Certain groups were
"pulling down" (i.e. exploiting) religion and attracting
innocents to their cause. The RTG recently invited the
Chairman of the Indonesian moderate Islamic group, Nahdlatul
Ulama (NU),to visit the South and, after talking to 1000
people, he also had concluded that religion was being used to
mask other activities. The RTG was determined to win back
support by following due process of law and transparency
after past incidents of abuses by local military and police
had alienated many Muslims. Anand Panyarachun, the head of
the NRC, was respected throughout Thailand for being open,
transparent and fair. His involvement added another positive
dimension to the RTG southern policy. Kanthati said that he
recently accompanied PM Thaksin to Jordan and King Abdullah
had explained that most Muslims are moderate. The RTG
believed the same was true in southern Thailand and wanted to
focus on education, use due process to clear up old local
abuses, and make ethnic Malay Thai Muslims feel that Thailand
is their home. This will take time, and complications from
score settling and involvement by drug smugglers have to be
overcome, but the violence can be ended, Kanthati said.

BURMA


16. (C) The Deputy Secretary asked for Kanthati's sense of
regional positions on Burma and said that Burma's assumption
of the ASEAN Chair in 2006 would reduce the U.S. ability to
engage with ASEAN in ways that we would like to and that
would advance common interests.


17. (C) Kanthati said that Thailand continued to share the
U.S. goal of wanting democratization in Burma as soon as
possible. To that end, he had recently engaged in
consultations with Burmese Foreign Minister Nyan Win and
others to explain the international community's concerns and,
keeping in mind that the two countries shared a 2400
kilometer border, to stress that Thailand wanted change.
Kanthati said that Nyan Win had responded that an early
release of Aung San Suu Kyi would create problems for the
Burmese national reconciliation process. The Burmese said
release would have to wait until after the SPDC resumed the
National Convention in November to finish drafting a new
constitution and had held a referendum on the constitution.
Kanthati said that he pushed for a quicker resumption of the
National Convention, but Nyan Win seemed firm on November.
There was also, he noted, continuing competition between SPDC
leaders Than Shwe and Maung Aye for influence that impacted
on the pace of reconciliation.


18. (C) Kanthati said that he had also raised concerns
about Burma assuming the ASEAN Chairmanship. He claimed that
Nyan Win had responded that ASEAN unity was more important
than Rangoon's interests and that Burma won't detract from
that. Kanthati said that the Burmese privately expressed
willingness to postpone assumption of the chairmanship.
Kanthati said he told Nyan Win that timing was a factor, and
that ASEAN will try to make it appear that passing up the
ASEAN chair was a Burmese initiative. Kanthati said he
advised the Burmese FM that an early announcement would be
best and Nyan Win had proposed July, although other Burmese
still wanted to wait until the ASEAN Kuala Lumpur Summit at
the end of the year.


19. (C) The Deputy Secretary expressed appreciation for
Thai efforts on Burma but was nevertheless concerned about
Thailand's reputation. Some may see Thailand as too
accommodating to the thugs in Rangoon. Kanthati said he
hoped that the Deputy Secretary would help explain the actual
situation and clear up misunderstandings. He said he was
open to consultations with anyone about Burma.

SHORT TAKES ON INDONESIA, EAST ASIA SUMMIT, CHINA, JAPAN,
NORTH KOREA, ETC.


20. (C) The Deputy Secretary asked Kanthati for his views
on regional issues. Kanthati said that he had recently
visited Jakarta and believed that the new government was
successfully consolidating itself, although problems with
Aceh continue. He noted that Thailand had taken into custody
five heavily-armed Indonesians aboard a vessel off southern
Thailand, but the Indonesians had suggested that the
detainees were more likely to be tied in to the Aceh conflict
than the Thai South. Kanthati said Indonesia was concerned
about its ability to police the Malacca Strait and wanted
help with capacity-building for that task.


21. (SBU) Kanthati said that Thailand supported the
"inclusive" approach to the East Asia Summit (EAS). He met
recently with ASEAN counterparts in the Philippines, he said,
and they agreed that countries should be invited if they: 1)
had substantial relations with ASEAN; 2) were ASEAN dialogue
partners; and, 3) supported the Treaty of Amity and
Cooperation. He mentioned that New Zealand would probably
join EAS and that the question of Australia was being
weighed. The Deputy Secretary said that a more open and
inclusive EAS made more sense. Thailand could play a central
role.


22. (SBU) Kanthati said that Thailand looked at China as an
increasingly formidable player in the region with which the
RTG wanted closer ties as an economic partner. It regarded
Japan in much the same way, and had found the recent tension
between Japan and China unsettling. He said that it had been
noticed that Japan had been strongly demanding an apology
from China over the anti-Japanese demonstrations and then,
suddenly, it was Japan which had apologized.


23. (SBU) Kanthati also stated that the Thai government,
and he personally, would be happy to help on the Korean
Peninsula issues, given Thailand,s diplomatic relations with
Pyongyang.


24. (SBU) Kanthati asked for an update on the issue of Thai
shrimp and U.S. anti-dumping investigations. The Deputy
Secretary said that the ITC had agreed to examine the issue

SIPDIS
of changed circumstances in light of the tsunami. Its
investigation would proceed in an open and transparent
process that would play out in the coming weeks/months.

25 (SBU) The Deputy Secretary noted the importance of
working closely with Thailand on avian influenza. There was
a need for early identification, accurate information, and
transparency because, otherwise, the situation with the
disease could quickly get nasty. He also noted again how
pleased and proud the U.S. was to have worked with Thailand
on tsunami relief and how important that cooperation had been
to Aceh in particular. In addition to official USG
assistance, the Deputy Secretary noted about USD 1.2 billion
had been raised privately in the U.S. for tsunami recovery.
Former President Clinton was expected to visit the region
soon.


26. (U) Participants: In this meeting, Deputy Secretary
Zoellick was accompanied by Ambassador Boyce, EAP DAS Marie
Huhtala, D Executive Assistant Ross Wilson, PA Deputy
Spokesman Joseph Adam Ereli, D Special Assistant for EAP
Chris Castro, D Special Assistant for Outreach and Public
Affairs Christine Davies, D Personal Assistant Lisa
Martilotta, Embassy Bangkok Economic Counselor Mike Delaney,
and Political Counselor Bob Clarke (notetaker). In addition
to FM Kanthati, MFA Deputy Minister Preecha Laohapongchana,
Advisors to the FM Dr. Pracha Guna-Kasem and Mrs. Sally
Jutabha, MFA Deputy Permanent Secretary Pisan Manawapat,
Americas Director-General Nongnuth Phetcharatana, Spokesman
Sihask Phuangketkeow, and East Asian Affairs Director General
Director-General Nopadol Gunavibool sat in on the Thai side.


27. (U) This cable has been reviewed by the Office of the
Deputy Secretary.
ARVIZU