THAILAND'S POLITICAL CRISIS AND THE FTA

C O N F I D E N T I A L BANGKOK 001317

SIPDIS

FOR D - DEPUTY SECRETARY ZOELLICK
FOR E - UNDER SECRETARY SHINER
FOR EAP - ASSISTANT SECRETARY HILL
DEPARTMENT PASS USTR FOR AMBASSADOR PORTMAN
FROM THE AMBASSADOR

E.O. 12958: DECL: 03/03/2016
TAGS: ETRD TH US FTA
SUBJECT: THAILAND'S POLITICAL CRISIS AND THE FTA

Classified By: Ambassador Ralph L. Boyce. Reason: E.O. 12958, 1.4 (b)
and (d)


1. (C) With Prime Minister Thaksin's February 24
dissolution of the Parliament and the calling of elections,
our FTA with Thailand is on hold. That may not be all bad:
the FTA was the one American component of the increasingly
vociferous anti-Thaksin campaign here, and the negotiations
hiatus has removed it (and the US) from the political line of
fire. The FTA is parked in what we believe to be a safe
place: what had been daily local media reports detailing one
or another dire threat posed by the FTA have now disappeared.
We also are close to finalizing arrangements for an
indefinite continuation of benefits provided to US investors
under our Treaty of Amity and Economic Relations (AER).
Keeping the FTA "on hiatus" is essential to this.
Considering the circumstances, this is a good outcome --
better than many possibilities we had feared.


2. (C) Thailand's political crisis continues to evolve in
unpredictable ways. The most probable scenarios, however,
suggest that the current hiatus in the FTA talks may prove an
extended one. We suspect that there are many within the RTG
who breathed a sigh of relief when the calling of elections
provided a neat, procedural excuse to suspend talks.
Questions over the viability of the FTA extend well beyond
the interruption caused by the elections. The FTA is closely
associated with Thaksin, and as opposition to the PM has
mounted, attacks on the FTA have become ever more strident.
Judging from media coverage, the FTA has now become intensely
unpopular. FTA supporters have either gone underground or
(sensing the political winds) switched sides. In his
currently embattled state, we wonder if Thaksin will be quick
to resume talks even if circumstances were to permit. The
main opposition Democrat Party, while being careful not to
condemn the FTA outright (it supports the FTA in principle
but criticizes certain provisions, e.g., intellectual
property, and the current government's handling of the
negotiations),may also find the FTA too radioactive to deal
with in the event the party wins office.


3. (C) The main reason for this negative atmosphere has
been the almost complete failure of the Thai Government to
explain to the public the need for, and benefits of, an FTA
with the US. The RTG has belatedly recognized the need for
public consultation, but this project will be doubly
difficult given that so many already have formed their views.
The pro-FTA forces have one great advantage, however: there
is a compelling argument that the FTA will be good for
Thailand, boosting employment and incomes. The FTA is a very
good message, and in the hands of an effective messenger
addressing an open-minded audience it is likely to eventually
gain the upper hand. But this eventuality is likely to take
time.


4. (C) In the meantime, what should we do? The sidelining
of the FTA should lower the temperature of what had become a
white hot issue. Our launch of FTA talks with other
countries in the region will serve to educate the Thai public
(and political parties) on the relationship between trade and
investment liberalization and maintaining Thailand's
competitiveness. At some point, the politics will calm down,
permitting a fresh look at the FTA.


5. (C) Aside from the FTA's close association with Thaksin,
the issue that did the greatest damage to the FTA's prospects
was enhanced IPR for medicines -- particularly those for
HIV/AIDS -- and its possible effect on prices. What we
needed to effectively counter the large numbers of
demonstrators (most of whom were HIV/AIDS sufferers) were
clear, direct answers to their concerns. The ability to make
a plain, unqualified statement that the FTA would not affect
Thailand's ability to access essential medicines to treat
HIV/AIDS at an affordable price would have been extremely
helpful. Such a statement by a high-level US official at the
outset of any future FTA talks will likely prove useful --
perhaps decisive -- in jumpstarting such talks, setting them
in a very different and more favorable light. It would be
infinitely more helpful than having such a position as a
negotiated outcome at the conclusion of the FTA negotiations.


6. (C) I urge you not to give up on Thailand. The original
vision of the FTA, with its promise of gains for both of our
economies, remains valid. That's why we are convinced that
conditions eventually will permit negotiating comprehensive
trade and investment liberalization with Thailand. We look
forward to that opportunity.
BOYCE