THAILAND REJECTS ASEAN-KOREA FTA

UNCLAS BANGKOK 005406 SIPDIS SENSITIVE SIPDIS STATE PASS USTR USDOC FOR JKELLY E.O. 12958:N/A TAGS: ECON ETRD TH SUBJECT: THAILAND REJECTS ASEAN-KOREA FTA REFTEL: SEOUL 1981 ¶1. (U) Thailand declined to join its nine ASEAN neighbors in the signing of the ASEAN-Korea FTA in Kuala Lumpur last week. Mr. Sarig Ubolbarn of the Department of Trade Negotiations explained that the RTG had yet to reach agreement with Korea on opening Korea's market to Thailand's rice exports. The RTG did not attempt to continue negotiations in Kuala Lumpur and likely will not schedule further bilateral discussions with Korea until after general elections are held in Thailand later this year. ¶2. (SBU) Although rice exports presented the most serious and public disagreement with Korea, other issues remain to be discussed. Thailand is concerned about its ability to conform to the FTA's model for tariff reduction and is still engaged in internal discussions over which items should be placed in the "normal track" or the "sensitive track" (see reftel). The RTG is struggling as well with Korea's more stringent SPS regulations. Thai industry has protested inclusion of products from North Korea's Kaesong special economic zone, fearing an influx of cheap imports, and Sarig suggested there would be further negotiations on the rate of tariff reductions for Kaesong goods before Thailand would sign the final agreement. ¶3. (SBU) Thailand's rice trade with Korea make up less than one percent of its total exports to Korea (USD 2.4 billion in 2005) but nevertheless holds a critical place in negotiations for Thailand. Sarig conceded that other agricultural and seafood products were more important exports to Korea at present that could benefit from immediate tariff reductions, but felt the RTG had to try to crack the market to benefit Thailand's many rice growers. Negotiations on investment and services remain to be finalized and Thai trade officials expect the rice issue may be resolved within those negotiations. BOYCE