USTR PUSHES RTG TO ESTABLISH ECONOMIC DIALOGUE, RESOLVE CL

UNCLAS SECTION 01 OF 03 BANGKOK 001006

SIPDIS

SENSITIVE

SIPDIS

STATE PASS USTR
USDOC FOR 4430/EAP/MAC/OKSA

E.O. 12958:N/A
TAGS: ECON ETRD KIPR TH

SUBJECT: USTR PUSHES RTG TO ESTABLISH ECONOMIC DIALOGUE, RESOLVE CL
ISSUE AND IMPROVE IPR

REF: A) BANGKOK 904; B) 07 BANGKOK 5405


1. (SBU) Summary: On March 17 and 18, Assistant USTR Barbara
Weisel and USTR Director for Southeast Asia David Bisbee met with a
range of RTG officials and private sector contacts in a bid to renew
regular contact on economic issues with the newly elected
government. Weisel proposed the two governments pursue a regular
dialogue to discuss bilateral and regional issues to which Thai
Commerce Department officials agreed. The continuing controversy
over compulsory licensing of patented drugs was raised by Thai
officials in nearly every meeting. RTG officials showed interest
managing the issue and in continued discussions with the
pharmaceutical industry, but made clear that relevant agencies had
not yet coordinated their positions or reached a decision on next
steps. A tentative way forward was reached in a meeting with Thai
Customs that may resolve concerns over valuation of distilled
spirits. Weisel pressed officials in various meetings to clarify
the country's trade and investment policies and send positive
signals to investors, particularly in the face of increased
competition from Thailand's regional competitors. IPR protection
was listed as a prime area of concern in which Thailand was falling
behind its neighbors. Despite its assertions that it wants to
improve the trade and investment climate, the new government is
still finding its way and coordination on economic policy may be
sluggish in the short run. End Summary.

Economic dialogue
--------------


2. (SBU) Ms. Weisel noted to Commerce officials that since the 2006
military coup and the suspension of FTA negotiations that there had
been infrequent contact on economic issues. She proposed to pursue
a dialogue to regularly discuss bilateral and regional issues. Ms.
Chutima Bunyaprapharasa, Director General of the Department of Trade
Negotiations, agreed that a regular dialogue would be useful but
suggested it could be done on the margins of other international
meetings. Weisel disagreed as key officials were often not present
at the same meetings, and proposed that dedicated meetings be
arranged several times per year. She said that holding sub-group
meetings during these dialogues, for example on IPR issues, would be
of particular value given the many specific issues that need to be
discussed in detail. Chutima suggested that Thai officials come to
Washington in the next few months for a dialogue meeting.


3. (SBU) Weisel noted to Siripol that investors were closely
watching the new government's statements, looking for signals of
where trade and investment policy was headed. As those signals were
still not clear, Weisel urged Siripol to communicate the
government's economic priorities to business and the general public.
She compared Thailand's economic performance unfavorably to
regional competitors including Vietnam who were making strides in
reforming business regulations and building institutions to drive
trade and investment growth. Siripol was somewhat dismissive and
obviously sensitive to the comparison to Vietnam, but said he
understood that investors were watching and hoped that trade would
increase now that Thailand had returned to an elected government.

Compulsory licenses
--------------


4. (SBU) In separate meetings, officials from the Ministries of
Foreign Affairs, Commerce and Public Health asked AUSTR Weisel about
her views on the new administration's policy on compulsory licenses
(CL) of patented pharmaceuticals. Weisel encouraged greater
cooperation with the pharmaceutical industry and an undertaking of
serious negotiations with affected companies. PM Samak had earlier
tasked these three Ministries to review the previous government's
policy of breaking drug patents and come to a joint decision on how
and whether to proceed with the policy. Although receptive to
negotiations and aware of the possible negative implications on
Thailand's image as a dependable economic partner, officials
indicated a lack of coordination among ministries and uncertainty
about how to bring forth a resolution of the highly sensitive issue.
Officials said that meetings between the Ministries on the issue
would continue over the next week, but were not clear on how they
would come to a policy decision. MFA officials said planned
meetings have not yet taken place due to the Minister's travels.


5. (SBU) Deputy Permanent Secretary Dr. Paijit Warachit of the
Ministry of Public Health told Weisel that the Ministry "did not
intend to do new compulsory licenses." Regarding those previously
issued, he laid responsibility on the previous government, saying
"we are not involved." Weisel noted that should the current
government import generic copies under the previous CLs that the
government would be taking ownership of them. Weisel stated that a

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real solution would have to include all previously issued CLs, and
encouraged Paijit to engage with industry. She suggested that
industry's proposal for a Joint Committee of health officials and
companies to work on public health issues expand to include the
Ministries of Commerce and Foreign Affairs. Paijit agreed the Joint
Committee could be a beneficial element in improving public health
for the poor, and disclosed he was planning to meet with the local
industry association the next week to discuss it. However, he
opined that he was in "a difficult time" and was waiting for a
policy decision from above.


6. (SBU) During a courtesy call by Ambassador John on Minister of
Commerce Mingkwan Sangsuwan (reftel A),the Minister was asked for
assistance in resolving the CL issue. Mingkwan lamented that the
previous government had left them such a controversial issue and
promised that his staff would study the issue "with a positive
attitude." He believed the issue belonged with the Ministry of
Public Health. "We take a passive role," Mingkwan said, but said
his Ministry would participate in deliberations. In an ensuing
meeting with Permanent Secretary Siripol Yodmuangcharoen, Weisel
again encouraged the Ministry to reconstitute the Joint Committee
and initiate a more constructive discussion on the CL issue,
particularly before taking any actions that would threaten to
dismantle the patent system that his Ministry was responsible for
maintaining. Siripol said the government had to balance its
international IPR commitments with the interests of the country, but
that he wanted "to do something."


7. (SBU) In other meetings on the issue it was clear that the
previous government's arguments in favor of CLs continued to
resonate and there was little understanding of industry's positions.
MFA officials brought up questions on the U.S. use of compulsory
licenses and asked for any information that would counter NGO claims
that compulsory licenses were a routine occurrence in the U.S. and
around the world. In a separate meeting with Mr. Kiat Sittheeamorn,
shadow Commerce Minister in the opposition Democrat Party, Kiat
noted that CL proponents claimed that the policy was WTO consistent
and questioned why the USG had not provided a counter argument. In
a final meeting with industry representatives, several companies
agreed that industry's efforts to explain their position to RTG
officials, press and the general public had been generally
ineffective.

IPR and Special 301
--------------


8. (SBU) Weisel brought up with Commerce the ongoing USTR Special
301 review of global IPR protection. She noted that while the
compulsory license issue had been a high-profile one for Thailand,
it was only one of many issues and serious concerns remained on
enforcement, judicial and legislative issues surrounding IP
protection. Ms. Puangrat Assavapisit, Director General of the
Department of Intellectual Property, said her department was
strengthening its IP task force and would be working more closely
with police units to trace back pirated merchandise to the
manufacturers. An inter-agency working group would also be
established to improve coordination on enforcement. Siripol claimed
that a great deal of effort had already been put into improving
enforcement and believed that Thailand's enforcement was superior to
other countries in the region. Weisel disagreed with his
assessment. She pointed out that Malaysia recently had taken on IP
enforcement as a domestic issue in a bid to attract more
knowledge-based industries and suggested Thailand do the same. To
get issue on track, she suggested that the two governments work on
an IPR action plan.

WTO and the Doha Round
--------------


9. (SBU) Weisel turned to ongoing negotiations in the WTO Doha
Round and expressed disappointment that ASEAN had recently submitted
a paper demanding a revised Rules text as a precondition for moving
Doha negotiations forward. DG Chutima said she had not been
following that particular issue closely, but would check on it.
Weisel said she hoped that we could expect significant offers from
Thailand on services and non-agricultural market access, noting that
Thailand's current services offer included foreign ownership
bindings much lower than what is currently allowed. She also
requested that Thailand consider taking commitments in several
important sectors where Thailand currently has no GATS commitments.
Weisel brought up Minister Mingkwan's stated desire to make Thailand
a business hub and suggested that a reluctance to make significant
commitments in important sectors such as telecommunications,
distribution, express delivery and financial services would
undermine any effort to reach that goal. Siripol said that his

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Ministry did not have the lead on many of the services sectors, but
conceded that the RTG needed to push further with services
liberalization.

Customs
--------------


10. In a meeting with Thai Customs, Weisel inquired about an
ongoing WTO case on Thailand's customs valuation procedures brought
by the EU (reftel B),and asked whether a proposed settlement would
apply to U.S. companies as well. Weisel asked for assurances that
there would be a permanent solution to the valuation problems,
noting that a similar problem had arisen five years prior, was
resolved temporarily and then reappeared. Deputy Director General
Chawewan Kongcharoenkitkul said the Customs Department would be
implementing new guidelines to customs officers on how to apply
customs valuation according to the WTO valuation system, accepting
the declared valuation unless there was sufficient "reason to
doubt." She said she would send these guidelines to the U.S. for
comment. She added that front-line officers would not be authorized
to make that judgment and would do so only in consultation with
supervisors. She also promised that pending cases under bank
guarantee would be reviewed and cleared within three months. Weisel
said the U.S. would review the guidance, but that it would keep all
of its options open for resolving the issue until it was satisfied
that its concerns had been fully addressed.

Comment
--------------


11. (SBU) Despite public comments that it will work to improve the
investment and trade environment, the new RTG economic team appeared
to still be struggling to outline its economic policies and
coordinate between ministries on issues, particularly on a
controversial issue like compulsory licenses. In a number of
meetings, our interlocutors expressed some doubt that this current
lineup of Ministers would be in place for long, including Minister
Mingkwan who frequently punctuated comments on his plans with "If
I'm still here...". Although RTG officials were receptive to the
idea of bilateral dialogue on economic issues, high-level attention
to coordination on individual issues may be sporadic as the new
government finds its way.
JOHN