U/S PADILLA PUSHES RENEWED ECONOMIC RELATIONSHIP WITH

UNCLAS BANGKOK 001452

SENSITIVE

SIPDIS

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

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

SUBJECT: U/S PADILLA PUSHES RENEWED ECONOMIC RELATIONSHIP WITH
THAILAND


1. (SBU) Summary: Under Secretary of Commerce for International
Trade Christopher Padilla held a productive visit to Bangkok on
April 28, underscoring with Thai government officials, private
sector groups, and the press that the United States fully supports
Thailand's democratically-elected government and is eager to
re-energize the economic and commercial relationship. U/S Padilla
was in Thailand to celebrate the 175th anniversary of U.S.-Thai
relations and discuss bilateral trade and investment issues. During
meetings with the Prime Minister, Foreign Minister, Finance
Minister, Trade Minister, and Transport Minister, U/S Padilla
proposed that the United States and Thailand begin a formal dialogue
to develop a Joint Action Plan to improve intellectual property
rights (IPR) protection in Thailand and joined with the Ambassador
to advocate on behalf of Engine Alliance (GA),which is seeking to
provide U.S.-made engines for Thai Airway's Airbus A380. Under
Secretary Padilla also raised U.S. concerns related to the Doha
Round, investment, and customs valuation for alcoholic beverages.
Thai officials welcomed U.S. support for the new government and
expressed serious interest in beginning a formal dialogue on IPR
issues. End Summary.


2. (SBU) Together with the Foreign Minister, the Prime Minister and
Ambassador John, Under Secretary Padilla opened the Business Summit
on April 28 celebrating U.S.-Thai partnerships and the 175th
Anniversary of U.S.-Thai relations. The Business Summit was
co-sponsored by the Ministry of Foreign Affairs, the U.S.-ASEAN
Business Council, the American Chamber of Commerce in Thailand and
the U.S. Embassy. In his remarks, U/S Padilla noted the close
economic ties between the United States and Thailand, underscored
America's support for the democratically-elected government, and
called for both sides to re-energize the economic and trade
relationship. He urged Thailand to allow greater foreign investment
in communications, transportation, financial services, and
agribusiness. He also noted Thailand's efforts to improve IPR
protection in 2007 and proposed a formal dialogue to discuss IPR
issues and develop a Joint Action Plan to address them. Foreign
Minister Noppadon complained that the U.S. Trade Representative
should have downgraded Thailand to the Special 301 Watch List for
IPR violations, rather than continuing its placement on the Priority
Watch List (PWL) for another year. The Prime Minister promised no
new restrictions on foreign investment and offered consideration for
more flexibility on investment in services.


3. (SBU) In an ensuing meeting with PM Samak, U/S Padilla
congratulated Thailand on its return to democracy and reiterated
America's support for the democratically-elected government.
Padilla explained the USG's recent decision to keep Thailand on the
PWL, and reiterated his proposal for the creation of a formal
bilateral dialogue to develop a joint action plan or roadmap for
improving IPR protection. In a wide-ranging discussion in which the
Prime Minister discussed at length the history of aviation, U/S
Padilla and the Ambassador advocated for the Engine Alliance (EA)
bid to provide U.S.-manufactured engines for the new A380. U/S
Padilla noted that the EA engines were more fuel-efficient, and that
the bid had been accepted by Thai Airways on technical merits. A
positive decision by Thailand would send an important message to
other companies participating in Thai procurements and would further
reinforce bilateral trade ties. Although the Prime Minister
admitted that he did not have all the background on this matter, he
appeared receptive to EA's bid and agreed that the decision should
be based on the facts.

Commerce Minister shows interest in IPR, WTO
--------------


4. (SBU) U/S Padilla later met with Commerce Minister Mingkwan and
explained more in-depth his proposal for a Joint Action Plan on IPR
to address Thailand's inclusion on the Priority Watch List (PWL).
He noted that the Prime Minister had expressed his support for the
idea. The action plan would address a wide range of IPR issues,
including copyright protection, unsafe counterfeit products, and the
need for deterrent sentencing by Thailand's Intellectual Property
Court. With respect to Thailand's policy of compulsory licensing of
patented pharmaceuticals, the Under Secretary noted that he had
discussed industry's proposal for a Joint Committee with the Prime
Minister as a cooperative approach to address this sensitive issue.
The Joint Committee would bring together key Thai Ministries and
industry to discuss solutions to health care problems. The Under
Secretary recommended that the Joint Committee meet soon, in May or
early June.


5. (SBU) U/S Padilla told the Commerce Minister that he welcomed
the Prime Minister's remarks at the Business Summit, including his
promise that there would be no new restrictions on foreign

investment. He encouraged the Minister to consider amending the
list of restricted sectors in the Foreign Business Act (FBA) to open
up the transportation sector for U.S. express delivery companies.
The Minister said that a revision of the Act's List Two, which
restricts foreign participation in inland transportation, is under
consideration.


6. (SBU) U/S Padilla also raised the WTO Doha Round and noted that
Thailand had made a positive contribution on industrial tariffs. He
asked that the RTG give more thought to improving its services offer
to help ensure a successful deal. Commerce Minister Mingkwan at
first did not appear to be familiar with the current status of the
Doha round, but after conferring with his staff agreed to consider
the Under Secretary's request.


7. (SBU) In response to a question from the Commerce Minister
regarding an administrative review of anti-dumping duties on Thai
shrimp exports, U/S Padilla explained that the Department of
Commerce is taking the Thai Government's request regarding major
exporter Thai Union seriously and would announce its decision in
July.

Finance Minister on services, customs
--------------


8. (SBU) In his meeting with Finance Minister Surapong, U/S Padilla
encouraged the Thai government to open new sectors to foreign
investment, including infrastructure, telecommunications, and
financial services. With respect to the Doha Round, he encouraged
the RTG to consider making a more ambitious offer on services and
described the next few months as a narrow window of opportunity for
progress, with a possible upcoming Ministerial meeting in June. The
Finance Minister responded that, in general, any opening of sectors
would be carefully considered and implemented on a step-by-step
basis.


9. (SBU) The Under Secretary expressed his interest in continued
progress towards the resolution of the customs valuation issue
involving alcoholic beverages as already agreed. He noted the
interest of the United States in concluding a written agreement with
the Thai Customs Department to confirm the resolution of this
matter. U/S Padilla also advocated on behalf of EA's bid to sqpply
angines for Airbus A380s.

Foreign Minister welcomes IPR proposal
--------------


10. (SBU) During his meeting with Foreign Minister Noppadon, U/S
Padilla reiterated America's support for the new
democratically-elected government and the desire to reenergize
economic relations. With respect to the compulsory licensing issue,
he expressed his appreciation to Noppadon for his Ministry's
participation in the Joint Committee and urged that this Committee
meet soon. The Foreign Minister said that he would convey these
concerns to the Health Minister.


11. (SBU) The Foreign Minister asked that the United States
reconsider the placement of Thailand on the Special 301 Priority
Watch List, but welcomed the U.S. proposal for a formal dialogue on
IPR issues and the development of a Joint Action Plan. Ambassador
John suggested that both governments could consider adding an IPR
discussion to the Strategic Dialogue planned for early June in
Washington.


12. (SBU) In response to a question from the Foreign Minister on
benefits under the Generalized System of Preferences (GSP) program
for gold jewelry, Under Secretary Padilla explained that under
current legislation, restoration of GSP benefits for this product
would be based on future export levels for the product.

Transport Minister wavers on engine advocacy
--------------


13. (SBU) Under Secretary Padilla and Minister Santi discussed the
bid by Engine Alliance to supply engines for the Airbus A380s
purchased by Thai Airways. The Under Secretary noted that he had
already raised the issue with PM Samak. He described the superior
fuel efficiency of the engines from EA and the Trade and Development
Agency (TDA) grant to provide training to Thai Airways staff. The
Transport Minister indicated that he would welcome a meeting with EA
to further discuss its offer. However, the Minister noted that
Rolls Royce had met with him and offered to open a maintenance
facility in Thailand that would employ several hundred people. He
asked whether the EA bid included any such offer. Ambassador John

promised to convey this question to EA and facilitate a meeting with
the ministry as soon as possible. FCS Bangkok arranged a meeting on
May 1 for EA representatives with Minister Santi to promote their
bid.

U.S. business community shows support
--------------


14. (SBU) During a breakfast roundtable, members of the American
Chamber of Commerce in Thailand expressed their support for U/S
Padilla's message to the RTG, particularly reengagement on economic
issues. They agreed with the Under Secretary that initial steps
taken by the RTG such as the removal of capital controls are
positive ones. Financial sector representatives emphasized the need
for liberalization of the financial sector, but acknowledged
significant challenges would be faced in any such effort. The Under
Secretary also met with the members of the U.S.-ASEAN Business
Council visiting Bangkok. Council members raised concerns regarding
the need for Thailand and Cambodia to resolve overlapping claims,
Thai policies on biotechnology, compulsory licensing, and investment
in services not cvered by the bilateral Treaty of Amity and
Economc Relations.


15. (SBU) Under Secretary Padillawas joined in his Ministerial
meetings by Ambassdor John, Deputy Assistant Secretary for Asia Ira
Kasoff, Chief of Staff to the Under Secretary Micael DiPaula-Coyle,
SCO Bacher, and Jean Kelly, Comerce Thailand Desk Officer.
JOHN