Rosen's message was that the benefits of low tariffs that Thai exports enjoy under the Generalised System of Preferences (GSP) could not be renewed in October, when the programme comes up for review. This is because Thailand's per capita income is approaching US$850 (Bt33,600), meaning it will no longer be qualified for the GSP. The GSP is designed to help developing countries export their products to the US market with low tariffs in order to help their economic development. Thailand is the second biggest beneficiary after Brazil, which benefits the most from the GSP.

Rosen's remark implied that if Thailand were dreaming of enjoying the benefits of the GSP forever, it would be in for a rude awakening.

Any time the GSP issue arises, Thai exporters - of shrimp, for example - jump and bring out their huge lobbying machine. Trade officials will say that they have already sent out warning signals to the exporters, telling them to get ready for the axe, and that Thai exporters have to make necessary adjustments by moving up the chain of value-added products. But at the end of the day, the exporters mostly get what they want because they represent the bread and butter of the country. Exports account for 60 per cent of Thailand's GDP.

The way to move forward for Thailand, according to Rosen, is to undertake the FTA with the US. This would ensure that Thai exports to the US market would not be hurt by the loss of GSP status since the FTA would be in place instead.

The Thaksin government has been very enthusiastic about having an FTA with the US, as well as Thailand's other key trading partners. With the stalled global trade liberalisation talks under the World Trade Organisation, the Thaksin government believes that the fastest way to pry open foreign markets is through free-trade pacts. Dr Somkid Jatusripitak, caretaker deputy prime minister and commerce minister, has also complained several times that Thailand is losing opportunities due to the sluggish pace of arriving at FTAs, such as with the US and Japan.

Once Japan or the US establishes an FTA with other countries in Asia, Thailand will suffer further from more lost opportunities, Somkid believes. The US has concluded a free-trade deal with Singapore and is now working on pacts with Malaysia and South Korea. Thailand might be left behind in this catch-up game.

However, local activists, NGOs, other civic groups and academics are exerting a wider influence on the drawing up of the FTA. In January they succeeded in stalling the FTA talks between the US and Thailand in Chiang Mai, arguing that the FTA would make medical drugs more expensive for Thai consumers and that Thai farmers would lose their livelihood. Now, with the Thaksin government in limbo, all key policies have been shelved.

Why is the US so enthusiastic about the FTA with Thailand? We think that the US, plagued by ballooning current account and budget deficits, would like to work more aggressively on the trade front in order to address its domestic economic problems. The US deficits are the result of the fact that the US consumes more than it produces. If the US could broaden its exports and increase its trade, it would address these deficits.

But as we all know, Thailand is not ready for anything at this juncture when political reform is the main agenda. The FTA has to be postponed indefinitely until the new government is formed, but nobody knows when the next election can be held.