Thai-Japan FTA an important test
The government and the NLA must base their decision on the trade pact on reason and the national interest
This week, the Foreign Ministry is expected to ask the Cabinet to consider whether to approve the draft Thai-Japanese free trade agreement (FTA). Although both sides wrapped up talks on the FTA earlier this year, the signing of the agreement was delayed because of the political turmoil in Thailand that led to the September 19 coup.
The interim government led by Prime Minister Surayud Chulanont has tentatively agreed that the FTA with Japan should be given the go-ahead as the pact was agreed to by the previous administration. However, the Cabinet will be asked to formally scrutinise the draft agreement and to avoid the mistake of the previous government, which had no intention of letting Parliament have a say on this important matter. The Surayud government, on the other hand, will ask the National Legislative Assembly (NLA) to ratify the trade pact.
Although the details of the draft Thai-Japanese FTA aren't likely to change much from the text that officials from both sides agreed upon earlier this year, the interim government should not expect the agreement to sail through easily. The government will need as much power of persuasion as it can muster to convince the NLA.
If the recent debate on the national lottery bill was any indication, the Thai-Japanese FTA is going to be one of the tough questions that the interim government must handle with utmost care. However, given the fact that the Thai business community generally approves of the FTA with Japan, which unlike the planned FTA with the United States does not cover highly sensitive components such as protection of intellectual property, the agreement should prove much less controversial.
The FTA, if successfully concluded, will be mutually beneficial to both Thailand and Japan, which have developed a strong and special economic partnership over the past several decades. The same cannot be said of Thailand's other trading partners or major foreign investors. Surely Thailand will want to persuade Japanese investors to maintain their production bases in the country. After all, Japan is still the biggest foreign investor in Thailand. According to the Board of Investment, the amount of Japanese investment that it approved and promoted between 1970 and 2005 totalled Bt1.11 trillion, or about 40 per cent of the country's total foreign direct investment.
The flow of Japanese investment into Thailand since the 1980s has helped drive the industrial sector and transform the economy. Among other things, Thailand has since become Japan's major auto-assembly centre in this part of the world.
Even so, the Thai-Japan FTA could easily become a highly politicised issue, especially if politicians or social activists want to exploit it to advance their political agenda. Facts can be distorted, as has happened in the past, to foment anti-foreigner sentiment, even though Thailand's economic wellbeing has always been dependent on the steady inflow of foreign capital.
Even in the absence of elected politicians, the Surayud government and the legislative assembly can do the country a great service by taking a reasonable approach in debating the FTA, using facts and reason to determine whether it offers the greatest good for the greatest number of Thais.
Inevitably, questions will crop up regarding the legitimacy of an interim government and a non-elected people's assembly to pass an international trade agreement. But the Surayud government and the NLA could gain public acceptance if they handle the FTA debate responsibly and with cool heads. Let's not forget that an FTA with a major trading partner and steadfast investor like Japan will have a huge impact on the country's economic opportunities and long-term prospects.
Decision-makers can vote either for or against the FTA; people will be able to accept the decision taken. But what the Thai public expects to see is that this appointed government and interim legislature can rise above contentious and adversarial politics and keep public interest as the highest priority in considering every national issue.