TPP: It’s make or break for Thailand

Photo: SumOfUs/CC BY 2.0

By Holly Reeves

Farmers in Thailand are threatening to take to the streets to protect their crops, and their livelihoods, from one of the most ambitious free trade agreements ever signed.

Prime Minister Prayut Chan-o-cha is expected to announce his government’s decision on asking to join the United States-led Trans Pacific Partnership (TPP) free trade grouping this month.

The pact aims to deepen economic ties between nations, slashing tariffs on 18,000 products and fostering trade to boost growth. Prayut calls it, “a critical agreement that could make or break Thailand.”

His choice will weigh heavily upon specialist reports which claim significant growth opportunities for his country if it becomes a TPP member – an additional 0.77% of GDP each year.

But Prapat Panyachatrak, chairman of the National Farmers Council, says he is worried that the farming industry will be hit the hardest by opening markets – running small scale farmers out of business and forever polluting the country’s crops.

“If the government does not avoid the TPP, we cannot avoid having a confrontation as well. All farmers nationwide are ready to move to protect their own interests,” he said.

Lessons from the past

Thailand has been here before. Critics point to the 2005 deal between Thailand and Australia, where local farmers struggled to compete on quality and price, when import taxes on foreign meat were gradually reduced to zero. The nation’s herd dropped by almost half as a result.

Unsurprisingly, livestock farmers are particularly worried about the impact of the new deal, and will be one of the first groups the government consults.

According to Bangkok-based regulatory expert Martin Klose, “Some experts fear significant losses in the export sector, especially in relation to the US market as one of Thailand’s major export destinations (10% of the total).”

“For rice, in particular, Japan agreed to reduce tariffs and non-tariff barriers on food imports and established a quota of 50,000 tonnes of US imports rising to 70,000 tonnes over 13 years. This may concern food exports, given the fact that Thailand is one of the world’s leading exporters of rice.“

But this is about more than just foreign products flooding onto shelves and increasing competition. Activists say the very essence of Thailand’s traditional farming techniques is at risk.

Withoon Lianchamroon, director of sustainable agriculture pressure group Biothai, said the TPP would force the country to join the International Convention for the Protection of New Varieties of Plants, and the Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure.

These agreements provide protection for biotechnology companies that produce genetically modified crops. The International Convention, in particular, stops farmers and breeders from exchanging protected seeds for 20 or 25 years, and asks governments to remove laws which stop plants from being patented.

At the same time, it is alleged that these deals strip out compensation for farmers who have their stocks tainted when laboratory-made crops are grown openly. And that is before one even considers the estimated 49 billion baht ($1.4 billion) lost by Thailand’s biotech industry each year, as it welcomes in these foreign players.

The Agriculture Ministry says it has listened to concerns among farmers and agreed to strengthen the sector. Its plan is to set up a centre to produce quality, low-cost seeds for farmers, as well as amend laws to ensure the protection of traditional Thai plants.

A wolf in sheep’s clothing?

The grumbles of farmers aside, the option of joining the TPP is not one Thailand can easily pass up on.

The current 12 members of the TPP account for 40% of Thailand’s trade and 45% of foreign direct investment. It is an impressive collection of trade partners, including everyone from Australia, Canada, Japan, Malaysia, Mexico, Peru, United States, Vietnam, Chile, Brunei, Singapore and New Zealand.

“Foreign investors await an official declaration of whether Thailand intends to join the TPP, and we are optimistic the meeting [of the relevant Government committee] will allow negotiations with TPP members to start early next year,” says Deputy Prime Minister Somkid Jatusripitak.

His optimism is based on a recent study conducted for the government by the Panyapiwat Institute. It found that the TPP would bring more benefits to Thailand than negative impact or challenges, leveraging its economic growth and increasing standards for Thai products and services.

The study also says that joining would draw more foreign investment into the country and maintain the investment that is already there – promoting growth in the automobile, electronic, computer, garment and textile sectors. Finally, it would spur faster development of the trade and service sectors.

But at what price?

Which way to turn?

This feels like a crossroads for Thailand. The US’s tariff privileges will run to the end of 2017, but if Prayut does not sign it and those benefits expire, his country’s competitiveness will be suddenly undermined, relative to TPP member states such as Malaysia and Vietnam.

Pressed into a corner, how does it run the balance between national peacekeeping and the demands of international trade?

Whatever happens, keeping up with neighbours is going to be expensive. The decision to be made is where the price is paid – by Thailand’s farmers, or its hopes to be an international player.