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USA & Thailand Industrial Supply Marketplace

US-Thailand Trade Relations: Comradeship Through Economic Access
How The Trade Flourished

Thailand is a Southeast Asian nation which shares boundaries with different places. Burma is situated both on the west and Northwest, Laos on the east and northeast, Cambodia on the southeast and Malaysia on the south. The name Thailand was only coined after 1939 since it was previously called as Siam. It was never found under any European colonization thus the meaning of its name is said to be "land of the free." Agriculture forms one-fourth of the Asian country's Gross National Product (GNP). Rice is its principal crop and leads the products exported to other nations. Rubber ranks next to the crop and is produced primarily in the southern portion of the country.

Manufacturing is vital in its economy as well with 20% contribution to the GNP. Major industries are composed of rice milling, tapioca clipping, tin and petroleum refining and jute sacking. Other important manufactures include cotton, textiles, footwear, clothing, refined sugar, cement and tobacco. Furthermore, silk articles, carved wood items, jewelry and cigarettes are produced in both cities and villages in the country.

Its trade relations with the United States started as early as 1833 and just recently, the ties were affirmed with the celebration of the 175th anniversary of the business alliance. The traces of World War II made the foundation of the friendship even closer as bilateral treaties started to be signed by the governments of these remarkable countries. Spearheading the list is the Treaty of Amity and Economic Relations.

In their efforts to help other nations as well, both US and Thailand played a major role in the signing of the Manila Pact of 1954. This was done for the former Southeast Asia Treaty Organization (SEATO). As part of this treaty, countries involved in the pact shall act to meet the common danger in accordance with constitutional laws in the event of armed attacks to their fellow member nations. Despite the SEATO's dissolution in 1977, the pact remains in force.

The US Agency for International Development (USAID) helped in Thailand's economic stability. While the program had to end in 1995, there are several assistance schemes which led to the prosperous relationship of the two nations. The programs primarily focused on HIV/AIDS, refugee and trafficking in individuals.

Major Exports and Imports Between US and Thailand

The prime commodities exported by Thailand to other nations in global trade include textiles, footwear, rice, rubber, fishery products, automobiles, jewelry, electrical appliances and computers. Its imports from other countries include capital and intermediate goods, consumer goods, raw materials and fuel. Its major export partners are US, Japan, China, Singapore, Hong Kong and Malaysia while its major suppliers are Japan, China, US, Malaysia, UAE and Singapore.

With the data collected by the US Census Bureau for the ten-month period beginning January 2008 to October 2008, total US exports to Thailand is approximately at $7.80 billion. The imports of the former from the latter were estimated at $20 billion for the said period. In 2007, the following records evidenced the trade balances between these two nations:

  • Thai Exports to US. Thai goods entering the market of US made good sales in 2007. As evidence to this, the total went to as high as $22.75 billion. On top of the list of goods under this category were computer accessories, peripherals and parts which made a total of $3.56 billion equivalent to 15.65%. Included in the list for this line were: telecommunications equipment; fish and shellfish; semiconductors and related devices; jewelry such as watches and rings; apparel and household goods from cotton; other parts and accessories; television receivers, VCR's and other video equipment; apparel and household goods from other textiles; and natural rubber and similar gums. Natural rubber and similar gums made total sales of $476.84 million which is 2.10% of 2007's total.
  • Thai Imports from US. The products which the US traded with Thailand were sold on the latter's ground at very hefty total amounts. As proof to this, the total of $8.44 billion was recorded. On top of the list of commodities were semiconductors which made total sales of $1.40 billion equivalent to 16.59%. Other goods which shared the limelight were: computer accessories; civilian aircraft; other industrial machines; telecommunications equipment; steelmaking materials; plastic materials; organic chemicals; electric apparatus and raw cotton. The last goods made it to the list with total earnings of $198.30 million which is equivalent to 2.35%.
  • Fastest-Growing US Exports to Thailand. The trade between these two nations prospered on a yearly basis. As evidence to this, the exports of US to Thailand made their fair share in the market in terms of percentage sales increases. Topping this category was complete military aircraft which sold at $521 thousand which is 3,256.25% more than what it made in 2006. Other products found on the list were: metallurgical grade coal; other commercial vessels; engines and engine parts such as carburetors and pistons; and nonmonetary gold. The total sales made by nonmonetary gold were recorded at $32.81 million which is 306.73% higher than its total for 2006.
  • Fastest-Growing US Imports from Thailand. The goods coming from Thailand sold in the US market made high percentage sales increases as well. Along this area, sulfur and nonmetallic minerals made it on top of the list with an amount of $326 thousand at an increase of 1,630%. Other commendable products were: zinc; other military equipment; other nonagricultural foods and food additives; and other materials except chemicals. The last goods made total sales amounting to $3.70 million which is 343.23% higher than how it faired in 2006.
Trade Agreements Between Thailand and the United States

To be able to attain a very good stature in each other's economy, trade agreements were made. The said treaties helped stabilize their trading relationship as well as provide a basis for rules, regulations, standards and policies that will govern their foreign businesses. Included in the list of trade agreements signed by the officials of both nations are:

  • Amity and Economic Relations Treaty. This treaty was signed in Bangkok on May 29, 1966 and was entered into force two years after in June 8, 1968. This was in consonance with both governments' desire to promote and foster friendly relations which have traditionally existed between them. Furthermore, it was made to provide mutual bond with regards to trade and commerce as well as cultural intercourse between Thailand and US. In the said pact, it was specifically provided that both locals as well as foreign companies from the contracting parties are permitted to enter each other's territorial jurisdictions without prejudice to the laws relating to the entry and sojourn of aliens. Constant protection, security and enjoyment of equal privileges were also tackled.
  • Cigarettes Agreement. After several consultations and discussions between the Royal Thai Government and the US Government, actions on importation, distribution, pricing, promotion, taxation, and labeling of foreign cigarettes in Thailand were implemented. Specifically, it geared to the latter's willingness to allow foreign investors to deal with the Thai market in terms of sales and distribution of foreign-labeled cigarettes. It was a means of opening the trade for the said goods in such a way that all discriminatory barriers will be eliminated in future transactions relating to the importation of cigarettes from other nations to Thailand. In October 9, 1990 the treaty became binding to both parties as Thailand lifts the ban on the importation of such commodities.
Issues on the US-Thailand Free Trade Agreement

Issues were connected to the Free Trade Agreement with the two nations. The Coalition of Service Industries wrote on March 30, 2004, a testimony on the US-Thailand FTA for the Trade Policy Staff Committee under the US Trade Representative. The companies represented the various sectors in business with the following as focal points to tackle:

  • On Market Access. The group specifically requested for the inclusion and specification of commitments for financial services as well as telecommunications. Direct and portfolio investment should also be focused on. These are the only means by which the final FTA could be reached.
  • Investor Protections. Though governed by the Amity and Economic Relations Treaty, there is a need to emphasize on investor protections in both areas. Without doing so, there is a great tendency of demoralizing investor confidence on both sides. On a higher note, Thailand wants that the FTA involve broader insights on all investment definitions which include not only cross-border trade but also portfolio investment and the expropriation and transfer of all payments relative to investments.
Future Trade Opportunities Between The Two Nations

Since the US-Thailand FTA are still on the works, it is important that US shall focus on issues that Thailand wants settled when it comes to market access. Thailand is willing to open its market only if the disputes and other issues will be settled. The US government is advised to focus on eliminating the tedious, lengthy and complicated requirements in getting licenses for commerce. For assets management, the condition is for US to grant permission for pension plans to invest in foreign securities. Banking concerns are also vital.

For Thailand's participation in future trade opportunities, it is important that its government will focus on the elimination of restrictions on the formation of establishments especially that the Cabinet's approval is needed for a foreign establishment to enter in Thai's jurisdiction. Issues on intellectual property rights need to be resolved as well since Thailand has no concrete provisions on piracy. Insurance practices should also be addressed since there are no procedures to ensure the creditworthiness of insurance companies. Should all Thailand and US concerns be addressed, the FTA will be realized for good.

US-Thailand References

Note: Trade statistics, industry links, economic projections and global business resources on this page have been compiled from hundreds of trade related websites, government guides and resources on the Internet. We provide this valuable information for industrial suppliers, manufacturers, exporters and importers seeking to enter or expland business opportunities in Thailand.

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