Required Report - public distribution

**Date:** 3/16/2004

**GAIN Report Number:** TH4033

TH4033

**Thailand**

**Trade Policy Monitoring**

**Annual**

**2004**

**Approved by:**

![](media/image1.wmf)Rodrick McSherry, Agricultural Counselor

U.S. Embassy, Bangkok

**Prepared by:**

Sakchai Preechajarn, Agricultural Specialist

**Report Highlights:**

The key developments in Thai agricultural trade policy in 2003 are: 1)
Tariff reduction for agricultural products and processed foods,
including wheat, wheat flour, and peas and lentils; 2) Thai FDA's
enforcement of requirements for the Good Manufacturing Practice (GMP);
3) The Thai Royal Government's import ban and a recall action on U.S.
beef immediately when finding of a BSE case was reported in late
December, 2003; and 4) Thailand's progress in free trade area
negotiations particularly with China and Australia. Thai-U.S. Free Trade
Agreement is the first-priority FTA negotiations for the RTG in 2004.
International trade policies on agricultural products and processed
foods may not change much from those in 2003 until an FTA is in place.

Includes PSD Changes: No

Includes Trade Matrix: No

Annual Report

Bangkok \[TH1\]

\[TH\]

[SECTION I: EXECUTIVE SUMMARY 3](#section-i-executive-summary)

[SECTION II: AGREEMENT COMPLIANCE 4](#section-ii-agreement-compliance)

[A. WORLD TRADE ORGANIZATION 4](#a.-world-trade-organization)

[MARKET ACCESS 4](#market-access)

[Tariffs 4](#tariffs)

[Tariff-rate Quotas 6](#tariff-rate-quotas)

[Non-fat dry (Skimmed) milk powder 6](#non-fat-dry-skimmed-milk-powder)

[Sanitary and Phytosanitary Measures
8](#sanitary-and-phytosanitary-measures)

[Other Terms and Conditions 14](#other-terms-and-conditions)

[EXPORT SUBSIDIES 15](#export-subsidies)

[DOMESTIC SUPPORT 16](#domestic-support)

[Price Support 16](#price-support)

[Direct Payments 16](#direct-payments)

[Other Support Programs 16](#other-support-programs)

[B. OTHER TRADE AGREEMENTS 17](#b.-other-trade-agreements)

[PREFERENTIAL TRADE AGREEMENTS WITH THE UNITED STATES
17](#preferential-trade-agreements-with-the-united-states)

[Non U.S. AGREEMENTS 18](#non-u.s.-agreements)

[Thai-Australia Free Trade Area 18](#thai-australia-free-trade-area)

[Thai-China Free Trade Area 20](#thai-china-free-trade-area)

[Thai-India Free Trade Area 20](#thai-india-free-trade-area)

[Thai-Bahrain Free Trade Area 20](#thai-bahrain-free-trade-area)

[ASEAN Free Trade Area 20](#asean-free-trade-area)

[ASEAN-China Free Trade Area 22](#asean-china-free-trade-area)

[SECTION III: TRADE BARRIER CATALOG
24](#section-iii-trade-barrier-catalog)

[SECTION IV: REFERENCE MATERIALS 25](#section-iv-reference-materials)

[EXHIBIT A 25](#__RefHeading___Toc67222986)

[EXHIBIT B 27](#exhibit-b)

[EXHIBIT C 28](#exhibit-c)

[EXHIBIT D 29](#exhibit-d)

[EXHIBIT E 30](#exhibit-e)

#   {#section .unnumbered}

# SECTION I: EXECUTIVE SUMMARY

Thailand's agricultural sector plays a pivotal role in domestic economic
and foreign trade policy. Farmers and farm workers constitute about a
half of the population and are generally less well off than those who
work in non-agricultural sectors. However, despite the massive labor
force occupied by the agro-industrial complex, this sector produces just
over 10% of the country's GDP. The share of agriculture in export
earnings is about 20%, while that of agricultural imports accounts for
only 6% of total imports.

Despite its relatively low productivity on several crops against major
producing countries, Thailand has been the world largest exporter of a
wide range agricultural products (such as rice, tapioca products,
rubber, frozen shrimp, canned tuna, and canned pineapple) and a top-ten
world exporter of others (such as chicken meat, seafood, and sugar).

Reflecting its export orientation on poultry and aquaculture, Thailand
has become a promising market for imported agricultural raw materials
such as fertilizer, chemicals, feed ingredients, livestock genetics,
etc. In addition, the rapidly growing personal income of Thai people
(despite being set back by an Asian economic crisis in late 1990s) and
continued favorable growth of the tourism industry have generated high
demand for imported goods, including western foods and beverages (e.g.
dairy products, meat, fruit, tree nuts, beans and lentils, french fry
potatoes, wine).

The U.S. has been a major importer of Thai agricultural products,
especially frozen shrimp and other canned/frozen seafood, while Thailand
has been a promising market for American wheat, cotton, tobacco leaf,
and livestock genetics. In addition, a market for imported U.S. high
value products is on the rise, in line with the growing incomes,
westernized lifestyles and an expansion in the size of the hospitality
sector (hotels, resorts, and restaurant). Annual levels of Thai food and
agricultural exports to the U.S. are almost US\$ 3 billion, with only
about US\$ 750 million recorded officially for Thai imports in the U.S.
It is apparent that there is room for high growth in U.S. agricultural
exports to Thailand particularly if the high tariffs applied to
agricultural products and other non-tariff trade barriers are
rationalized.

Thailand, despite its appetite for foreign foods and beverages, is a
relatively protected market with high duties and other trade barriers
(including TRQ implementation, complicated import bureaucracy, and
increased technical barriers).

In addition, the Royal Thai Government (RTG) manipulates non-automatic
import permits for several products (meats, feed stuffs, gunny bag, jute
and kenaf, etc.) in order to protect local producers. In many cases, the
TRQ administration by the RTG is manipulated to create trade barriers.
The RTG began strict controls on imported food and feed, through its
sanitary and phytosanitary measures.

In general, Thailand has complied with the WTO obligations due other
member countries. Although Thailand has fixed their bound rates, the
applied tariff rates in many cases are lower than the WTO bound rates.
Meanwhile, Thailand does maintain 23 tariff-rate quotas for agricultural
products. Thailand has been a member of the ASEAN (Association of
Southeast Asian Nations) Free Trade Area, called AFTA, since 1991. AFTA
set up preferential applied tariffs between Thailand and other ASEAN
countries on most agricultural products, with levels currently between
0-5 percent.

In addition to WTO and AFTA, Thailand is aggressively entering into
regional and bilateral trade negotiations that will bestow improved
access to new markets overseas. Similarly, Thailand's trading partners
will have greater access to the Thai market. After the U.S.-Thai
bilateral Trade and Investment Framework Agreements (TIFA) was initiated
in 2002, Thailand and the United States agreed in October 2003 to begin
FTA negotiations. Thailand launched bilateral free trade with China,
under the auspices of the ASEAN-China Free Trade Area. In addition,
Thailand is moving aggressively ahead to conclude bilateral free trade
negotiations with Australia, Japan, South Korea, India and Bahrain.

While the increased bilateral free trade negotiations is a signal that
Thailand is becoming more amenable about opening its market to its trade
counterparts, the implementation of free trade areas with other
agricultural exporting countries, China and Australia in particular,
will negatively impact U.S. agricultural exports to Thailand in the
future.

# SECTION II: AGREEMENT COMPLIANCE

## A. WORLD TRADE ORGANIZATION

### MARKET ACCESS

#### Tariffs

While Thailand, in general, has been in compliance with its WTO tariff
bindings, the prevailing applied and WTO tariff schedules on
agricultural products are the highest among ASEAN countries. The Thai
government openly employs them as a tool to generate income and protect
domestic producers. The WTO bound rates on certain agricultural products
are listed in Exhibit A in the Reference Materials Section.

Based on the latest Trade Policy Review, which the RTG reported to the
WTO in 2003, Thailand has initiated a restructuring of its tariff regime
and customs procedures in order to increase the country's
competitiveness. It was forecast that the new restructured tariff system
would be completed in 2003 - import duties would be reduced to 1% for
raw material products, 5% for intermediate products, and 10% for
finished products. However, this target was not reached. Despite a
reduction in the average applied tariff on agricultural products (from
32.7 % in 1999 to 25.4% in 2003), the current agricultural tariff rates
far exceed the targeted ranges of 1-10%. In addition, this average
tariff rate (25.4%) is much higher than the overall tariff on
non-agricultural items (12.9%) in 2003.

On October 4, 2003, the RTG further restructured customs tariff schedule
for 1,511 items in order to increase the competitiveness of domestic
manufacturers and resolve discrepancies in the current import tariff
structure. The Royal Thai Government announced that 464 items under this
scheme were agricultural products and processed foods while 1,047 items
were industrial goods.

However, there are some ironic aspects of this cabinet approval. First,
out of a total 1,511 products, 403 items on the list (not explicitly
referred to as either agricultural products or industrial products) will
be categorized as a reserved list for international trade negotiations
in the future. Second, after scrutinizing the details in the proposed
tariff plan, it is apparent that there will be no change in tariffs for
most of the agricultural products: the tariffs for these products are
just being reduced to the WTO bound rates of 2004, the last year of the
current WTO tariff reduction scheme. Third, only a few categories of
products are actually

subject to an explicitly reduced tariff schedule. This includes wheat,
wheat flour, and peas and lentils:

1)  Wheat (both durum and meslin): The tariff will be reduced from 1.00
    baht/kg to 0.10 baht/kg;

2)  Wheat flour: The tariff will be at 25.5% (or 1.85 baht/kg) in 2003
    and in the year 2004. The tariff rate will be further reduced to 5%
    (or 0.50 baht/kg) as of Jan 1, 2005. The current WTO bound rate in
    2003 is 32.6% (or 2.24 baht/kg);

3)  Peas, beans, and lentils (HS code 0713): The tariff will be reduced
    to 30%, as opposed to the WTO target bound rate of 40%.

Although a reduction in the tariff for both wheat and wheat flour should
lead to decreased prices for wheat flour and to a possible expansion in
wheat product consumption, it is still doubtful that this tariff
reduction will generate better opportunities for U.S. wheat exports to
Thailand in general.

According to trade sources, the larger reduction in the wheat flour
tariff (in terms of value equivalence) compared to that of wheat will
benefit imported wheat flour, rather than imported wheat. The local
flour market segment that will be affected the most is that of the low
premium items, especially biscuit flour. Trade sources report that,
because of a lack of brand loyalty and fierce competition from imported
flour, all domestic flour mills sell biscuit flour at prices close to
their break even points from time to time. The situation will become
worse for imported wheat when the tariff reduction schedule is fully
implemented: based on out calculation in 2003, locally-made biscuit
flour will be reduced by 27 baht/bag, while imported wheat flour will
get a reduction of 50.63 baht/bag.

If this is the case, Thailand will likely increase its imports of
relatively cheaper flour, especially low premium items, from Malaysia
and Australia, at the expense of U.S. wheat. U.S. wheat currently
accounts for about 40-50 percent of total wheat imports (about 380,000
tons in 2002) while the other two primary suppliers are Canada and
Australia.

The change in applied tariff for agricultural products in 2003 is
summarized in Exhibit B.

According to Exhibit B, the applied tariffs on several products become
equal to the bound rates in the WTO tariff schedule. However, in the
case that the applied tariff rates are lower than the bound rates, an
importer of products originating from the WTO member countries is
eligible to choose either the \"bound rate\" or \"applied rate\". This
means that the importer may want the \"applied rate\" to be assessed if
it is lower than the bound rate. If the importer wants to enjoy the
bound rate in case that it is lower than the applied rate, he must
present documents to the Customs such as a certificate of origin.

In addition to high tariffs, the RTG is also using unfair import permit
fees on uncooked red meat, poultry, and meat offal as a barrier to the
trade flow. Imported meat faces much higher fees than domestic meat. In
1999, the House of Parliament passed a law to amend the various fees
which were collected from animal/animal products trade and
transportation. As a result, the Ministry of Agriculture revised its
fees across the board, including import permit fees for meat and offal.
While fees on red meat (beef, buffalo meat, goat meat, lamb, and pork)
remained unchanged at 5 baht/kg, those for other products were higher.
For instance, the import permit fee on poultry meat was raised to 10
baht/kg (as compared to the earlier 5 baht/kg), meat offal to 20 baht/kg
(as compared to 5 baht/kg), and hides and skins to 2 baht/kg (as
compared to 1 baht/kg). As a result of the proposal which was initiated
by U.S. Meat Export Federation (USMEF) and FAS/Bangkok in 2000, the Thai
Cabinet recently agreed in 2002 to reduce the import permit fee on meat
offal from the current 20 baht/kg (approx. US\$ 454/ton) to 5 baht/kg
(US\$ 114/ton). However, the reduction was officially implemented on
June 1, 2003.

It is apparent that Thailand is implementing trade barriers that are not
WTO compliant by violating the national treatment rule, for example,
because the prevailing rates on imported meats appeared to surpass the
actual veterinary inspection costs inferred by Thai Department of
Livestock Development. Fees on domestic meat, which are paid to the
local administrative office in the forms of a slaughtering fee and a
slaughterhouse fee, are much lower. Domestic fees currently amount to 24
baht/head (US\$ 0.55/head or US\$ 4/ton beef equivalent) for cattle, 30
baht/head (US\$ 0.68/head or US\$ 4/ton meat) for buffalo, 25 baht/head
(US\$ 0.57/head or US\$ 15/ton pork) for hog, and 0.40-1.10 baht/bird
(approx. US\$ 0.018/bird or US\$ 17/ton poultry meat) for poultry. The
inspection fees applied on domestic products and imported products are
summarized as follows:

  ------------------- ------------------------ --------------------------
  Product             Thai Product, \$/MT      Imported Product, \$/MT

  Beef                4                        114

  Poultry meat        17                       227

  Pork                15                       114

  Offal               0                        114
  ------------------- ------------------------ --------------------------

#### Tariff-rate Quotas

Thailand is allowed to establish TRQs for 23 agricultural products under
the WTO Agreement on Agriculture. The products under the TRQs system are
divided into two groups. The first group comprises a number of
traditional export commodities (e.g. rice, coconuts), where comparative
advantage could preclude the need for import protection. A second group
consists of commodities, which can be produced domestically but
importation is necessary to meet the high demand of the processing
industry (e.g. oilseed, corn). In administering the TRQs for the latter
group, the RTG will issue higher-than-commitment in-quota amount and/or
lower-than-commitment in-quota duties, when domestic production is not
sufficient to cover the demand, especially for export-oriented
industries. In years of sufficient domestic supply or surpluses, the RTG
will limit in-quota imports, both in-quota amount and in-quota duties,
only to the level which is obligated to the WTO agreement. The details
on the tariff-rate quotas and the out-quota tariff rates are provided in
Exhibit C and Exhibit D in Reference Materials Section.

Although the RTG claims it is justified, Thailand's TRQs management on
certain products is quite unpredictable and non-transparent, which
discourages imports. The illustration of this practice can be seen in
the TRQs allocations for skimmed milk powder, fresh potatoes, and corn.

#### Non-fat dry (Skimmed) milk powder

In general, the RTG allocated the TRQs to dairy processors based on
their purchases of domestic raw milk. Prior to 2003, the RTG allocated
the TRQ import quota in an amount exceeding the WTO commitment and
lowered the in-quota duties to 5% against 20% allowable under the WTO
agreement. However, its practice of quota allocation created problems
for the importers and dairy processors in two ways; i.e., untimely quota
allocation and uncertainty in the amount of the whole-year import quota.
In order to force dairy processing plants in using domestic raw milk,
the government strategically delays the announcement of quota
allocations (normally divided into two slots). In addition, the RTG used
the purchase of local raw milk supply as criteria for eligibility for
additional quota allocated in 2001. In 2001, the RTG allocated the
regular quota of 55,000 tons and divided the quota into two slots, with
the window periods for NDM shipments in January-June and July-December,
respectively. That year an additional quota of 10,000 tons was allocated
due to a severe lack of local supplies. The RTG utilized the same
practice again in 2002, announcing the TRQ quota of 55,000 tons at the
beginning of the year. In mid 2002, the government announced plans to
allocate an additional quota of 18,000 tons, but this quota amount was
never released for use after the national dairy cooperative complained
to the government about a raw milk surplus.

In early 2003, the RTG determined to limit the in-quota amount to 53,889
tons and raised the duty to 20% (instead of 5% as in the past several
years), corresponding to the levels that Thailand is obligated at with
the WTO. This action apparently was to force dairy processing plants to
absorb domestic raw milk. Nevertheless, in late 2003, the RTG announced
the allocation of additional quota of 13,401.11 tons as requested by
dairy processors and lowered the tariff rate back to 5 percent for this
additional quota.

In addition to the unpredictable manner in rendering the amount of
quota, the RTG has also tactically divided the actual quota for eligible
dairy processors into many slots without advance notice. Fluid milk
processors and trading importers are not eligible to receive quota in
2003, as the RTG is likely to force fluid milk processors to utilize
domestic milk only, while trading importers are considered "middlemen".
The eligible importers under the 2003 TRQ system include condensed milk
processors, other non-fluid milk processors (such as ice cream makers,
chocolate or coffee beverage processors, and bakery manufacturers),
dairy-for-export processors, and yogurt producers. In addition, each
company that receives an import quota allotment must divide its import
shipments equally into 4 slots for the whole year. This means that a
shipment can be done in every three months.

# Fresh potatoes

In addition to frozen potatoes (french fries), U.S. potatoes exporters
have potential markets for seed and table potatoes. However, the RTG
limits market access for fresh potatoes (seed or table) through the use
of extremely limited TRQs. The RTG is committed to allow imports of 302
metric tons of seed and table potatoes combined in 2004 at the tariff
rate of 27% for in-quota imports, while the out-quota imports are
subject to 125.0%.

Due to a growing potato chip market and a lack of domestic seed potato
production, the potato chipping industry has acquired fresh potato
production through seed imports and fresh potato farming contract.
Reflecting insufficient local fresh production, the chipping and snack
food industry requested the government to increase the in-quota imports.
The three hundred tons of fresh potatoes under the TRQ is far from
enough to keep the plants running at efficient capacity when local
supplies are off-season.

The RTG has had the discretion to allow potato imports in excess of its
WTO-committed quota, however, there is little to no transparency to the
way the RTG reaches this decision or that it will be repeated.

For example, although a group of potato chip processors submitted their
request in mid 2001 to the RTG for receiving additional quota in 2002 to
fulfill their production demand, the RTG allocated an additional quota
of 22,100 tons in August 2002. This was too late for Thai processors to
contract their purchase with exporting growers. As a result, only 3,000
tons were imported in 2002.

Although a group of potato chip processors in mid 2002 voiced their
concern about delayed quota allocation and proposed the RTG to announce
the quota allocation in September in the year prior to an importing
year, the RTG is still reluctant to issue quota on a timely basis. The
Thai Cabinet approved to allocate additional quota of 25,400 tons for
2003 on July 29, 2003, a date that was far behind the first request
submission by processors in September, 2002.

# Corn

While corn is one of 23 agricultural commodities of which importation is
under the WTO tariff-rate-quota system, the RTG has generally restricted
the window period of in-quota imports, normally March-June, in order to
protect domestic corn growers. This limited time frame, when U.S. corn
supplies are decreasing and prices are bullish, places U.S. suppliers at
a disadvantage against competitors like Argentina and China.

The RTG limited the in-quota imports to a level that Thailand is
obligated to the WTO in 2003 in response to sufficient supply domestic
availabilities. The TRQs for corn in 2004 is 54,700 metric tons at a 20
percent tariff rate for shipment during Mar 1- June 30, 2004. The
out-of-quota imports are subject to a 73 percent tariff rate with a
surcharge of 180 baht/ton.

#### Sanitary and Phytosanitary Measures

Thailand historically did not seem to explicitly use sanitary and
phytosanitary measures to limit agricultural imports. It complied with
most international standards. Due mainly to an anticipation of reduced
efficacy in using tariffs as trade barriers (following an ongoing
decline in import duties) and to increased pressures on Thai
agricultural products implemented by importing counties (particularly
the EU and Japan), the RTG began to place more stringent standards on
imported products. There are some specific problems that Thailand should
address including:

1\) Domestic producers often are not obligated to meet the same
standards;

2\) Arduous tests for chemical residues, colorants, and other food
additives are burdensome on the exporter and importer alike;

3\) Methodologies used in testing practices, resulting in discrepancies
between results from

foreign laboratories and Thai laboratories;

4\) The RTG's reluctance to publish changes or updates to existing
regulations, which creates confusion and difficulties in understanding
and preparing for the change by interested parties; e.g., instead of
providing written guidance, the common way of doing business is based on
official word or personal commitments made by the RTG official to
interested parties;

5\) Sampling at import location more rigorous than for domestic
producers.

The RTG has recently initiated several programs to upgrade the food
safety of Thai products to meet international standards in. The Ministry
of Agriculture and Cooperatives (MOAC) introduced an effort in capacity
building in food safety research and development through the application
of the Good Agricultural Practice (GAP) method by the use of high yield
crop varieties and proper fertilizers. In addition, the MOAC set up the
National Bureau of Agricultural Commodity and Food Standards (NBACFS)
which is responsible for standardizing, inspecting, and certifying food
and agricultural products. MOAC has determined the standards for 14
agricultural commodities including longans, orchids, Thai Hom Mali rice
(fragrant rice), lychees, oranges, and others.

The RTG also announced a "Food Safety Year 2004" campaign. In
preparation for this event, the Thai Cabinet in March 2003 set up
guidelines for a procedure framework for inspecting and controlling the
quality of agricultural commodity and food. The objectives of the
guidelines are:

> 1\) to focus on the safety of consumers in both the country and
> international market\
> on an equivalent basis;
>
> 2\) to promote Thai agricultural products and food to meet
> international standards;
>
> 3\) to determine sanitary and phytosanitary standards (SPS) on a
> scientific basis in\
> order to protect consumer and agricultural production;
>
> 4\) to initiate an equivalency of standard and safety control between
> Thailand and\
> international communities.

Following are illustrations of some of the sanitary and phytosanitary
measures being used as trade barriers:

#### Requirements for Good Manufacturing Practice (GMP) 

After a two-year grace period, beginning July 24, 2003, the Public
Health Ministerial Notification No. 193, B.E. 2543 (2000), Titled
\"Method of Food Manufacturing and Equipment for Manufacturing Food and
Food Storage\", would be applied to all domestic manufacturers and
foreign suppliers of 54 types of products.

The covered products under this regulation are listed as follows:

> 1\. Infant food and modified food for infant and children

2\. Infant and children's food supplements

3\. Modified milk for infant and modified milk for infant and

children

4\. Ice

5\. Drinking water in sealed containers

6\. Beverage in sealed containers

7\. Food in sealed containers

8\. Milk

9\. Cultured milk

10\. Ice cream

11\. Flavored milk

12\. Milk products

13\. Food additives

14\. Food color

15\. Food flavoring substances

16\. Sodium cyclamate and food containing sodium cyclamate

17\. Food for weight control

18\. Tea

19\. Coffee

20\. Fish sauce

21\. Water by-products from manufacturing of monosodium glutamate

22\. Natural mineral water

23\. Vinegar

24\. Edible oil and fat derived from animal or vegetable

25\. Peanut oil

26\. Cream

27\. Butter oil

28\. Butter

29\. Cheese

30\. Ghee

31\. Margarine

32\. Semi-processed food

33\. Some particular sauces as identified by Thai FDA

34\. Palm oil

35\. Coconut oil

36\. Mineral drink

37\. Soybean milk in sealed containers

38\. Chocolate

39\. Jam, jelly, marmalade in sealed containers

40\. Food classified by Thai FDA as food for special purpose

41\. Quicklime soaked egg

42\. Royal jelly and royal jelly products

43\. Products from the hydrolysis or fermentation of soybean protein

> 44\. Honey (except where the place of manufacturing does not fall
> under
>
> the description of a factory under the law-governing factory

45\. Fortified rice

46\. Brown rice flour

47\. Salted water for food flavoring

48\. Sauce in sealed containers

49\. Bread

50\. Gum and candy

51\. Processed agar and jelly

52\. Garlic products

53\. Flavor and essence additives

54\. Frozen food

Domestic manufacturers of these products are obligated to comply with
the method of food manufacturing, tools and equipment for manufacturing
food, and food storage according to the Good Practice in Food
Manufacturing standards of Thailand. Meanwhile, any importer of the
covered products must present an equivalent certificate of GMP in line
with the Thai GMP Law for certain factories or plants which manufacture
those products. The GMPs accepted can be [any]{.underline} of the
followings: a) GMP by Thai Law; b) GMP by Codex; c) HACCP; d) ISO 9000;
and e) other practice equivalent to (a)-(d).

For U.S. food products, Thai FDA officials agree that U.S. practices (it
is understood that all U.S. food manufacturers are already subject to
21CFR part 110) are normally superior to the Thai GMP under the present
Thai GMP Law. Accordingly, any simple statement/certificate (including
HACCP certificate) that is endorsed by USG agencies will be acceptable.
The statement may contain sayings like \"The food product(s) are
manufactured by U.S. processing plant(s) which is (are) subject to 21CFR
part 110\".

It is understood that most of U.S. food plants adopt HACCP systems to
ensure the food safety of their processed food and the HACCP
certification (or equivalent) documents are acquired. As a result, this
law enforcement should have no serious impact on trade flow of U.S.
products into Thailand.

**The Requirement on Registration and Import Control on Feed Ingredients
and Commercial Feed**

The Thai government announced a new import regulation governing feeds
and feedstuffs in 2002. The latest move by the Thai Ministry of
Agriculture and Cooperatives (MOAC) seeks to tighten its control over
the inflow of animal feed and ingredients. A common practice in Thailand
is the use of sanitary and phytosantiary import permits as de facto
import licenses. Furthermore, MOAC wants to only allow imports from
foreign plants that have been inspected and approved by the foreign and
Thai government officials.

The requirement addresses: a) requesting import permits; b) issuing
import permits; c) extending import permits; d) replacing import
permits; and e) import procedures and mechanics.

These requirements and their mechanisms leave considerable room for
arbitrary and subjective use of the import permits to be used as means
to slow down or even to stop imports. Again, requirements like these are
starting to be used against many imported commodities. In general, the
requirements call for:

1\. Each shipment to be accompanied by many documents, including
certificate of origin; certificate of health or export; certificate of
analysis; product information and use; manufacturing process chart;
ingredient list; invoice; bill of lading; packing list; and possibly
others;

2\. MOAC Department of Livestock Division (DLD) has fifteen days to
review the documents and make its determination to issue the import
permit or not;

3\. Only foreign plants that have been inspected and approved by the
foreign government and the Thai government will be allowed to export to
Thailand;

4\. MOAC/DLD to have the authority to reject any shipment that does not
fully comply with this regulation. Any rejected shipment will have to be
removed from Thailand at the expense of the importer.

The Thai feed processing sector has obvious interests in closing off
imports of feedstuffs and is able to heavily influence the Thai
government to take steps to make it more difficult to import. The Thai
government is also feeling pressure from multilateral partners (ASEAN,
WTO, inter alias) to open its agricultural market by lowering tariffs.
Additionally, Thai government sources indicate that this new regulation
is actually in response to tougher EU livestock product import
requirements that could impact Thai poultry and shrimp exports to
Europe. As a result, the Thai government seems to be shifting to
non-tariff barriers as a means to protect its agricultural industry from
the expected increase in foreign supplier presence, as well as to avoid
losing access to EU markets.

MOAC is widely regarded as the segment of the government that is most
vocal against increasing market access for foreign companies, while the
Ministry of Commerce and the Ministry of Foreign Affairs seem to accept
greater market openness.

# Requirement on the Inspection of Meat Processing Plants in Exporting Countries

The Thai Department of Livestock Development (DLD) recently decided not
to extend the two-year waiver of this regulation to require the
inspection of meat processing facilities in supplier countries.
Enforcement of this regulation is now scheduled to begin January 1,
2003, but the Thai government is likely to be reluctant to enforce this
regulation to the U.S. In order to avoid possible trade disruption in
exporting U.S. meat and poultry into Thailand, in 2004 FAS/Bangkok will
help Thai authorities to visit and inspect U.S. plants currently
supplying meat to Thailand.

The DLD announced in 2000 the guidelines for the importation of meat and
its by-products (including offal). Under these regulations, the DLD
required that: 1) any importer must have a DLD-approved cold storage
facility, of which the quality is subject to determined standards; and
2) all imported meat and meat by-products coming into Thailand must be
delivered from DLD-approved slaughterhouses, which may also be subject
to annual inspection by DLD veterinarians. The focus of the meat plant
inspections would be the disease control and surveillance system,
epidemic status, ante-mortem transportation, slaughtering process and
meat inspection, post-mortem transportation to export port, and
laboratory tests. Although the DLD claimed that the action was aimed at
preventing any exotic disease contact and protecting domestic consumers,
the actual motives may be more related to efforts to protect domestic
producers as tariffs on meat and meat by-products fall to lower levels
in the future.

Shortly after the regulation's announcement, the DLD provided a grace
period of one year for all meat imports during 2001, as they needed to
work out the details and specific requirements of this plant inspection
program. FAS/Bangkok approached high-ranking DLD officials about the
regulation and they finally agreed to waive the regulation for another
year in 2002. In the case of U.S. meat and offal, the DLD also agreed to
accept U.S. meat plants listed on the Meat and Poultry Inspection
Directory issued by the Food Safety Inspection Service (FSIS) as plants
eligible for exporting meat and offal into Thailand for the past few
years as an interim measure.

A Lack of Scientific Ground to Impose Import/Sale Prohibition in
Response to Disease Outbreaks in Exporting Countries

Like other importing countries, Thailand appeared to go beyond the
recommendations of the competent international health organization,
particularly the Office International des Epizooties (OIE), when
exporting countries confirm a finding of an animal disease outbreak in
their countries.

For example, in the context of notification of Bovine Spongiform
Encephalopathy (BSE) disease, the RTG would impose an immediate import
suspension on beef and meat from other ruminant animals (including their
meat products) from any BSE-infected country. The Thai practice in its
import suspension is that any shipments of prohibited products, which
have not arrived Thailand prior to the effective date of directives or
already arrived Thailand but not yet cleared at the Thai port, will be
banned and must be shipped back to the exporting country. In addition,
the Thai Food and Drug Administration stipulated that prohibited
products, which are already approved and marketed, must be recalled from
supermarket shelves and restaurants and must be returned to an exporting
country. The recall action is not only non-scientific but also unfairly
applied only to imported products. This discriminatory rule imposition
can be clearly seen when the Thai FDA did not conduct a recall action on
fresh poultry meat in the domestic market when Thailand was recently hit
by an outbreak of High Pathogenic Avian Influenza (HPAI) during the end
of CY 2003.

In the case of such BSE high-risk items as meat and bone meals, blood
meal, etc., the RTG has thus far banned feed ingredients and feed
(including pet food) deriving from any animals, both ruminant and
non-ruminant animals, from any BSE-affected countries.

FAS/Bangkok protested the ban imposition by sending a letter to convince
the Thai Department of Livestock Development (DLD) that a ban on
products not containing ruminant products (especially which are derived
from non-ruminant products) is an extreme, unnecessary measure and does
not comply with the OIE's guidelines. In response to the inquiry, the
DLD called for an urgent meeting of the Feed Quality Control Committee
on March 3, 2004. This committee is responsible for scrutinizing and
reviewing controversial issues about feed quality control and is
composed of representatives from different agencies in the Ministry of
Agriculture and Cooperatives (MOAC). As a result of the March 3 meeting,
the Committee agreed to modify its notification by prohibiting the
imports of animal feed deriving from all ruminant animals, which
originate in the European Union and any country where is reported or
suspected to have BSE disease. However, this change will not become
official until the Minister of Agriculture signs the revised
notification after it is prepared by the Committee.

As for a BSE low-risk item like hides and skins, the RTG had initiated
additional requirements on export certificates endorsed by BSE-affected
countries, while the OIE's guidelines clearly state that veterinary
administrations in importing countries, regardless of the BSE status of
exporting countries, should authorize without restriction the import or
transit through their territory of products recognized to be essentially
risk free for BSE transmission, including hides and skins. Again, as a
result of discussions, the RTG verbally agreed to comply with the OIE's
guidelines. At time of report, Post was awaiting official documentation
confirming this position.

# Biotechnology

Thailand's biotechnology policy is ambivalent, allowing research in
government and university laboratories but not allowing field trials or
the commercialization of transgenic plants. From the applied side, it is
widely known that there is transgenic cotton growing in Thailand today
without the approval of the government. Additionally, there are no
regulations, other than a moratorium, as to how to manage transgenic
crops that are in commercial production in Thailand.

Thailand has the scientific wherewithal to develop its own biotechnology
programs, research, and development. However, there are non-science
concerns within the Thai government that keep the support for
biotechnology programs limited to the laboratories. The Thai government
claims that its unwillingness to move forward with commercialization of
transgenic plants is due to the European Union's strict import
regulations on these sorts of products.

While banning the commercial planting of transgenic seed, the RTG
ironically approved to allow imports of transgenic soybeans and corn for
a wide-range of domestic use, in both the feed milling and food
processing industries. On the other hand, following pressure from
Non-Government Organization (NGO) groups, the RTG, through the Ministry
of Public Health, issued in April 2002 a labeling law for food
containing Genetically Modified Organisms (GMO) materials/products. The
regulations, claiming to protect consumers, were apparently based on the
Japanese model allowing for a 5 percent tolerance. In addition, the
regulations appeared to hurt U.S. interests, as corn, corn products,
soybeans, and soy products have been targeted.

Under the regulations for processed products containing more than one
ingredient, labeling will only be required for the top three ingredients
by weight, if each ingredient constitutes 5 percent or more of the final
product and 5 percent or more of that ingredient is derived from GMO
ingredients.

Although the implementation of the regulations was scheduled to be
enforced on May 11, 2003, one year from the date of regulation
announcement in the Royal Gazette, sources in the Ministry of Public
Health reported that the ministry, realizing its lack of laboratory
facilities, will only monitor the regulation enforcement on a
post-marketing basis. This means that product labeling by
producer/importer will be voluntary on their judgment. However, the
products may be confiscated and the producer/importer will be subject to
the same sorts of penalties if the government inspector proves that the
products are supposed to be GMO labeled.

#### Other Terms and Conditions

Thailand also has other import requirements that restrict market access
especially for U.S. products in the forms of domestic purchase
requirements, biased customs valuations, import permit/license
requirements, and complicated excise tax valuation.

# Domestic Absorption

It is apparent that the TRQs allocation for a few products, i.e.,
soybeans, soy meals, corn, and skimmed milk, are all subject to a
domestic purchase requirement of the quota receivers. In the case of
soybeans, importers (mainly soybean oil crushers) need to guarantee
their domestic purchase from farmers at determined prices. The amount of
import quota allocated to these importers is proportional to their
domestic purchase. The same method is applied in case of soy meals,
corn, and skimmed milk.

# Customs Valuation

Thailand, in its latest Trade Policy Review reported to the WTO, claimed
that it has adopted the WTO Customs Valuation Agreement and thus the
relevant rules under the Agreement are being applied. Thailand has also
introduced clear customs appeal procedures which cover custom valuation,
tariff classification, amount of duty payable, origin of goods and
quantity of imported goods. An Electronic Data Interchange (EDI) system
has been established to reduce paper load and about 87 percent of
declarations are administered through this EDI system. All customs laws
are published in the Official Gazette and all important customs
information are also posted on the Customs Department's website.

However, the RTG's claims that the method of transaction values in
custom valuations to be in compliance with the Agreement (which should
have made the customs procedures more transparent) are still
questionable. According trade sources, the Customs Department is
believed to continue its practice of utilizing reference prices in
customs valuation for some product like fruits and food products.

In the case of imported fruits and produce, the U.S. is particularly
vulnerable because of the relative transparency in marketing U.S.
products. The Thai practice of indexing duty charges tends to bias
charges on U.S. products. The Thais typically will take the highest
import value of a particular commodity for each country as the base
price used to assess duties. If someone orders even a small specialty
unit of a commodity, regardless of the obvious aberration the price of
this good represents, its high price becomes the duty reference price.
This has occurred notably for fresh fruit where there are relatively
large numbers of U.S. suppliers and Thai importers. Other countries do
not draw similar scrutiny. The seeming lack of price change for
competitor products because of long-term contracts or corruption is
never challenged. The transparent fluctuation in U.S. commodity prices
has proven to be a disadvantage.

Import Permits

In addition to the fact that importers of uncooked meat and meat offal
must pay an unfair import permit fee for inspection services provided by
veterinary officials, the administration of sanitary import permit
issuances has been non-automatic and nontransparent, and apparently has
become a barrier to trade. Thus far, the Department of Livestock
Development, for example, has never issued an import permit for chicken
meat and pork, mainly because they want to protect domestic producers.
There is no official prohibition against importing poultry or pork. The
issuance of import permits for beef, even allowable to enter the
country, takes 15 days, an unreasonably long time. Thai importers must
obtain licenses from the RTG for every shipment of imported meat.
Further, the RTG sometimes limits an importer to only part of a
requested shipment, when the department wants to limit the imports. For
example, if an importer requests a permit for five containers, the RTG
may grant a license for only two containers.

# Excise Tax Valuation

Thailand has collected excise tax on products that are considered luxury
goods, a wide range from spirits and beverage to automobiles, as a tool
to generate government revenue. Wine and spirits imported into Thailand
face astronomically high duties and taxes. While the import duty on
these products is a bit under 60% ad valorem, there is an excise tax
that is unreasonably complicated and discriminatory between imported
products and domestic products.

The excise valuation is extremely complicated in the sense that the
amount of paid excise tax itself is revolved in the calculation of
excise tax. As a result, based on 54% import duty, for example on wine,
60% excise tax, 7% value added tax, 10% of excise tax as municipal tax,
and 2% of excise tax as health tax, the actual duties in 2004 add up to
390%. When compared to taxes on domestic products in which import duty
is not included, the complication in excise tax calculation favors
domestic manufacturers by requiring them to pay total taxes about
one-half of that paid by importers. Total taxes upon domestic wine and
spirits are only 212%.

### EXPORT SUBSIDIES

Thailand claims that it does not provide direct export subsidies for
agricultural products although Thailand availed itself of the
transitional arrangements for export subsidies under the WTO Agreement
on Subsidies and Countervailing Measures. However, the RTG provides
indirect assistance to agricultural exporters and export-oriented
agricultural processors through a few schemes.

For example, the Export-Import Bank conducted a refinance scheme for
exporters (including agricultural exporters), called the Packing Credit
Facility, by purchasing promissory notes from exporters at a lower than
commercial interest rate. This facility, however, was terminated in 2003
as the RTG claimed that Thailand wants to comply with WTO agreement.
Nevertheless, the RTG set up a new program administered by the EXIM Bank
in 2003. Under this program, the EXIM Bank will refund interest on
export finance to exporters (including agricultural and non-agricultural
exporters) who export their products to the new emerging markets (41
listed countries). Sources from the EXIM Bank reported that the program
is on a one-year basis. The RTG claims that this new program is WTO
compliant and is to be part of foreign market development program which
is directed at emerging markets only, rather than being direct subsidies
to exporters.

The RTG also provides other assistance to exporters through investment
incentives to export-oriented manufacturers. The Board of Investment
(BOI) generally provides a grace period of corporate income tax
exemption. The BOI also gives a deduction on the corporate income tax
for BOI-approved manufacturers who are able to increase their export
income from the previous year.

### DOMESTIC SUPPORT

#### Price Support

Although the RTG does not have a guaranteed price program for
agricultural commodities, it has intervened in the market for several
products in stabilizing the farm prices. These include: a) a mortgage
scheme for paddy and corn; b) price intervention for rubber, oil palm,
coffee, garlic, pineapple, eggs, live chicken, etc.; c) the common price
intervention program for sugar; and d) the Government's domestic prices
intervention on soybeans and raw milk, by forcing processing plants
(soybean crushing mills and dairy processors) to buy domestic
soybeans/raw milk at pre-determined levels. In case of corn, the
Government determines the level of domestic prices as one of the
conditions for allowing imports.

As examples, the content of price support programs for paddy and corn in
MY 2003/04 remain unchanged from those in MY 2002/03:

In 2003/04, the government policy remains focused on a paddy mortgage
scheme. Despite more flexibility in the program this year, fewer farmers
participated in the program, due to a higher market price than the
intervention price. The mortgage scheme for main paddy, from November 1,
2003 -- March 15, 2004, planned to buy 9 million tons of paddy -- 5
million tons of fragrant paddy, 3 million tons of non-fragrant paddy,
and 1 million ton of glutinous paddy. As of Mar 2, 2004, the program had
bought 2.3 million tons of main-crop paddy which included 0.2 million
ton of fragrant paddy, 2.1 million tons of non-fragrant paddy, and 0.04
million tons of glutinous paddy. In addition, the intervention prices
for 2004 second-crop paddy mortgage scheme were set higher by about US\$
12 /ton from the previous year's level, as follows: US\$ 129 /ton for
100% grade paddy, US\$ 127 /ton for 5% grade, US\$ 124 /ton for 10%
grade, US\$ 122 /ton for 15% grade, and US\$ 116 /ton for 25% grade
(exchange rate: 39.50 Baht/US\$).

#### Direct Payments

As a part of a paddy mortgage program, the Marketing Organization for
the Farmers (MOF) and Public Warehouse Organization (PWO) bought 2002/03
main crop paddy at 700-1300 Baht per ton above domestic market prices
and hired local millers to process it and store it in local warehouses
at government expense. Currently the government is selling this rice via
Government-to-Government sales at a considerable discount to the
purchase price, amounting to an export subsidy. Many of rice millers
ended up doing business solely with the government, receiving payment in
the form of broken rice and rice bran currently selling at about 400-500
Baht per ton.

#### Other Support Programs

The RTG normally has other support programs in forms of assistance to
reduce the cost of agricultural production. For instance, the RTG
supports prices for crop seeds or gives agricultural inputs (seeds and
fertilizer) to farmers whose crops are affected by disaster. The
Department of Livestock Development continued its program to provide
free-of-charge vaccination and artificial insemination to livestock
farmers in rural areas. In addition, the Bank for Agriculture and
Agricultural Cooperatives (BAAC), which was established in 1966, extends
credit widely, directly to individual farmers as well as indirectly
through farmer institutions. Following declining market interest rates
in recent years, the BAAC's client farmers may not receive the
under-market rates as they used to. However, the loans provided by the
BAAC are preferred by a majority of Thai farmers due to the long-term
relationship and the bank's well-established operation network. As of
March 2003, the BAAC provided lending of 93.6 billion Baht (US\$ 2.4
billion) to more than 3.6 million client farmers, and of 27.0 billion
Baht (US\$ 0.69 billion) to 969 agricultural cooperatives.

## B. OTHER TRADE AGREEMENTS

### PREFERENTIAL TRADE AGREEMENTS WITH THE UNITED STATES

The U.S.-Thai bilateral Trade and Investment Framework Agreements
(TIFA), signed in October 2002, created a foundation for a comprehensive
dialogue on the full range of bilateral and other trade issues. The
discussions under the TIFA have allowed the two sides to make progress
in addressing bilateral issues and clear away the underbrush which will
lead to the conclusion of successful FTA negotiations.

Following a discussion between the Prime Minister of Thailand and the
President of the United States in Bangkok (during an APEC meeting hosted
by Thailand), Thailand and the United States agreed on October 19, 2003,
to begin FTA negotiations.

On February 12, 2004, United States Trade Representative Robert B.
Zoellick notified Congressional leaders of U.S. objectives and goals for
negotiations for a free trade agreement (FTA) with Thailand. This
notification follows President Bush's announcement in October 2003 of
the U.S. intention to negotiate an FTA with Thailand. As stipulated in
provisions of the Trade Promotion Authority legislation passed by
Congress in August 2002, negotiations can begin after 90 days after the
Congressional notification.

\"We believe the United States has much to gain in pursuing a
negotiation with Thailand. Thailand already is our 18th largest trading
partner with \$19.7 billion in total trade during 2002. The increased
access to Thailand's market that an FTA would provide would further
boost trade in a wide range of both goods and services, enhancing
employment opportunities in both countries,\" wrote Zoellick in the
letter. \"Negotiation of an FTA would level the playing field for U.S.
exports. Many of Thailand's products already enter the U.S. market duty
free under the Generalized System of Preference. An FTA would make
duty-free treatment reciprocal.\"

\"An FTA with Thailand would be particularly beneficial for U.S.
agricultural producers who have urged us forward,\" wrote Zoellick. "The
United States is one of the largest suppliers of agricultural products
to the Thai market, which was the 16th largest market for U.S. farm
exports in 2002. Elimination of Thailand's high duties and other
barriers in the agricultural sector would create new opportunities for
U.S. farmers in this major market.\"

Mr. Somkid Srijatupitak, Deputy Prime Minister of Thailand, is going to
officially visit the U.S. to discuss the FTA further with the U.S.
officials in March 2004. According to Mr. Srijatupitak, Thailand will
use a framework agreement being concluded with Australia as a basis in
FTA negotiations with the United States.

### Non U.S. AGREEMENTS

In addition to the establishment of the ASEAN Free Trade Area (AFTA) in
early 1990s, the Thai government, especially the present cabinet led by
Prime Minister Thaksin Shinnawatra, has aggressively engaged in
negotiating regional free trade agreements and bilateral free trade
agreements. According to the Thai Department of Trade Negotiations,
there are currently in the pipeline the following free trade agreements
in negotiation: Thai-U.S., Thai-China, Thai-Australia, Thai-Japan,
Thai-New Zealand, Thai-India, Thai-Bahrain, Thai-Peru, ASEAN-China, and
BIMST-EU (BIMST represents Bangladesh, India, Myanmar, Sri Lanka,
Bhutan, Nepal, and Thailand).

Thailand has made the most progress with Australia in their FTA
negotiations as the two countries were able to conclude dialogue on key
issues (such as tariff reduction plan, service trade liberalization,
investment opportunities, etc.) in October 2003. The text of the
agreement is expected to be signed in the first half of 2004 and to
enter into force after legal and parliamentary processes have been
completed in both countries.

Thailand also made a substantial progress in FTA negotiations with
China, Bahrain, India, and Peru, by signing framework agreements.

Following is a summary of progress in FTA negotiations that Thailand has
with Australia, China, Bahrain, India, and with ASEAN member countries:

#### Thai-Australia Free Trade Area

The agreement will deliver new trade and investment opportunities and an
improved climate for commercial exchanges.  The agreement is Australia's
third free trade pact.  It is Thailand's first comprehensive free trade
agreement and its first with a developed country.

The most significant feature of the free trade agreement is that it will
sweep away all of Thailand's tariff and quota barriers on imports from
Australia; including those for agricultural products.  It also includes
initiatives to free up and facilitate trade in services and two-way
investment.

The agreement will contain 19 chapters and runs to more than 120 pages. 
It includes rules to promote cooperation and best practice in a wide
range of areas such as competition policy, e.commerce, industrial
standards and quarantine procedures, and includes state-of-the-art
provisions to avoid and settle disputes.

The deal establishes a platform for Australia to work towards greater
economic integration with the second-largest economy in south east
Asia.  Thailand's economic growth performance over the past few years
has been consistently strong.

####### Trade in goods

Australia and Thailand will eliminate virtually all tariffs on goods
imported from the other country in the period between when the agreement
enters into force and 1 January 2010.

At the time of entry into force of the agreement, Australia will
eliminate 83.2 % of its tariffs, which account for 83.0 % of current
imports from Thailand. Almost thirteen percent of Australian tariffs
will be phased down to zero over the period from entry into force to 1
January 2010. For 3.9 % of Australia's tariff lines, Australia will
phase its rates to zero in 2015.

In general, at the time of entry into force of the agreement, Thailand
will eliminate about 49% of its tariffs, which account for 77.9 % of
current imports from Australia. The products under this coverage include
cereals, lac (a resinous secretion of an Asian insect), cocoa, products
made from cocoa, minerals, fuel, etc. Another 50% of Thailand's tariffs
will be phased down to zero over the period from entry into force to 1
January 2010. The product coverage includes vegetables, fruits, plastic,
paper, textiles, steel, machinery, electric appliances, etc.

However, for sensitive agricultural and industrial products, Thailand's
tariff reduction scheme will be extended at a slower pace. These
sensitive products will be divided into 3 categories: 1) products with a
gradual phase down to a zero tariff rate in 10 years include condensed
milk, buttermilk, honey, orange, grape, processed potatoes, wine,
textile products, and steel; 2) products with a gradual phase down to a
zero tariff rate in 15 years include meat, milk powder, skimmed milk
powder, butter, cheese, meat offal, fresh potatoes, sugar, tea, coffee,
and corn; 3) products with a gradual phase down to a zero tariff rate in
20 years include fresh milk and cream.

Thailand will expand access for Australian imports under tariff rate
quotas (TRQs) over a transition period that varies according to the
product, with the eventual elimination of all TRQ restrictions.
Australia will immediately eliminate any TRQ restrictions that it
maintains.

The agreement will contain a safeguard mechanism to apply during the
transition period to allow action to be taken should a surge in imports
threaten a domestic industry in either country.

Consistent with the provisions of the WTO Agreement, the agreement will
prohibit the use of export subsidies in trade between Australia and
Thailand.

####### Sanitary and phytosanitary measures (SPS) and Food Standards

Australia and Thailand have agreed to establish an expert group on SPS
and food standards to strengthen cooperation in this area. The expert
group will implement a work program over a 2-year period from entry into
force of this agreement with the aim of:

-   enhancing mutual understanding of each other's SPS, agricultural and
    food standards;

-   consulting on matters related to the development or application of
    SPS measures and other agricultural and food standards that affect
    or may affect trade between the Parties;

-   reviewing and assessing progress of both countries' priority market
    access interests;

-   consulting on requests for recognition of equivalence of SPS
    measures or other agricultural and food standards;

-   consulting on matters relating to the harmonization of standards;

-   coordinating capacity-building and technical cooperation programs;
    and

-   strengthening cooperation in the WTO, Codex Alimentarius Commission,
    the Office International des Epizooties, and the International Plant
    Protection Convention.

#### Thai-China Free Trade Area

On June 18, 2003, Thailand and China signed the Early Harvest Scheme on
fruits, vegetables, and nuts (harmonized codes of chapter 07-08). Under
the scheme, import duties on these products between two countries would
be eliminated immediately on October 1, 2003.

The tariff reduction under the free trade area agreement has benefited
the Chinese agricultural products (chapter 01-08) coming into Thailand,
at the expense of U.S. and others' exports. However, this threat has
been limited initially to fruits and nuts due to the direct competition
that Chinese products present to these U.S. products in the Thai market.

Assuming that the future Thai-U.S. FTA agreement will not activate
possible tariff reductions in imported U.S. fruits and nuts to Thailand
prior to the year 2006, FAS/Bangkok assessed the impact of a zero-tariff
given to China on U.S. exports as presented in Exhibit E.

#### Thai-India Free Trade Area

On October 9, 2003, Thailand and India signed a framework agreement
mainly to initiate an Early Harvest Scheme. Under the scheme, both
countries will gradually reduce the current applied tariff rates by 50%
on March 1, 2004, by 75% on March 1, 2005, and 100% on March 1, 2006,
respectively. There are 84 items of product under this scheme, including
rambutans, longans, mangosteens, grapes, wheat, canned seafoods, and
other industrial goods.

#### Thai-Bahrain Free Trade Area

Thailand and Bahrain signed a framework agreement on Common Effective
Preferential (CEP) which was effective on December 29, 2002. The Early
Harvest products (662 items) were reduced to zero and a 3%. Any products
with 3% tariff rate would be eliminated on January 1, 2005.

As for the rest of the uncovered products (about more than 5,000 items),
they will be divided into 3 groups: 1) Fast track products (about 40% of
total pending items), for which tariff rates will be eliminated by
January 1, 2005; 2) Normal track products (another 40%), for which
tariff rates will be eliminated by January 1, 2007; and 3) Other
products (about 20%), for which tariff rates will be eliminated by
January 1, 2010.

#### ASEAN Free Trade Area

The former Thai Prime Minister Anand Panyarachun first floated the idea
of an AFTA (ASEAN Free Trade Area) in June 1991. Having gathered
preliminary support from other ASEAN member countries, Thailand
presented in September 1991 a draft AFTA proposal, called Anand's
initiative. The basic principle of the AFTA is to introduce, through the
Common Effective Preferential Tariff Scheme (CEPT), tariff reductions in
AFTA of all products to within 0-5% by 2003, beginning January 1, 1993,
except for rice, a highly sensitive product.

There are two categories of commodities which are subject to the tariff
reduction under the CEPT scheme; i.e., 1) Industrial and Agro-Industrial
Products; and 2) Non-Processed Agricultural Products.

1\) Industrial and Agro-Industrial Products

There are two main lists for these products:

1.1. Inclusion List (IL). The products under the inclusion list are
separated into two programs, which are the Fast Track Program and the
Normal Track Program:

A\) The Fast Track Program: The tariff rates for products under this
program were to be reduced to 0-5 percent within 7 years (by January 1,
2000). A set of 15 product groups identified for accelerated tariff
reduction include oil, cement, chemicals, pharmaceuticals, fertilizer,
plastics, rubber products, leather products, pulp and paper, textiles &
apparels, wooden and rattan furniture, ceramics and glass products, gems
and jewelry products, machinery & electrical appliances (electronics),
and mineral products.

B\) The Normal Track Program: The tariff rates for products under this
program will be reduced to 0-5 percent within 10 years: by January 1,
2003, for original members (incl. Brunei, Indonesia, Malaysia,
Philippines, Singapore, and Thailand) and by January 1, 2006-2010 for
new Members (incl. Cambodia, Lao PDR, Myanmar, and Vietnam).

1.2 Temporary Exclusion List (TEL). ASEAN Members are eligible to delay
their tariff reduction by listing the products in TEL. Under the TEL,
the members, after 3 years of tariff reduction exemption, are committed
to release 20 percent of total listed items into the Inclusion List (IL)
and the tariff rates for these products will be reduced to 0-5 percent
within 7 years: by January 1, 2003, for original members; and by January
1, 2006-2010, for new Members.

2\) Non-processed Agricultural Products

In principle, the tariff reduction under the CEPT scheme for
non-processed agricultural products will start later than that for
industrial and agro-industrial products, but will be ended at the same
relevant year of agreement. However, this rule is not applied to
commodities on the Sensitive List and Highly Sensitive List.
Accordingly, there are three lists for this product category:

2.1 Inclusion List (IL). Under this scheme, original members (including
Thailand) will reduce the tariff rates for products under this category
to 0-5 percent by 2003. While the same committed tariff level (0-5
percent) will be applied to new members by 2006-2010.

2.2. Temporary Exclusion List (TEL). Members are able to begin their
tariff reduction under this list in one year after the tariff reduction
under the Inclusion List is effective. Tariff rates must reduced to 0-5
percent in the same relevant year as that in the IL.

2.3 Sensitive List (SL). The tariff reduction for the products under the
SL will be the slowest. Members are committed to reduce the tariff rates
to 0-5 percent within 10 years after the scheme starts. However, as some
products which are considered as highly sensitive products like rice,
the final tariff rates are allowed to be higher than 5 percent at the
end of the scheme time frame. As for Thailand, there are seven tariff
lines within four products that are in its Sensitive List: Harmonized
code (6 digits); a) Coconut (120300); b) Coffee (090111, 090112 and
090130); c) Fresh Cut Flowers (060310); and d) Potatoes (070110 and
070190).

There are also General Exceptions which are those products excluded for
the protection of national security, the protection of human, animal or
plant life and health, and the protection of articles of artistic,
historic, and archaeological value.

Apart from tariff reduction, member countries are obliged to eliminate
all quantitative restrictions (quotas, license, etc.) on CEPT products.

As regards non-tariff barriers, these shall be eliminated by member
countries on a gradual basis within a period of five years enjoyment of
concessions applicable to the CEPT products.

The product, which is deemed to be under the CEPT scheme, must contain
local content or ASEAN content altogether at least 40 percent of the
product value, and it must be on the CEPT scheme of both an importing
country and an exporting country.

As one of the original ASEAN members (including Brunei, Malaysia,
Philippines, and Singapore), Thailand's tariff rates for all
agricultural products imported from ASEAN members, except for the 7
commodities on the Sensitive List, are subject to be 0-5% since January
1, 2003.

#### ASEAN-China Free Trade Area

The ASEAN-China Summit in Brunei in November 2001 agreed to establish an
ASEAN-China Free Trade Area (ASEAN-China FTA) within ten years, with
recognition of differences in the level of economic development among
the parties. The area of economic cooperation includes: (1) agriculture;
(2) information and communication technology; (3) human resources
development; (4) investment; and (5) Mekong River basin development.

In the area of trade in goods, ASEAN and China agreed in principle that
the tariff schedule among the parties should be reduced substantially on
all trade in goods, including HS code chapters of 01 (live animals), 02
(meat and edible meat offal), 03 (fish), 04 (dairy products), 05 (other
animal products), 06 (live trees), 07 (edible vegetables), and 08
(edible fruits and nuts).

# Tariff Reduction and Elimination Plan

The products in the covered items, which are not covered by the Early
Harvest Program, will be categorized into two Tracks: Normal Track and
Sensitive Track:

\(a\) Normal Track: the applied MFN tariff rates\* for products listed
in the Normal Track will be gradually reduced or eliminated over a
period from 2005 to 2010 for the ASEAN 6 (Brunei, Indonesia, Malaysia,
Singapore, Thailand) and China, and in the case of the newer ASEAN
member states (Cambodia, Laos, Burma, Vietnam), the period will be from
2005 to 2015.

\(b\) Sensitive Track: The applied MFN tariff rates for products listed
in this track will be reduced in accordance with the mutual end rates
and end dates as agreed by the parties.

Note: \* Applied MFN tariff rates shall:

\(i\) in the case of ASEAN Member States (which are WTO members as of 1
July 2003) and China, refer to their respective applied rates as of 1
July 2003; and

\(ii\) in the case of ASEAN Member States (which are non-WTO members as
of 1 July 2003), refer to the rates as applied to China as of 1 July
2003.

# Early Harvest Program 

In order to accelerate the implementation of this agreement, the ASEAN
Parties agreed to implement an Early Harvest Program. Products covered
by the Early Harvest Program will include: 1) products of HS Code
Chapter 01-08, unless otherwise excluded by a Party in its Exclusion
List; and 2) specific products set out in Annex 2 of the Agreement. As
ASEAN 6 has no exclusion of any product, this means all commodities from
Chapter 01 to Chapter 08 will be included in the Early Harvest Program.

The product categories for tariff reduction and elimination under the
Early Harvest Program are broken into 3 product categories, defined as
follows:

  ----------------------- ----------------------- -----------------------
  Item                    China and ASEAN 6       New ASEAN States

  Category 1              MFN rates \>15%         MFN rates \> 30%

  Category 2              MFN rates 5-15%         MFN rates 15-30%

  Category 3              MFN rates \<5%          MFN rates \<15%
  ----------------------- ----------------------- -----------------------

The implementation time frames under the Early Harvest Program are
determined as follows:

China and ASEAN 6 ( Brunei, Indonesia, Malaysia, Singapore, Thailand):

  ----------------- ------------------ ------------------ -----------------
  Product Category  Not later than 1   Not later than 1   Not later than 1
                    Jan 2004           Jan 2005           Jan 2006

  1                 10%                5%                 0%

  2                 5%                 0%                 0%

  3                 0%                 0%                 0%
  ----------------- ------------------ ------------------ -----------------

China and the newer ASEAN Member States (Cambodia, Laos, Burma,
Vietnam):

+--------------------+------+------+------+------+------+------+-----+
| Country            | 1    | 1Jan | 1Jan | 1Jan | 1Jan | 1Jan | 1   |
|                    | Jan  | 2005 | 2006 | 2007 | 2008 | 2009 | Jan |
|                    | 2004 |      |      |      |      |      | 2   |
|                    |      |      |      |      |      |      | 010 |
+--------------------+------+------+------+------+------+------+-----+
| *Vietnam:*         | 20%  | 15%  | 10%  | 5%   | 0%   | 0%   | 0%  |
|                    |      |      |      |      |      |      |     |
| Product Category 1 | 10%  | 10%  | 5%   | 5%   | 0%   | 0%   | 0%  |
|                    |      |      |      |      |      |      |     |
| Product Category 2 | 5%   | 5%   | 0-5% | 0-5% | 0%   | 0%   | 0%  |
|                    |      |      |      |      |      |      |     |
| Product Category 3 |      |      |      |      |      |      |     |
+--------------------+------+------+------+------+------+------+-----+
| *Laos and Burma:*  | \-   | \-   | 20%  | 14%  | 8%   | 0%   | 0%  |
|                    |      |      |      |      |      |      |     |
| Product Category 1 | \-   | \-   | 10%  | 10%  | 5%   | 0%   | 0%  |
|                    |      |      |      |      |      |      |     |
| Product Category 2 | \-   | \-   | 5%   | 5%   | 0-5% | 0%   | 0%  |
|                    |      |      |      |      |      |      |     |
| Product Category 3 |      |      |      |      |      |      |     |
+--------------------+------+------+------+------+------+------+-----+
| *Cambodia:*        | \-   | \-   | 20%  | 15%  | 10%  | 5%   | 0%  |
|                    |      |      |      |      |      |      |     |
| Product Category 1 | \-   | \-   | 10%  | 10%  | 5%   | 5%   | 0%  |
|                    |      |      |      |      |      |      |     |
| Product Category 2 | \-   | \-   | 5%   | 0-5% | 0-5% | 0-5% | 0%  |
|                    |      |      |      |      |      |      |     |
| Product Category 3 |      |      |      |      |      |      |     |
+--------------------+------+------+------+------+------+------+-----+

# SECTION III: TRADE BARRIER CATALOG

+----+--------------+---------+---------------------------------------+
| It | Product      | Trade   | Restriction/Notes                     |
| em |              | Impact  |                                       |
|    |              |         |                                       |
|    |              | US\$    |                                       |
|    |              | million |                                       |
|    |              |         |                                       |
|    |              | (an     |                                       |
|    |              | nually) |                                       |
+----+--------------+---------+---------------------------------------+
| 1  | Red meats    | 6.0     |  High duties of 51%                  |
|    |              |         |                                       |
|    |              |         |  Import permit fee applied at US\$   |
|    |              |         | 114/ton                               |
|    |              |         |                                       |
|    |              |         |  Non-automatic and non-transparent   |
|    |              |         | administration of import permit       |
|    |              |         |                                       |
|    |              |         |  Import permit for pork has been     |
|    |              |         | never issued                          |
|    |              |         |                                       |
|    |              |         |  *Note: market creation and          |
|    |              |         | expansion*                            |
+----+--------------+---------+---------------------------------------+
| 2  | Poultry meat | 4.0     |  High duties of 51%                  |
|    |              |         |                                       |
|    |              |         |  Import permit fee applied at US\$   |
|    |              |         | 227/ton                               |
|    |              |         |                                       |
|    |              |         |  Non-automatic and non-transparent   |
|    |              |         | administration of import permit       |
|    |              |         |                                       |
|    |              |         |  Import permit for chicken meat      |
|    |              |         | (excluding turkey) has been never     |
|    |              |         | issued                                |
|    |              |         |                                       |
|    |              |         |  *Note: market creation*             |
+----+--------------+---------+---------------------------------------+
| 3  | Dairy        | 3.0     |  TRQs system is applied to skimmed   |
|    | products     |         | milk, and the quota administration is |
|    |              |         | untimely and uncertain                |
|    |              |         |                                       |
|    |              |         |  Local content requirement           |
|    |              |         |                                       |
|    |              |         |  High duties (5-30%) on other dairy  |
|    |              |         | products                              |
|    |              |         |                                       |
|    |              |         |  *Note: market expansion*            |
+----+--------------+---------+---------------------------------------+
| 4  | Seafood      | 5.0     |  High import duties of 60%           |
|    |              |         |                                       |
|    |              |         |  *Note: market creation and          |
|    |              |         | expansion*                            |
+----+--------------+---------+---------------------------------------+
| 5  | Fresh fruit  | 5.0     |  High duties of 10-60%               |
|    |              |         |                                       |
|    |              |         |  *Note: market expansion*            |
+----+--------------+---------+---------------------------------------+
| 6  | Nuts         | 4.0     |  Duties of 10% for most products     |
|    |              |         |                                       |
|    |              |         |  *Note: market expansion*            |
+----+--------------+---------+---------------------------------------+
| 7  | Wheat        | 8.0     |  Duty of 1.0 baht/kg (approx. US\$   |
|    |              |         | 25/ton)                               |
+----+--------------+---------+---------------------------------------+
| 8  | Snack foods  | 5.0     |  Duties of 5-30%                     |
|    |              |         |                                       |
|    |              |         |  *Note: market expansion*            |
+----+--------------+---------+---------------------------------------+
| 9  | Frozen       | 6.0     |  High duties of 33%                  |
|    | potatoes     |         |                                       |
|    |              |         |  *Note: market expansion*            |
+----+--------------+---------+---------------------------------------+
| 10 | Processed    | 4.5     |  High duties of 30-60%               |
|    | meat         |         |                                       |
|    | products     |         |  *Note: market expansion*            |
+----+--------------+---------+---------------------------------------+
| 11 | Processed    | 6.0     |  High duties of 30%                  |
|    | fruit &      |         |                                       |
|    | vegetables   |         | *Note: market creation and expansion* |
+----+--------------+---------+---------------------------------------+
| 12 | Wine         | 6.0     |  Duties altogether are almost 400%   |
|    |              |         |                                       |
|    |              |         | *Note: market expansion*              |
+----+--------------+---------+---------------------------------------+
| 13 | Pet foods    | 6.0     |  Duties of 9.2 %                     |
|    |              |         |                                       |
|    |              |         |  Complicated feed control            |
|    |              |         | regulations                           |
|    |              |         |                                       |
|    |              |         | *No Note: market creation and         |
|    |              |         | expansion*                            |
+----+--------------+---------+---------------------------------------+

# SECTION IV: REFERENCE MATERIALS

## EXHIBIT A

Thailand: WTO Bound Rates on Certain Agricultural Products

<table>
<colgroup>
<col style="width: 3%" />
<col style="width: 26%" />
<col style="width: 14%" />
<col style="width: 7%" />
<col style="width: 6%" />
<col style="width: 11%" />
<col style="width: 6%" />
<col style="width: 8%" />
<col style="width: 6%" />
<col style="width: 9%" />
</colgroup>
<tbody>
<tr class="odd">
<td></td>
<td rowspan="2">PRODUCT</td>
<td rowspan="2"><p>HARMONIZED</p>
<p>CODE</p></td>
<td colspan="7">TARIFF (WTO)</td>
</tr>
<tr class="even">
<td></td>
<td>QUOTA</td>
<td colspan="2">2002</td>
<td colspan="2">2003</td>
<td colspan="2">2004</td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td>(%)</td>
<td>Volume</td>
<td>(%)</td>
<td>Volume</td>
<td>(%)</td>
<td>Volume</td>
</tr>
<tr class="even">
<td>1</td>
<td>BEEF (Fresh and Frozen)*</td>
<td>0201</td>
<td></td>
<td>52</td>
<td></td>
<td>51</td>
<td></td>
<td>50</td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td>0202</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>2</td>
<td>BEEF OFFAL*</td>
<td colspan="2">0206.100.007</td>
<td>36</td>
<td></td>
<td>33</td>
<td></td>
<td>30</td>
<td></td>
</tr>
<tr class="odd">
<td>3</td>
<td>MEAT OF SWINE</td>
<td colspan="2">0203.290.000</td>
<td>36</td>
<td></td>
<td>33</td>
<td></td>
<td>30</td>
<td></td>
</tr>
<tr class="even">
<td>4</td>
<td>MEAT OF SHEEP/LAMB</td>
<td>0204</td>
<td></td>
<td>34</td>
<td></td>
<td>32</td>
<td></td>
<td>30</td>
<td></td>
</tr>
<tr class="odd">
<td>5</td>
<td>TURKEY</td>
<td colspan="2">20724‑20727</td>
<td>36</td>
<td></td>
<td>33</td>
<td></td>
<td>30</td>
<td></td>
</tr>
<tr class="even">
<td>6</td>
<td>SALMON,TUNAS,COD,SARDINES</td>
<td>0303</td>
<td></td>
<td>5</td>
<td></td>
<td>5</td>
<td></td>
<td>5</td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td colspan="2">MACKEREL AND OTHER FISH</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>7</td>
<td>CRABS</td>
<td colspan="2">0306.140.001</td>
<td>5</td>
<td></td>
<td>5</td>
<td></td>
<td>5</td>
<td></td>
</tr>
<tr class="odd">
<td>8</td>
<td>SCALLOPS</td>
<td colspan="2">0307.210.006</td>
<td>5</td>
<td></td>
<td>5</td>
<td></td>
<td>5</td>
<td></td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td colspan="2">0307.290.003</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td>9</td>
<td>POWDER MILK &amp; CREAM</td>
<td>0402</td>
<td>X</td>
<td>32</td>
<td></td>
<td>31</td>
<td></td>
<td>30</td>
<td></td>
</tr>
<tr class="even">
<td>10</td>
<td>CHEESE &amp; CURD</td>
<td>0406</td>
<td></td>
<td>36</td>
<td>Bt.12/kg</td>
<td>33</td>
<td>Bt.11/kg</td>
<td>30</td>
<td>Bt.10/kg</td>
</tr>
<tr class="odd">
<td>11</td>
<td>DRIED PEAS, BEANS,LENTILS</td>
<td>0713</td>
<td></td>
<td>44</td>
<td></td>
<td>42</td>
<td></td>
<td>40</td>
<td></td>
</tr>
<tr class="even">
<td>12</td>
<td>ALMONDS, FRESH/DRIED</td>
<td colspan="2">'0802110001</td>
<td>44</td>
<td>Bt.36.80/kg</td>
<td>42</td>
<td>Bt.35.15/kg</td>
<td>40</td>
<td>Bt.33.50/kg</td>
</tr>
<tr class="odd">
<td></td>
<td>IN SHELL &amp; SHELLED</td>
<td colspan="2">0802120002</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>13</td>
<td>PISTACHIOS, FRESH/DRIED</td>
<td colspan="2">0802.500.008</td>
<td>44</td>
<td>Bt.36.80/kg</td>
<td>42</td>
<td>Bt.35.15/kg</td>
<td>40</td>
<td>Bt.33.50/kg</td>
</tr>
<tr class="odd">
<td>14</td>
<td>ORANGE</td>
<td>0805.200</td>
<td></td>
<td>44</td>
<td>Bt.36.80/kg</td>
<td>42</td>
<td>Bt.35.15/kg</td>
<td>40</td>
<td>Bt.33.50/kg</td>
</tr>
<tr class="even">
<td>15</td>
<td>GRAPEFRUIT, FRESH/DRIED</td>
<td colspan="2">0805.400.002</td>
<td>44</td>
<td>Bt.36.80/kg</td>
<td>42</td>
<td>Bt.35.15/kg</td>
<td>40</td>
<td>Bt.33.50/kg</td>
</tr>
<tr class="odd">
<td>16</td>
<td>GRAPES, FRESH</td>
<td colspan="2">0806.100.002</td>
<td>36</td>
<td>Bt.30.00/kg</td>
<td>33</td>
<td>Bt.27.50/kg</td>
<td>30</td>
<td>Bt.25.00/kg</td>
</tr>
<tr class="even">
<td>17</td>
<td>RAISINS</td>
<td colspan="2">0806.200.004</td>
<td>36</td>
<td>Bt.30.00/kg</td>
<td>33</td>
<td>Bt.27.50/kg</td>
<td>30</td>
<td>Bt.25.00/kg</td>
</tr>
<tr class="odd">
<td>18</td>
<td>APPLE (FRESH)</td>
<td colspan="2">0808.100.003</td>
<td>36</td>
<td>Bt.15.00/kg</td>
<td>33</td>
<td>Bt.13.75/kg</td>
<td>30</td>
<td>Bt.12.50/kg</td>
</tr>
<tr class="even">
<td>19</td>
<td>PEARS &amp; QUINCES</td>
<td colspan="2">0808.200.005</td>
<td>36</td>
<td>Bt.30.00/kg</td>
<td>33</td>
<td>Bt.27.50/kg</td>
<td>30</td>
<td>Bt.25.00/kg</td>
</tr>
<tr class="odd">
<td>20</td>
<td>CHERRIES (FRESH)</td>
<td colspan="2">0809.200.000</td>
<td>44</td>
<td>Bt.36.80/kg</td>
<td>42</td>
<td>Bt.35.15/kg</td>
<td>40</td>
<td>Bt.33.50/kg</td>
</tr>
<tr class="even">
<td>21</td>
<td>PEACHES, INCL NECTARINES</td>
<td colspan="2">0809.300.002</td>
<td>44</td>
<td>Bt.36.80/kg</td>
<td>42</td>
<td>Bt.35.15/kg</td>
<td>40</td>
<td>Bt.33.50/kg</td>
</tr>
<tr class="odd">
<td>22</td>
<td>PLUMS AND SLOES</td>
<td colspan="2">0809.400.004</td>
<td>44</td>
<td>Bt.36.80/kg</td>
<td>42</td>
<td>Bt.35.15/kg</td>
<td>40</td>
<td>Bt.33.50/kg</td>
</tr>
<tr class="even">
<td>23</td>
<td>COFFEE</td>
<td>0901</td>
<td>X</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td>24</td>
<td>POPCORN</td>
<td>1005.90.0000</td>
<td>X</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>25</td>
<td>SUNFLOWER/SUFFLOWER OIL</td>
<td colspan="2">1512.191006</td>
<td>27.6</td>
<td>Bt.5.11/l.</td>
<td>27.3</td>
<td>Bt.5.06/l.</td>
<td>27</td>
<td>Bt.5.00/l.</td>
</tr>
<tr class="odd">
<td></td>
<td>(EDIBLE)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>26</td>
<td>SAUSAGES</td>
<td>1601</td>
<td></td>
<td>36</td>
<td>Bt.30.00/kg</td>
<td>33</td>
<td>Bt.27.50/kg</td>
<td>30</td>
<td>Bt.25.00/kg</td>
</tr>
<tr class="odd">
<td>27</td>
<td>SUGAR CONFECTIONERY</td>
<td colspan="2">1704.100.007</td>
<td>44</td>
<td>Bt.36.80/kg</td>
<td>42</td>
<td>Bt.35.15/kg</td>
<td>40</td>
<td>Bt.33.50/kg</td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td colspan="2">1704.900.001</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td>28</td>
<td>CHOCOLATE &amp; FOOD PREP.</td>
<td>1806</td>
<td></td>
<td>44</td>
<td>Bt.36.80/kg</td>
<td>42</td>
<td>Bt.35.15/kg</td>
<td>40</td>
<td>Bt.33.50/kg</td>
</tr>
<tr class="even">
<td></td>
<td>WITH COCOA</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td>29</td>
<td>MILKFOOD FOR INFANTS</td>
<td colspan="2">1901.101.009</td>
<td>9.2</td>
<td></td>
<td>9.1</td>
<td></td>
<td>9</td>
<td></td>
</tr>
<tr class="even">
<td>30</td>
<td>OTHER PREPS W/FLOUR MEAL</td>
<td colspan="2">1901.909.004</td>
<td>9.2</td>
<td></td>
<td>9.1</td>
<td></td>
<td>9</td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td>OR STARCH</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>31</td>
<td>BREAKFAST CEREAL</td>
<td>1904.10</td>
<td></td>
<td>31.4</td>
<td>Bt.26.19/kg</td>
<td>25.7</td>
<td>Bt.21.43/kg</td>
<td>20</td>
<td>Bt.16.67/kg</td>
</tr>
<tr class="odd">
<td>32</td>
<td>FROZEN FRIES</td>
<td colspan="2">2004.100.007</td>
<td>36</td>
<td>Bt.30.00/kg</td>
<td>33</td>
<td>Bt.27.50/kg</td>
<td>30</td>
<td>Bt.25.00/kg</td>
</tr>
<tr class="even">
<td>33</td>
<td>JAMS, FRUIT JELLIES</td>
<td>2007</td>
<td></td>
<td>36</td>
<td>Bt.30.00/kg</td>
<td>33</td>
<td>Bt.27.50/kg</td>
<td>30</td>
<td>Bt.25.00/kg</td>
</tr>
<tr class="odd">
<td>34</td>
<td>GROUND NUTS</td>
<td colspan="2">2008.110.004</td>
<td>36</td>
<td>Bt.30.00/kg</td>
<td>33</td>
<td>Bt.27.50/kg</td>
<td>30</td>
<td>Bt.25.00/kg</td>
</tr>
<tr class="even">
<td>35</td>
<td>OTHER NUTS INC MIXTURES</td>
<td>2008.190</td>
<td></td>
<td>36</td>
<td>Bt.30.00/kg</td>
<td>33</td>
<td>Bt.27.50/kg</td>
<td>30</td>
<td>Bt.25.00/kg</td>
</tr>
<tr class="odd">
<td>36</td>
<td>ALMOND (ROSTED)</td>
<td colspan="2">2008.190.014</td>
<td>36</td>
<td>Bt.30.00/kg</td>
<td>33</td>
<td>Bt.27.50/kg</td>
<td>30</td>
<td>Bt.25.00/kg</td>
</tr>
</tbody>
</table>

<table>
<colgroup>
<col style="width: 3%" />
<col style="width: 26%" />
<col style="width: 14%" />
<col style="width: 7%" />
<col style="width: 6%" />
<col style="width: 11%" />
<col style="width: 6%" />
<col style="width: 8%" />
<col style="width: 6%" />
<col style="width: 9%" />
</colgroup>
<tbody>
<tr class="odd">
<td></td>
<td rowspan="2">PRODUCT</td>
<td rowspan="2"><p>HARMONIZED</p>
<p>CODE</p></td>
<td colspan="7">TARIFF (WTO)</td>
</tr>
<tr class="even">
<td></td>
<td>QUOTA</td>
<td colspan="2">2002</td>
<td colspan="2">2003</td>
<td colspan="2">2004</td>
</tr>
<tr class="odd">
<td>37</td>
<td>FRUIT &amp; VEG JUICE</td>
<td>2009</td>
<td></td>
<td>44</td>
<td>Bt.14.72/l.</td>
<td>42</td>
<td>Bt.14.06/l.</td>
<td>40</td>
<td>Bt.13.40/l.</td>
</tr>
<tr class="even">
<td>38</td>
<td>INSTANT COFFEE</td>
<td>2101.110.010</td>
<td>X</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td colspan="2">2101.120.010</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>39</td>
<td>INSTANT TEA</td>
<td colspan="2">2101.200.016</td>
<td>44</td>
<td></td>
<td>42</td>
<td></td>
<td>40</td>
<td></td>
</tr>
<tr class="odd">
<td>40</td>
<td>TOMATO KETCHUP</td>
<td colspan="2">2103.200.004</td>
<td>36</td>
<td>Bt 9.00/kg.</td>
<td>33</td>
<td>Bt. 8.25/kg.</td>
<td>30</td>
<td>Bt. 7.50/kg.</td>
</tr>
<tr class="even">
<td>41</td>
<td>MUSTARD</td>
<td colspan="2">2103.300.006</td>
<td>36</td>
<td>Bt 15.00/kg.</td>
<td>33</td>
<td>Bt. 13.75/kg.</td>
<td>30</td>
<td>Bt. 12.50/kg.</td>
</tr>
<tr class="odd">
<td>42</td>
<td>OTHER SAUCES &amp; PREP</td>
<td colspan="2">2103.909.099</td>
<td>44</td>
<td>Bt. 11.04/kg.</td>
<td>42</td>
<td>Bt. 10.55/kg.</td>
<td>40</td>
<td>Bt. 10.05/kg.</td>
</tr>
<tr class="even">
<td>43</td>
<td>SOUPS &amp; BROTHS &amp;</td>
<td colspan="2">2104.100.008</td>
<td>31.4</td>
<td>Bt. 5.36/kg.</td>
<td>25.7</td>
<td>Bt. 4.43/kg.</td>
<td>20</td>
<td>Bt.3.50/kg.</td>
</tr>
<tr class="odd">
<td></td>
<td>PREPARATION</td>
<td colspan="2">2104.200.004</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>44</td>
<td>ICE CREAM</td>
<td colspan="2">2105.000.001</td>
<td>44</td>
<td></td>
<td>42</td>
<td></td>
<td>40</td>
<td></td>
</tr>
<tr class="odd">
<td>45</td>
<td>OTHER FOOD PREP</td>
<td>2106.900</td>
<td></td>
<td>31.4</td>
<td></td>
<td>25.7</td>
<td></td>
<td>20</td>
<td></td>
</tr>
<tr class="even">
<td>46</td>
<td>BEER</td>
<td colspan="2">2203.000.001</td>
<td>62</td>
<td>Bt. 25.8/l.</td>
<td>61</td>
<td>Bt. 25.4/l.</td>
<td>60</td>
<td>Bt. 25.00/l.</td>
</tr>
<tr class="odd">
<td>47</td>
<td>CHAMPAGNE</td>
<td colspan="2">2204.100.104</td>
<td>55.2</td>
<td>Bt. 18.4/l.</td>
<td>54.6</td>
<td>Bt. 18.2/l.</td>
<td>54</td>
<td>Bt. 18.00/l.</td>
</tr>
<tr class="even">
<td>48</td>
<td>OTHER SPARKLING WINES</td>
<td colspan="2">2204.100.907</td>
<td>55.2</td>
<td>Bt. 18.4/l.</td>
<td>54.6</td>
<td>Bt. 18.2/l.</td>
<td>54</td>
<td>Bt. 18.00/l.</td>
</tr>
<tr class="odd">
<td>49</td>
<td>WINE</td>
<td colspan="2">2204210001</td>
<td>55.2</td>
<td>Bt. 18.4/l.</td>
<td>54.6</td>
<td>Bt. 18.2/l.</td>
<td>54</td>
<td>Bt. 18.00/l.</td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td colspan="2">2204290009</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td>50</td>
<td>WHISKIES</td>
<td colspan="2">2208.300.004</td>
<td>62</td>
<td>Bt. 124/l.</td>
<td>61</td>
<td>Bt. 122/l.</td>
<td>60</td>
<td>Bt. 120/l.</td>
</tr>
<tr class="even">
<td>51</td>
<td>DOG&amp;CAT FOOD</td>
<td colspan="2">2309.100.108</td>
<td>9.2</td>
<td></td>
<td>9.1</td>
<td></td>
<td>9</td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td colspan="2">2309.100.905</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td colspan="10">Remark: *Inspection fee by Livestock Department is
equal to Baht 5/kg. for beef and Baht 20/kg. for offals</td>
</tr>
</tbody>
</table>

##  EXHIBIT B

+-----------------------------------------------------------------------+
| ##### Thail                                                           |
| and: The Changes in Applied Tariffs for Agricultural Products in 2003 |
+-----------------------------------------------------------------------+

+-----+---------------------+-----------------------------------------+
| C   | **Description**     | **Tariff Changes**                      |
| hap |                     |                                         |
| ter |                     |                                         |
+-----+---------------------+-----------------------------------------+
| 01  | ##### Live animals  | The tariff rate on live cattle, not for |
|     |                     | breeding, was down from 10% to 5%;      |
|     |                     | otherwise down from 40% to 30%.         |
+-----+---------------------+-----------------------------------------+
| 02  | Meat and edible     | Down from 60% to 30-50%.                |
|     | meat offal          |                                         |
+-----+---------------------+-----------------------------------------+
| 03  | Fish and            | Down from 60% to 5-30%.                 |
|     | crustaceans, etc.   |                                         |
+-----+---------------------+-----------------------------------------+
| 04  | Dairy products,     | Tariff rates on butter, cheese, and     |
|     | eggs, honey, etc    | curd were reduced from 60% to 30%       |
+-----+---------------------+-----------------------------------------+
| 05  | Products of animal  | Tariff on only few items was reduced;   |
|     | origin, not         | for example, skin and other parts of    |
|     | elsewhere specified | birds, down from 35% to 10%.            |
|     | or included         |                                         |
+-----+---------------------+-----------------------------------------+
| 06  | Live trees and      | Tariff for cut flowers was down from    |
|     | other plants;       | 60% to 54%, while that for foliage,     |
|     | bulbs, roots, etc   | branches, and other parts of plants,    |
|     |                     | without flowers was reduced from 60% to |
|     |                     | 30%                                     |
+-----+---------------------+-----------------------------------------+
| 07  | Edible vegetables   | Mostly reduced from 60% to 30-40%.      |
|     | and certain roots   |                                         |
|     | and tubers          |                                         |
+-----+---------------------+-----------------------------------------+
| 08  | Edible fruit and    | Tariff on other nuts (almonds,          |
|     | nuts                | hazelnuts, walnuts, chestnuts, and      |
|     |                     | pistachios) remain unchanged at 50      |
|     |                     | baht/kg to 10% or 8.50 baht/kg. Fresh   |
|     |                     | apples: unchanged at 10% or 3 baht/kg.  |
|     |                     | Fresh pears and quinces: down from 60%  |
|     |                     | or 30 baht/kg to 30% or 15 baht/kg.     |
|     |                     | Otherwise was down from 60% to 50%.     |
+-----+---------------------+-----------------------------------------+
| 09  | Coffee, tea, mate   | Mate tariff was reduced from 60% to     |
|     | and spices          | 30%, and tariff rates for most of other |
|     |                     | products were down from 30% to 27%.     |
+-----+---------------------+-----------------------------------------+
| 10  | Cereals             | Tariff rate for wheat grains was down   |
|     |                     | from 1.00 baht to 0.10 baht/kg;         |
|     |                     | otherwise was 2.75 baht/kg.             |
+-----+---------------------+-----------------------------------------+
| 11  | Products of the     | Wheat flour tariff was reduced from     |
|     | milling industry,   | 2.75 baht/kg to 1.85 baht/kg, otherwise |
|     | including malt,     | down from 40% or 2.75 baht/kg to 30% or |
|     | starches, etc.      | 2.25 baht/kg.                           |
+-----+---------------------+-----------------------------------------+
| 12  | Oilseeds and        | Tariff on soybeans remain unchanged at  |
|     | miscellaneous       | 6% or 0.30 baht/kg; copra - 0.65        |
|     | grains              | baht/kg); castor oil seed - 5%; low-fat |
|     |                     | flour and meal of soybeans - 10% or     |
|     |                     | 0.30 baht/kg). Otherwise was reduced    |
|     |                     | from 35-60% to 23-30%.                  |
+-----+---------------------+-----------------------------------------+
| 13  | Lac, gums, and      | Tariff on most items was reduced from   |
|     | other vegetable     | 15-30% to 5-27%.                        |
|     | saps and extracts   |                                         |
+-----+---------------------+-----------------------------------------+
| 14  | Vegetable plaiting  | Bamboo and rattan tariff remains zero;  |
|     | materials, etc.     | dyeing and tanning materials derived    |
|     |                     | from vegetable remain at 20%; and       |
|     |                     | otherwise down 35% to 30%.              |
+-----+---------------------+-----------------------------------------+
| 15  | Animal and          | Tariff on about 40% of total items in   |
|     | vegetable fats and  | the chapter remain unchanged at 10%, or |
|     | oils                | 1.32 baht/liter, otherwise down from    |
|     |                     | 30% to 27%.                             |
+-----+---------------------+-----------------------------------------+
| 16  | Preparations of     | Tariff on all meat products originating |
|     | meat, of fish or of | from livestock and poultry meat remain  |
|     | crustaceans, etc.   | unchanged at 30% or 30 baht/kg; fish    |
|     |                     | meat products down from 30% or 100      |
|     |                     | baht/kg to 20% or 65 baht/kg; otherwise |
|     |                     | remain unchanged at 60%.                |
+-----+---------------------+-----------------------------------------+
| 17  | Sugars and sugar    | Tariff on a few products was reduced    |
|     | confectionary       | from 20% to 10%; cane molasses down     |
|     |                     | from 65% to 30-40%; otherwise remain    |
|     |                     | unchanged                               |
+-----+---------------------+-----------------------------------------+
| 18  | Cocoa and cocoa     | Tariff on cocoa beans was reduced from  |
|     | preparations        | 30% to 27%; cocoa butter, fat, and oil  |
|     |                     | down from 10% to 5%.                    |
+-----+---------------------+-----------------------------------------+
| 19  | Preparations of     | Product preparations for infant who is  |
|     | cereals, flour, etc | lactose-intolerance was down from 40%   |
|     |                     | to 5%; some prepared foods, sweet       |
|     |                     | biscuits, waffles, and wafers down from |
|     |                     | 30% to 20%; otherwise remains           |
|     |                     | unchanged.                              |
+-----+---------------------+-----------------------------------------+
| 20  | Preparations of     | Tariff on all products (including       |
|     | vegetables, fruit,  | french fries) remains unchanged at 30%. |
|     | nuts, etc           |                                         |
+-----+---------------------+-----------------------------------------+
| 21  | Miscellaneous       | Tariff on some products was reduced     |
|     | edible              | from 30% to 1-20%.                      |
|     |                     |                                         |
|     | preparations        |                                         |
+-----+---------------------+-----------------------------------------+
| 22  | Beverages, spirits  | Tariff on water, including mineral      |
|     | and vinegar         | water and aerated water remain          |
|     |                     | unchanged at 30%; sparkling wine, gin,  |
|     |                     | and geneva down from 60% to 54%;        |
|     |                     | otherwise remain unchanged at 60%.      |
+-----+---------------------+-----------------------------------------+
| 23  | Residues and wastes | Tariff on meat and bone meals remain    |
|     | from food           | unchanged at 1%, fishmeal with a        |
|     | industries, and     | protein level less than 60% unchanged   |
|     | prepared animal     | at 6%, soymeal unchanged at 6%. Tariff  |
|     | feed                | rates for most of other meals were      |
|     |                     | reduced from 10% to 5-9%.               |
+-----+---------------------+-----------------------------------------+
| 24  | Tobacco and         | Tariff on non-manufactured tobacco      |
|     | manufactured        | leave, cigarettes, cigars, and other    |
|     | tobacco substitutes | manufactured tobacco remain unchanged   |
|     |                     | at 60%.                                 |
+-----+---------------------+-----------------------------------------+

##  EXHIBIT C

  -------------- -------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
  THAILAND:                                                                                                         
  Tariff‑rate                                                                                                       
  Quotas of                                                                                                         
  Agricultural                                                                                                      
  Products for                                                                                                      
  Market Access,                                                                                                    
  1995‑2004.                                                                                                        
  (Unit: Metric                                                                                                     
  Ttons)                                                                                                            

                                                                                                                    

  Items          Tariff   1995      1996      1997      1998      1999      2000      2001      2002      2003      2004

                 (%)                                                                                                

  Milk & Cream   20.0     2,286     2,299     2,311     2,324     2,337     2,349     2,362     2,375     2,387     2,400

  Skim milk      20.0     45,000    46,111    47,222    48,333    49,444    50,556    51,667    52,778    53,889    55,000

  Potatoes       27.0     288       290       291       293       294       296       297       299       300       302

  Onion          27.0     348       350       352       354       356       357       359       361       363       365

  Garlic         27.0     62        62        63        63        63        64        64        64        65        65

  Coconut        20.0     2,312     2,325     2,338     2,350     2,363     2,376     2,389     2,401     2,414     2,427

  Copra          20.0     694       745       797       848       900       951       1,003     1,054     1,106     1,157

  Coffee bean    30.0     5         5         5         5         5         5         5         5         5         5

  Tea            30.0     596       600       602       606       609       612       615       619       622       625

  Pepper         27.0     43        43        43        44        44        44        44        45        45        45

  Corn           20.0     52,096    52,385    52,675    52,964    53,253    53,543    53,832    54,121    54,411    54,700

  Rice           30.0     237,863   239,185   240,506   241,828   243,149   244,471   245,792   247,114   248,435   249,757

  Soybean        20.0     10,402    10,460    10,518    10,575    10,633    10,691    10,749    10,806    10,864    10,922

  Onion Seeds    30.0     3         3         3         3         3         3         3         3         3         3

  Soybean oil    20.0     2,173     2,185     2,197     2,209     2,221     2,233     2,245     2,257     2,269     2,281

  Palm & Palm    20.0     4,629     4,655     4,680     4,706     4,732     4,757     4,783     4,809     4,834     4,860

  kernel oil                                                                                                        

  Coconut oil    20.0     382       384       386       388       390       393       395       397       399       401

  Sugar          65.0     13,105    13,177    13,251    13,323    13,396    13,469    13,542    13,614    13,687    13,760

  Instant coffee 40.0     128       129       129       130       131       131       132       133       133       134

  Soybean meal   20.0     219,580   220,800   222,020   223,240   224,460   225,679   226,899   228,119   229,339   230,559

  Tobacco Leaf   60.0     6,129     6,163     6,197     6,231     6,265     6,299     6,333     6,367     6,401     6,435

  Raw silk       30.0     460       463       465       468       470       473       475       478       480       483

  Dried longan   30.0     5         5         6         6         6         7         7         7         8         8

  Source:                                                                                                           
  Department of                                                                                                     
  Business                                                                                                          
  Economics,                                                                                                        
  Ministry of                                                                                                       
  Commerce.                                                                                                         
  -------------- -------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------

## EXHIBIT D

  -----------------------------------------------------------------------------------------------------------------
  THAILAND:                                                                                                 
  Out‑Quota                                                                                                 
  Tariff‑rate of                                                                                            
  Agricultural                                                                                              
  Products for                                                                                              
  Market Access,                                                                                            
  1995‑2004.                                                                                                
  (Unit:                                                                                                    
  Percent)                                                                                                  
  -------------- ---------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
                                                                                                            

                 Items      Base    1995    1996    1997    1998    1999    2000    2001    2002    2003    2004

                            (%)                                                                             

  1              Milk &     46.0    45.5    45.0    44.5    44.0    43.5    43.0    42.5    42.0    41.5    41.0
                 Cream                                                                                      

                 Flavored   93.0    92.1    91.2    90.3    89.4    88.5    87.6    86.7    85.8    84.9    84.0
                 milk                                                                                       

  2              Skim milk  240.0   237.6   235.2   232.8   230.4   228.0   225.6   223.2   220.8   218.4   216.0

  3              Potatoes   139.0   137.6   136.2   134.8   133.4   132.0   130.6   129.2   127.8   126.4   125.0

  4              Onion      158.0   156.4   154.8   153.2   151.6   150.0   148.4   146.8   145.2   143.6   142.0

  5              Garlic     63.0    62.4    61.8    61.2    60.6    60.0    59.4    58.8    58.2    57.6    57.0

  6              Coconut    60.0    59.4    58.8    58.2    57.6    57.0    56.4    55.8    55.2    54.6    54.0

  7              Copra      40.0    39.6    39.2    38.8    38.4    38.0    37.6    37.2    36.8    36.4    36.0

  8              Coffee     100.0   99.0    98.0    97.0    96.0    95.0    94.0    93.0    92.0    91.0    90.0
                 bean                                                                                       

  9              Tea        100.0   99.0    98.0    97.0    96.0    95.0    94.0    93.0    92.0    91.0    90.0

  10             Pepper     57.0    56.4    55.8    55.2    54.6    54.0    53.4    52.8    52.2    51.6    51.0

  11             Corn       81.0    80.2    79.4    78.6    77.8    77.0    76.2    75.4    74.6    73.8    73.0

  12             Rice       58.0    57.4    56.8    56.2    55.6    55.0    54.4    53.8    53.2    52.6    52.0

  13             Soybean    89.0    88.1    87.2    86.3    85.4    84.5    83.6    82.7    81.8    80.9    80.0

  14             Onion      242.0   239.6   237.2   234.8   232.4   230.0   227.6   225.2   222.8   220.4   218.0
                 Seeds                                                                                      

  15             Soybean    162.0   160.4   158.8   157.2   155.6   154.0   152.4   150.8   149.2   147.6   146.0
                 oil                                                                                        

  16             Palm &     159.0   157.4   155.8   154.2   152.6   151.0   149.4   147.8   146.2   144.6   143.0
                 Palm                                                                                       

                 kernel oil                                                                                 

  17             Coconut    58.0    57.4    56.8    56.2    55.6    55.0    54.4    53.8    53.2    52.6    52.0
                 oil                                                                                        

  18             Sugar      104.0   103.0   102.0   101.0   100.0   99.0    98.0    97.0    96.0    95.0    94.0

  19             Instant    55.0    54.4    53.8    53.2    52.6    52.0    51.4    50.8    50.2    49.6    49.0
                 coffee                                                                                     

  20             Soybean    148.0   146.5   145.0   143.5   142.0   140.5   139.0   137.5   136.0   134.5   133.0
                 meal                                                                                       

  21             Tobacco    80.0    79.2    78.4    77.6    76.8    76.0    75.2    74.4    73.6    72.8    72.0
                 Leaf                                                                                       

  22             Raw silk   257.0   253.9   250.8   247.7   244.6   241.5   238.4   235.3   232.2   229.1   226.0

  23             Dried      59.0    58.4    57.8    57.2    56.6    56.0    55.4    54.8    54.2    53.6    53.0
                 longan                                                                                     

                                                                                                            

  SOURCE:                                                                                                   
  Department of                                                                                             
  Business                                                                                                  
  Economics,                                                                                                
  Ministry of                                                                                               
  Commerce.                                                                                                 
  -----------------------------------------------------------------------------------------------------------------

## EXHIBIT E

**Potential impact on U.S. agricultural exports to Thailand**

The tariff reduction under the free trade area agreement will
immediately benefit the

Chinese agricultural products (chapter 01-08) coming into Thailand, at
the expense of U.S. and others' exports. However, it is anticipated that
this threat should be limited initially to fruits and nuts due to the
direct competition that Chinese products present to these U.S. products
in the Thai market.

Tariff rates applied to U.S. and Chinese agricultural products in
2004-2006 under the ASEAN-China Free Trade Agreement's Early Harvest
Program

  ------------------ -------------------------- --------------------------
  Commodity          U.S.A.                     China

  ------------------ -------------------------- --------------------------

  ------------------ -------- -------- -------- -------- -------- --------
                     2004     2005     2006     2004     2005     2006

  Dried peas, beans, 40%      n/a      n/a      10%      5%       0%
  lentils                                                         

  Other nuts (mostly 10%      10%      10%      5%       0%       0%
  almonds)                                                        

  Grapes, fresh      30%      n/a      n/a      10%      5%       0%

  Raisins            30%      n/a      n/a      10%      5%       0%

  Apple, fresh       10%      10%      10%      5%       0%       0%

  Pears & quinces    30%      n/a.     n/a      10%      5%       0%

  Plum & sloes       40%      n/a      n/a.     10%      5%       0%
  ------------------ -------- -------- -------- -------- -------- --------

Note: The tariff schedule for most agricultural products imported from
the U.S., a WTO member, is not yet available, reflecting the pending WTO
trade negotiations.

Thailand's imports of U.S. and Chinese fruits and nuts during 2000-2002

  ------------------ -------------------------- --------------------------
  Commodity          U.S.A. (unit: USD 1,000)   China (unit: USD 1,000)

  ------------------ -------------------------- --------------------------

  ------------------ ---------- ---------- ---------- ---------- ---------- ----------
                     2000       2001       2002       2000       2001       2002

  Dried peas, beans, 108.8      211.0      171.4      595.5      762.6      787.7
  lentils                                                                   

  Other nuts (mostly 1,249.2    1,457.1    1,589.7    72.2       30.5       14.4
  almonds)                                                                  

  Grapes, fresh      4,019.0    3,867.6    3,999.3    0          14.1       24.0

  Raisins            239.0      277.8      235.9      0          3.0        4.0

  Apple, fresh       14,054.4   16,608.8   11,744.6   18,436.7   18,188.2   19,460.8

  Pears & quinces    2.3        23.1       0.5        1,389.1    1,492.9    3,224.4

  Plum & sloes       129.7      94.2       56.3       1.0        1.0        0
  ------------------ ---------- ---------- ---------- ---------- ---------- ----------

**The possible impact on U.S. exports of fruits and nuts in 2004-2006**

In 2004, China will begin to enjoy import duties of 10% on its exports
of fruits and

nuts to Thailand, against 30-40% tariff rates on most U.S. products,
except for the tariff

rate of 10% on fresh apples and unprocessed nuts. While the import
duties on most U.S.

products in 2005 and 2006 are not available yet, import duties for
Chinese products will

be reduced to 5% in 2005 and 0% in 2006. While Chinese products will be
much

cheaper than U.S. products, trade sources reported that the present
quality of Chinese

products are generally inferior to U.S. product quality and that it may
take several years

to improve their product quality to be on par with U.S. products.

It is anticipated that, due mainly to the price disadvantage, U.S.
exports of fruits and nuts

toThailand could be reduced by 15-20%, from USD 18.1 million in 2003 to
USD 15.0

million in 2006. According to trade sources, the heaviest hit items in
U.S. exports will be

apples, dried beans and raisins, reflecting the substitutability between
these U.S. and Chinese products. The analysis of the possible reduction
in U.S. exports of fruits and nuts is indicated as follows:

  --------------------- -------------------------------------------------
  Commodity             U.S.A. (unit: USD 1,000)

  --------------------- -------------------------------------------------

  --------------------- ---------- ---------- ---------- ---------- ----------
                        2002       2003       2004       2005       2006

  Dried peas, beans,    171.4      160        120        100        80
  lentils                                                           

  Other nuts (mostly    1,589.7    1,620      1,550      1,530      1,500
  almonds)                                                          

  Grapes, fresh         3,999.3    4,020      3,990      3,800      3,700

  Raisins               235.9      240        180        120        100

  Apple, fresh          11,744.6   12,000     10,500     10,000     9,600

  Pears & quinces       0.5        0.5        0.5        0.5        0.5

  Plum & sloes          56.3       55         40         30         20

  Total                 17,797.7   18,095.5   16,380.5   15,580.5   15,000.5
  --------------------- ---------- ---------- ---------- ---------- ----------

End of Report.