RESTRICTEDWORLD TRADE
ORGANIZATIONWT/TPR/G/63
17 November 1999
(99-4876)
Trade Policy Review Body Original:  English
TRADE POLICY REVIEW
THAILAND
Report by the Government
Pursuant to the Agreement Establishing the Trade Policy Review Mechanism
(Annex 3 of the Marrakesh Agreement Establishing the World Trade
Organization), the policy statement by the Government of Thailand is attached.
Note: This report is subject to restricted circulation and press embargo until the end of the meeting
of the Trade Policy Review Body on Thailand.Thailand WT/TPR/G/63
Page 3
CONTENTS
Page
I. OVERVIEW 5
II. THE ECONOMIC AND TRADE ENVIRONMENT 6
(i) Economic developments, 1995–99 6(ii) Economic situation in 1999 6
(iii) Trade environment 7
(iv) Medium term outlook for 2000 – 2004 8
III. TRADE POLICY DEVELOPMENTS (1996-99) 8
(i) Tariffs 8
(ii) Import system 9
(iii) Export system 10
(iv) Customs procedures 10(v) VAT refund system 11(vi) Customs valuation 11(vii) Anti-dumping and countervailing measures 11(viii) Standards and phytosanitary measures 11
(ix) Competition law 11
(x) Intellectual property 11(xi) Services 12
(xii) Improving auditing and accounting standards 13(xiii) Investment measures 13(xiv) Environment 15
(xv) Privatization 16
IV. IMPLEMENTATION OF URUGUAY ROUND COMMITMENTS 16
(i) Tariffs 16
(ii) Agriculture 16(iii) Technical barriers to trade and sanitary and phytosanitary measures 16
(iv) Anti-dumping measures 16
(v) Customs valuation 16(vi) Trade-related investment measures 17(vii) Trade-related intellectual property rights 17(viii) Trade in services 17
V. PARTICIPATION IN REGIONAL GROUPINGS 18
(i) APEC 18
(ii) ASEAN 18
(iii) ASEM 19
(iv) Subregional cooperation 19
VI. FUTURE POLICY DIRECTION 20Thailand WT/TPR/G/63
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I. OVERVIEW
1. This Trade Policy Review of Thailand takes place during the time when many countries in
Asia are undergoing economic restructuring following the economic crisis which had engulfed the
region for the past two years.
2. At present, the economic climate in Asia is still rather volatile and economic contraction
continues in a number of countries.  There are scattered signs of recovery but, by and large, the Asianeconomies remain stagnated.
3. Thailand was the first country to experience the crisis in mid-1997.  The baht was floated in
July and GDP growth in 1997 registered -0.4%.  In 1998, growth continued to decline to around -8%
and investment and manufacturing production fell continuously, while the proportion of
non-performing loans in the financial system climbed to 45%.
4. Since 1997, the government has been trying to devise and implement various measures to get
the country back to its normal state.  Helps from the International Monetary Fund (IMF) were sought
after, both in terms of loans and policy advice.
5. The policy initiatives undertaken by the Thai Government so far has succeeded in rebuilding
the country’s foreign exchange reserves, stabilizing the currency and bringing down interest rates.Nevertheless, the real economy has yet to resume growth and therefore, since the middle of 1998,
government policies have shifted to focus increasingly on stimulating growth.  After years of
maintaining balanced budgets, the government began deficit spending in 1998 initially at 3% of the
country's GDP and later at 5 and 6%.  In March, 1999, an economic stimulus package to stimulate
private consumption and investment, increase in public expenditures and reduce taxes and energy
prices were introduced.  Moreover, the Cabinet approved on 10 August 1999 a set of measures to
encourage private investment with a view to ensuring sustained economic recovery.  This packageconsisted of tax and tariff measures;  equity investment measures;  measures to promote the recovery
of the real estate sector, and measures to improve financing for SMEs.
6. Since the beginning of the crisis, it was recogn ized that the restructuring and recapitalizing of
the financial sector as well as restructuring the huge burden of non-performing loans would be a key
to Thailand’s economic recovery and would also bring back investors’ confidence.  Hence, inAugust 1998, the government announced a major programme to force financial institutions to
recognize and set aside provision for bad debts.  In early 1999, creditors also agreed on mechanisms
to speed up restructuring and the Thai Parliament passed legislation to streamline bankruptcy and
foreclosure procedures.
7. Besides financial measures, the government has announced the policy to privatize some
state-owned enterprises in the utilities, transportation, energy, and commercial banking sectors.
8. The Thai Government also puts great emphasis on building a modern legal framework for the
country.  A number of laws were enacted or amended in response to the crisis notably laws and
regulations on bankruptcy and foreign investment.  A package of reform legislation, including
provisions that will establish a new bankruptcy c ourt, speed bankruptcy and foreclosure proceedings
and allow creditors to pursue payment from loan guarantors has been initiated.  Bills that have been
introduced in Parliament but have yet to be passed include a new foreign investment law, new
foreclosure provision and a bill that will accord internationally recognized labour rights to workers in
state enterprises.WT/TPR/G/63 Trade Policy Review
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9. With these developments, the government believes that the Thai economy will become more
efficient, transparent and able to cope better with future changes.
II. THE ECONOMIC AND TRADE ENVIRONMENT
(i) Economic developments, 1995–99
10. 1995 was the year of transition from economic boom to economic recession for the
Thai economy.  Despite strong GDP and export growth of 8.8% and 23.6%, respectively, Thailandhad a negative trade balance of US$14.7 billion and current account deficit of US$13.2 billion
(equivalent to -7.8% of GDP).  Total debt outstanding increased to US$82.6 billion, an increase of
27% from the previous year.  However, these negative signals were largely overshadowed by the
balance of payments surplus of US$7.2 billion which resulted from net capital inflow of
US$21.9 billion into the Thai economy.
11. In 1996 the problems became much more evident when Thailand experienced negative export
growth of 1.9% in U.S. dollar terms and cu rrent account deficit of US$14.4 billion, an amount
equivalent to -7.9% of GDP.  Total debt outstanding also increased to US$90.5 billion, a large
proportion being short term debt accrued by the private sector.  The balance of payments situation
also weakened, recording a surplus of only US$2.2 billion while real GDP growth slowed to 5.5%
12. In 1997 the economic conditions worsened.  Although exports increased by 3.8% in
U.S. dollar terms real GDP recorded a negative gr owth of -0.4%.  Due to depleted foreign reserves
which were used to fight off speculators, in July the government abandoned the baht’s parity to the
U.S. dollar in favour of a floating exchange rate resulting in the depreciation of the baht from
25.5 baht/US$ to an average of 53.82 baht/US$ in January 1998.  In August 1997 Thailand also
entered the IMF bailout package forcing the government to tighten its monetary and fiscal policies.
13. In 1998 Thailand continued to experience the economic problems which carried over from the
previous year, particularly in the first half of the year when the economy contracted.  In order to
address the financial problems the government announced its reform package on 14 August 1998
which focused on four aspects, namely:
- accelerated consolidation of bank and finance companies through interventions;
- encouragement of private investment in banking systems;
- provision of public funds to recapitalize remaining financial institutions;
- development of framework for the creation of private asset management companies.
14. Economic conditions improved considerably in the second half of the year and the baht
gradually appreciated to about 36.25 baht/US$ in December 1998.  Although exports fell 6.8% in
U.S. dollar terms the current account recorded a surplus of US$14.1 billion due to a decrease of33.5% in imports.
(ii) Economic situation in 1999
15. In 1999 the Thai economy is expected to recover, albeit at a modest rate.  In the first quarter
of the year, GDP growth of 0.9% was recorded, while during January – May exports grew by 0.10%
in U.S. dollar terms.  The forecast for the whol e year is that exports will grow by about 4% in
U.S. dollar terms, while real GDP growth of more than 3% is expected.  Economic stability isThailand WT/TPR/G/63
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expected to improve, with inflation rate of around 2.5%.  The current account and balance of
payments are projected to be in surpluses of US$11.8 billion and US$3.5 billion, respectively.
Foreign reserves are expected at US$32-34 billion whic h is equivalent to nine months of imports.  In
March 1999, the government introduced an economic stimulus package of 130 billion baht consisting
of additional government expenditure of 53.3 billion baht (known as the Miyazawa Plan) aimed at
creating income and employment, especially among the under-privileged group of people and thoseheavily affected by the crisis;  reduction of tax measures to encourage private consumption and
investment;  and measures to lower energy price.  In addition, with a view to ensuring sustained
economic recovery, facilitating restructuring of the manufacturing sector, and strengthening private
sector's competitiveness, the Cabinet approved on 10 August 1999 a fiscal and monetary package to
encourage private investment.  It consisted of the following:
- tax and tariff measures aimed at reducing production costs, encouraging corporate
restructuring, and lowering prices of consumer products;
- equity investment measures to encourage investment in new commercially potential
projects and facilitate corporate debt restructuring;
- measures to promote the recovery of the real estate sector;  and
- measures to restructure financial facilities for SMEs to ensure adequate financing for
SMEs in the medium and long terms.
(iii) Trade environment
16. ASEAN, the U.S., Japan and the EU are the four  largest markets for Thai exports.  In 1995
ASEAN was the largest export market, accounting for approximately one-fifth of total Thai exports.
The main products which Thailand exports to ASEAN are computers and computer parts, electronic
circuits, electric generators, rice, sugar, and printing circuits.  The U.S. was the second, absorbing17.8% of Thai exports in the form of computers and computer parts, garments and textiles, electronic
circuits, canned seafood and jewelry.  Japan ranked third with 16.8%, importing from Thailand
products such as computers and computer parts, rubber, furniture, automobile parts and frozen
chicken.  In the same year the EU was the fourth largest market purchasing 15.1% of Thai exports
such as computers and computer parts, garments and textiles, automobile parts, electronic circuits andair-conditioners.  In 1995, the total value of trade amounted to 3,169,901.4 million baht
(approximately US$126.8 billion at 25 baht/US$), with exports accounting for
1,406,310.1 million baht (US$56.2 billion) and imports 1,763,591.3 million baht (US$70.5 billion),
thus resulting in a negative trade balance of 357,281.2 million baht (US$14.2 billion).
17. For 1996 trade patterns were similar to the previous year.  The four largest export markets
remained unchanged in terms of their rankings.  International trade value was slightly higher at
3,243,864.5 million baht (US$129.8), with exports at 1,411,039.3 million baht (US$56.4 billion) and
imports 1,832,825,2 million baht (US$73.3), resulting in a negative trade balance of
421,785.9 million baht (US$16.9 billion).
18. In 1997 the EU overtook Japan as Thailand’s third largest export market.  Thailand's total
trade value stood at 3,730,945.1 million baht (approximately US$118.8 billion at 31.4 baht/US$), with
exports at 1,806,682 million baht (US$57.5 billion) and imports at 1,924,263.1 million baht
(US$61.3 billion), causing the negative trade balance to be lowered significantly to
117,581.1 million baht (US$3.8 billion).WT/TPR/G/63 Trade Policy Review
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19. In 1998 the U.S. overtook ASEAN as Thailand’s  largest export market, with the EU and
Japan still in third and fourth place respectively.  Total trade value was at 4,022,155.8 million baht
(US$97.2 billion at 41.4 baht/US$), with exports at 2,248,089.4 million baht (US$54.3 billion)
outstripping imports at 1,774,066.4 million baht (US$42.9 billion) for the first time, resulting in a
positive trade balance of 474,023.1 million baht (US$11.4 billion).
20. In the first six months of 1999 (January – June) trade pattern has  remained similar to that of
the previous year, with the U.S. still the largest export market accounting for 21.3% of Thailand’s
exports, followed by ASEAN (18.6%), EU (17.3%) and Japan (14.2%).  Again, Thailand has been
able to export more than it has imported, thus re sulting in a preliminary trade balance figure of
75,258.5 million baht (US$2 billion at 37.1 baht/US$).
(iv) Medium term outlook for 2000 – 2004
21. In the years 2000 and 2001 the Thai economy is expected to grow by 2.5% and 3.6%
respectively.  Slow growth is forecasted due to limited world growth and persistent problems of
non-performing loans, excess capacity in manufacturing and over-supply in the real estate sector.
Exports are expected to grow by about 7-8% annua lly in U.S. dollar terms, while inflation rate is
expected to be around 4%.
22. After 2001 economic conditions should continue to improve for Thailand.  However, the rates
of export and real GDP growth are not expected to reach pre-1995 levels, when Thailand enjoyed
export and real GDP growth of 20% and 8% respectively.  In the future, Thailand’s economic success
will depend largely on the effectiveness of the financial and real sector restructuring.
23. International trade continues to be the govern ment’s top priority despite the current economic
crisis.  Although there has been some calls for protectionism, the Thai Government has continued to
liberalize the economy as well as adhering to its WTO commitments.  In future, Thailand willcontinue to maintain its outward-looking polic ies, with trade as the engine of growth.
III. TRADE POLICY DEVELOPMENTS (1996-99)
24. Thailand recognizes the importance of trade policy in its development.  Trade measures have
been instrumental in strengthening the competitiveness of domestic industries to compete in the world
market.  Over the past four years Thailand has ma de progress in implementing more outward-oriented
policies.  New efforts have been made to improve market access in several areas.
(i) Tariffs
25. The first round of tariff restructuring in Thailand began in 1990 and was completed in 1997.
Under this reform, the structure of Thailand's ta riff policy has been reduced from 39 tariff rates
categories (or bands) to only six categories.  The six different categories in accordance with theprinciple of value-added escalation, are as follows:
- zero per cent for necessary goods such as medical equipment;
- 1% for raw materials and electronic parts and vehicles for international transport;
- 5% for primary and capital goods;
- 10% for intermediate goods;Thailand WT/TPR/G/63
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- 20% for finished products;  and
- 30% for goods which require additional protection;
- resulting from the above changes, the average tariff rates were lowered from 30.24%
to 17.01% in 1997.
26. In 1998, due to the economic crisis and the shortfall in government revenues, the
Ministry of Finance announced increased tariffs on some items e.g., tariff on tobacco and clothingwere raised from 30 to 60%.  Some cosmetics and leather goods were raised from 10 to 40%.  An
additional temporary surcharge of 10% on all imports with a customs duty over 5% was also applied.
However, none of these tariff increases or surcharges violates Thailand's tariff binding commitments.
27. In 1998, Thailand adopted a 6-digit Harmonized System (HS96) and has since amended
relevant laws and regulations accordingly.  This will enable the Ministry of Finance to solve problemsrelated to tariff classification.
28. Though that set of reform has brought the country’s tariff system more into conformity with
international practices, much remain to be accomplished.  In December 1998, the Ministry of Finance
appointed a Tariff Restructuring Committee to study tariff rates, and structure and also to reclassify
goods in each group.  The new tariff structure will still follow the value-added escalation principle buta number of rates and the rationalization of the existing structure are being considered.  At the
moment, the study for a new tariff structure is not yet finished but a preliminary conclusion is that
future tariff bands should be reduced to only three rates categories.
29. As part of the set of measures to further promote economic recovery announced by the
government on 10 August 1999, tariffs on capitals goods, raw materials and other products more than
630 items were reduced or exempted on a permanent basis, for example:
- removal of the 10% import duty surcharge;
- tariff reduction on machinery and mechanical appliances and parts; electrical
machinery and equipment parts from 5 and 20% to 3% for 326 items;
- tariff exemption on fish or crustaceans, molluscs or other aquatic invertebrates for
breeding which previously faced a tariff rate of 60%;
- tariff reduction of raw materials for cosmetic, pharmaceutical, food and other
industries including lanolin, jojaba oil, vitamin premix, dried glands and organs for
medical uses from 10% to 5%.
(ii) Import system
30. In accordance with the government trade policy to liberalize trade and minimize trade
distortive effects, most products can be imported freely into Thailand.  The government, however,applies import prohibition to certain products for reasons of public health and safety, environmental
consideration, national security and in compliance with its obligations under international agreements
and United Nations Security Council resolutions.  Import licensing is kept to a minimum.  Import
controls are maintained for the purpose of public health and safety, environmental protection, and
promotion of the establishment of particular industries.WT/TPR/G/63 Trade Policy Review
Page 10
31. Since 1995, Thailand has abolished import licenses for a number of products such as new
motorcycles, high speed diesel, benzine and other similar fuel for engines, kerosene, naphtha, and
liquified petroleum gas, vinyl chloride monomer in any form, and all products from or originating in
Yugoslavia (Serbia and Montenegro).
(iii) Export system
32. Thailand is an export-led economy.  The government's policy is to promote exports by
limiting export controls to a minimum.  Most of the commodities are exported freely out of the
country.  Some items are, however, subject to the requirements of prior approval for reasons such as
economic stability, public health, national security and public morals, etc.  The export of certain
products is controlled as a result of bilateral agreements between Thailand and trading partners, i.e.
textile and clothing.
(iv) Customs procedures
33. The Thai Government has long recognized the need to improve customs services as part of its
efforts to enhance Thailand’s competitiveness as a regional hub.  There is also the need to continue to
reform and liberalize tariff and quota systems in line with the commitments to the WTO, APEC, and
ASEAN.
34. Considerable progress was made in reforming customs operations.  The Customs Department
has introduced some customs reforms such as express shipment handling, document simplification,
etc.  In the past few years, a majority of businessmen and investors in Thailand have reported their
satisfaction with the significant improvement made in these procedures.
35. Other measures designed to streamline customs procedures include the introduction of the
“Long Room System” whereby customs clearance pr ocedures have been reduced from eight to two
steps, taking no more than 30 minutes.  The Customs Department has tried to eliminate the barriersand difficulties of importers, exporters and custom brokers by providing formality privileges, such as
categorization of importers, exporters and customs brokers.  Those who are qualified will be exempt
from being checked on valuation, tariff classi fication and tax calculation during the formality
execution process.  The review will be carried out within 15 days after the goods have been released
from customs custody.  Such goods will be subject to half the normal opening rate for physicalexamination and exempt from review by the Investigation Bureau unless there is any information that
requires officials to verify at a landing-go-down.  Importers are required to deposit a security for any
additional duty payable on the goods that have already been released from customs custody, or for a
fine in case of an offence.
36. Thailand also applies the United Nations Electronic Data Interchange for Administration,
Commerce and Transport (EDIFACT) system.  The EDI system has been implemented by the
Customs Department in an effort to develop Thailand's import and export systems to meet
internationally-accepted standards.  It is expected to substantially reduce the management and
administrative costs of the trading community and to  simultaneously expedite the Customs clearance
process.  The operation of EDI system for exporters entered into force on 1 July 1999 and cover allthe major ports in Thailand.  As to the operation of EDI system for importers, it will enter into force
on 1 November 1999.
37. Furthermore, in order to bring the customs procedures closer to international standards, the
government intends to ratify the International Convention on the Simplification and Harmonization of
Customs Procedures (Kyoto Convention).Thailand WT/TPR/G/63
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(v) VAT refund system
38. There is an initiative to implement a VAT refund  system for tourists as early as 1 June 1999.
This scheme has succeeded in bringing in tourists for those countries that have employed a similar
system, and it is hoped that it will generate increased tourism revenues for Thailand in the future.
(vi) Customs valuation
39. The Customs Department is in the process of introducing necessary amendments to the
Customs Act regarding transaction value to im plement the WTO’s Customs Valuation Agreement.
The draft amendment bill has been approved by the Cabinet and is currently awaiting parliament's
consideration.  The GATT/WTO valuation system will be implemented within the target date of
1 January 2000.
(vii) Anti-dumping and countervailing measures
40. On 22 March 1999, the Anti-dumping and Counter vailing Act of Thailand was promulgated.
It became effective from 1 July 1999.  The act provides a legal basis for anti-dumping and
countervailing measures and ensures Thailand's compliance with Agreement on Implementation of
Article VI of GATT 1994 and Agreement on Subsidies and Countervailing Measures.
(viii) Standards and phytosanitary measures
41. A significant change to Thailand's policy with regard to the establishment of national
standards is the adoption of international standards as a basis for the Thai Industrial Standards (TISs).
This policy, which reflects a strong intention of the Thai authority in complying with the
TBT Agreement, has been implemented by the Thai Industrial Standards Institute (TISI) since 1997.
From January 1998 to July 1999, the total number of TISs including final drafts which were prepared
by adopting international standards such as ISO, IEC and Codex standards, is 375.
42. However, there are some instances where international standards have been found to be
inappropriate for Thailand as they were prepared based on criteria or technical data of developed
countries;  therefore, they are not appropriate for technical infrastructure and/or climatic conditions of
Thailand.
43. Currently, imports which are subject to sanitary and phytosanitary inspection include
feedstuff, fishery products, food products, hazardous substances, live animals, plant seeds and plants.
(ix) Competition law
44. The government enacted a new competition law which became effective on 30 April 1999.
The objective of this law is to encourage and promote fair business practices by prohibiting abuse of
market dominant as well as creating opportunities for new entrants to gain access into the markets.
The enforcement and implementation of the Act is under the responsibility of the Committee onCompetition which is chaired by the Minister of Commerce.
(x) Intellectual property
45. Thailand has stepped up her enforcement of various laws on the protection of intellectual
property rights.  In 1997, the cabinet approved the establishment of a specialized division within the
police force to deal specifically with intellectual property.  Subsequently, a Joint Committee for theWT/TPR/G/63 Trade Policy Review
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Suppression of Intellectual Property Infringement was set up, chaired by the Royal Thai Police with
representatives from Department of Intellectual Property and other government agencies.
46. There are developments on the judicial procedures as well.  On 1 December 1997, the Office
of Attorney-General set up a special section to deal with intellectual property, namely, the Department
of Intellectual Property and International Trade Litigation.  At the same time, the Intellectual Property
and International Trade Court was inaugurated.  This Court is the first one that has rendered decisionsto imprison IPRs infringers.  Jurisdiction of the Court covers civil and criminal cases involving
intellectual property such as patent, trademark and copyright;  civil and criminal cases involving
trade;  civil cases dealing with transfer of techno logy;  and cases involving international trade such as
disputes on import/export of goods and services, etc.
47. Lastly, a Working Group on the Cooperation and Monitoring of the Suppression of IPR
Violation, chaired by the Deputy Minister of Commerce, was established in July 1998 to deal with
matters related to violation of intellectual property rights.  The suppression has been targeted at
manufacturers, wholesalers and retailers alike, with a view to preventing crime on
intellectual property at its source rather than at its ends.  Moreover, intensive suppression activities
have been conducted at several renowned shopping areas to deter IPR infringing activities, resultingin dramatic decrease of IPR infringements.  From January-June 1999, there have been
732 infringement cases, seizing approximately 401,032 infringing materials.  Most of the
infringements were trademark counterfeits.
48. Regarding border measures, the customs officer may, upon request from the right holders,
seize trade mark or copyright infringing goods being exported or imported into the country.  The
Customs Department is currently reviewing the regulations concerning the suspension of trade mark
counterfeit goods and pirated copyright goods.
49. Thailand is in the process of accession to the Paris Convention and Patent Cooperation
Treaty.
(xi) Services
50. Thailand welcomes foreign investment in the services sector through joint-ventures with
Thai partners at the maximum ownership of up to 49%.  In some services activities, foreigners mayseek for permission to establish a 100% foreign-owned entity in Thailand.  In certain sectors such as
accountancy, architecture and engineering, Thailand has adopted standard regulations and licensing
requirements in order to guarantee professional quality and integrity.
51. Since 1997, as part of the efforts to bring the country out of the financial crisis, the
government has permitted investment in banking and securities businesses through share-holding inexisting commercial banks, both privately- and publicly- owned.  The previous maximum foreign
ownership of 25% for banks and 49% for securities companies were relaxed.  The Minister of
Finance, upon recommendation from the Bank of Thailand, is empowered to authorize requests of
interested foreign investors who wish to have ownership of more than 50%.
52. For insurance services, Thailand has continually implemented the principle of progressive
liberalization.  The first step of the liberalizati on plan for insurance has been completed with the
establishment of 25 additional insurance companies (12 life insurance companies, and 13 non-life
insurance companies).  The amendment of insurance laws to increase foreign equity participation in
insurance companies in Thailand, which is part of a second step of the liberalization plan, is also in
progress.  The last step will involve the consideration of the possibility of revising insurance laws to
grant market access for foreign insurers through commercial presence as full branch.Thailand WT/TPR/G/63
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53. Regarding telecommunications sector, as part of telecommunications liberalization process,
the Master Plan for Telecommunications Development was formulated and approved by the cabinet
on 28 March 1995.  The incoming government which was formed in late 1995 instructed the
Ministry of Transport and Communications to revi ew the Master Plan.  The reviewed Master Plan
was resubmitted to the cabinet for approval and subsequently was approved on 4 November 1997.
The main policy elements of the Master Plan for Telecommunications Development are as follows:
- liberalization;
- increasing private participation;
- establishing an independent regulatory body;
- privatization of Telephone Organisation of Thailand (TOT) and Communication
Authorities of Thailand (CAT).
54. The liberalization of telecommunications in Thailand will provide a good opportunity for
local and foreign firms to apply for licenses to operate telecommunications services.  The foreign
companies may participate in telecommunications business in Thailand after the year 2006 through
joint ventures with local firms.
(xii) Improving auditing and accounting standards
55. The Thai Government has been trying to improve the accounting and auditing standards of
business in Thailand.  For instance, there is now a re quirement that all listed companies must have an
internal auditor and accompanying programmes to provide necessary training to prospective internal
auditors.  In the area of accounting, the Institute of Certified Accountants and Auditors is in the
process of developing much higher standard s of accounting and auditing among their members.
(xiii) Investment measures
56. The legislation relating to foreign investment in Thailand is the Alien Business Law of 1972
(ABL), which is administered by the Department of Commercial Registration, Ministry of Commerce.
“Aliens” here refer to natural persons not possessing Thai nationality;  juristic persons with at least
one-half of their capital owned by aliens or in which half or more of their shareholders, partners or
members are aliens;  and limited or registered ordinary partnerships having aliens as the managing
partner or manager.  The law prohibits these alie ns from participating in specified activities and
requires them to obtain business permit in conducting certain activities.
57. Activities that are subject to the ABL are classified into three categories, namely, category A,
B and C.  Aliens are prohibited from participating in category A while category B is permitted only
with the Board of Investment (BOI) promotion, and aliens can engage in category C businesses only
with the permission of the Director-General of the Department of Commercial Registration or thepromotion of the BOI.  Activities not specified by the ABL or any specific laws are not subject to
foreign equity participation restrictions.  The law is  not applicable to aliens engaging in businesses in
Thailand by permission of the Thai government for a definite duration or an agreement between the
Royal Thai Government and a foreign government.
58. The ABL is being revised to allow foreign participation in a wider range of activities.  The
new legislation entitled “Foreign Business Act,” which has been approved in principle by the cabinet
on 18 August 1998 and is under consideration by the parliament will replace the ABL.  Major changes
of the bill are as follows:  a number of activities will be further liberalized such as brokerage services,WT/TPR/G/63 Trade Policy Review
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wholesale and retail trade, construction, non-silk textile, garment, footwear, beverage production and
auction business.  Activities reserved for Thai nationals are as follows:
- those relating to special reasons;
- those restricted due to national safety and security, culture, traditional, folk
handicrafts, national resources and environment;
- those restricted due to less competitiveness of Thai nationals in comparison to
foreigners;
- classification of activities will be reviewed on a regular basis by an advisory
committee comprising representatives of both public and private sectors.
59. In fact, certain important sectors have already been liberalized to allow greater foreign equity
participation.  In particular, foreigners are allowed to have a majority ownership in banks, finance,securities and credit foncier companies for ten years.  After ten years, they will not be forced to sell
their existing shares but may not purchase additional shares unless foreign ownership accounts for no
more than 49%.
Investment Incentives
60. The BOI offers both tax and non-tax incentives to Thai and foreign investors.  The
Investment Promotion Act of 1977 forms the legal basis for investment incentive provision.  A wide
range of activities are eligible for investment promotion.
61. While tax incentives form measures to help reduce investors’ initial investment costs, non-tax
incentives are geared towards reducing investors’ risks and facilitating investors.  These measures
include the following:
- guarantees against nationalization, competition from new state enterprises, and price
controls;
- permissions to bring in foreign nationals to undertake investment feasibility studies or
to work under promoted projects;  and
- permissions to own land to carry out promoted projects.
62. Over the past several years, industrial decentralization has been the major policy theme of
Thailand’s tax incentive scheme.  The criteria in granting tax incentives have been designed to attractinvestments to regional areas which are generally disadvantaged in terms of infrastructure availability
and economic development.  The entire country is divided into three zones.  Zone 1 comprises
Bangkok and five neighbouring provinces, whereas zone 2 consists of ten provinces adjacent to
zone 1.  Zone 3 covers the rest of the country and the Laem Chabang Industrial Estate.  Zone 1
receives the least tax incentives while zone 3 enjoys the most incentives.
63. Factory relocation has also been another important policy goal since many industrial activities
have been highly concentrated in Bangkok and neighbouring provinces.  Tax incentives have thus
been offered to encourage companies to relocate  their production facilities to regional areas.Thailand WT/TPR/G/63
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64. Apart from decentralization, the BOI attaches great importance to investments that will bring
technological developments to Thailand and help improve infrastructure facilities as well as
environmental restoration and protection.
65. Since the start of the Asian economic crisis, th e BOI has come up with a series of measures
aimed at revitalizing the economy and enhancing the country's competitiveness.  These measures
include relaxation of joint venture criteria to allow more foreign participation, measures to facilitatedebt restructuring, and stimulating firms to obtain in ternational standards.  Efforts have been focused
on encouraging existing companies to maintain and expand their operations in Thailand.
66. As a result of the relaxation of the joint venture criteria, a total of 25.8 billion baht was
transferred into Thailand as injection of additional foreign capital in BOI-promoted companies during
November 1997-April 1999.
(xiv) Environment
67. Thailand has ratified a number of important Multilateral Environmental Agreements (MEAs)
namely:  Montreal Protocol on Substances that De pletes the Ozone Layer;  Basel Convention on the
Control of Transboundary Movements of Hazardous Wastes and their Disposal;  Convention on
International Trade in Endangered Species of Wild Fauna ad Flora;  International Tropical TimberAgreement;  and Framework Convention on Climate Change.
68. In addition, Thailand is in the process of ratifying or acceding to other MEAs such as
Convention of Biological Diversity, Desertification Protocol as well as the Kyoto Protocol on Climate
Change.
69. Besides these MEAs, Thailand is also a signatory to some UN conventions such as the
High Seas Fishery and FAO’s Code of Responsible Fishery.
70. Thailand also participate in ISO 14000 meetings in which international standards on
environmental management, labelling, auditing and impact assessments are being made.  For the
standards that have already been finalized under the ISO 14000 series, relevant governmental
agencies and private organizations have encouraged Thai companies and SMEs to follow these
standards even though they are voluntary.  At pres ent, Thailand is a leading country in the ASEAN
region to receive ISO 14001 certificate as many companies in Thailand have been certified as meetingISO on environmental management.  The Ministry of Industry has a programme to assist SMEs to
attain ISO standards in addition to putting more resources on training certifiers and accreditors.
71. The Ministry of Science, Technology and Environment, under direction from the
National Environment Committee, is in the process of considering appropriate environmental taxes
and charges in Thailand.  This is in accordance with “Polluters-pay Principle.”  The Ministry alsoconducts regular public awareness programmes to instil a sense of environmental responsibility
among the people, and particularly the younger generation.
72. On the private sector initiatives, a Thai eco-labelling scheme called “Green Label Thailand”
was introduced in 1994 and jointly administered by Thailand Environment Institute and Ministry of
Industry.  The label is currently given to ten product groups such as recycled paper, energy-savingrefrigerators and air-conditioners, non-CFC sprays, etc.  The criteria for awarding the label to most
products are identical or similar to those found in developed countries.  This helps explain why so far
there have been only a few of products that have been awarded the Green Label.  Nevertheless, it is
believed that such high and stringent criteria will be useful for companies that have successfully met
the standards as it will be easier for them to apply for eco-labelling in other countries.WT/TPR/G/63 Trade Policy Review
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(xv) Privatization
73. Privatization efforts began in 1961 and have been part of every subsequent national economic
and social development plan.  In the past decade, the government has privatized more than
40 enterprises and reduced the number of state-owned enterprises from more than 100 to 59.  There
are currently 59 state-owned enterprises which can be broadly categorized into five major sectors:
telecommunications, water, energy, transport and othe r (including enterprises in the industrial, social
and technology, commercial and services, agriculture and financial sectors).
74. At present, the government is in the process of accelerating privatization of many state-owned
enterprises such as Thai Airways International, Telephone Authority of Thailand, Electricity's Power
Plant Generation, etc.
IV. IMPLEMENTATION OF URUGUAY ROUND COMMITMENTS
(i) Tariffs
75. In the implementation of the Uruguay Round market access commitments, in 1995 the
Ministry of Finance announced the package of tariff reduction starting from 1995-99 for industrial
products and 1995-2004 for non-agricultural products and textiles and clothing.  As a result the scope
of tariff binding increased from 5% to almost 70% of total tariff lines.
(ii) Agriculture
76. Thailand is committed to reduce tariffs of 740 agricultural products by an average of 2.4%
each year and expand tariff quotas for 23 products at 0.2% annually until 2004.  The 23 products are
milk and cream, not concentrated;  milk and cream, concentrated;  potato;  onion;  garlic;  coconut;
copra;  coffee;  tea;  pepper;  maize;  rice;  soya bean;  onion seed;  soya bean oil;  palm oil and palm
kernel oil;  coconut oil;  cane or beet sugar;  instant coffee;  soya bean cake;  tobacco;  raw silk;
dried longans.
(iii) Technical barriers to trade and sanitary and phytosanitary measures
77. All technical regulations and sanitary and phytosanitary measures that Thailand has adopted
since 1995 have been notified to the WTO under relevant committees.  Most of these technical
regulations and standards are in accordance with, or are aligned to international standards set by those
organizations recognized by the WTO.
(iv) Anti-dumping measures
78. The new anti-dumping law was passed and became effective on 30 June 1999.  This fulfils
Thailand’s obligation to implement the Uruguay Round agreement on anti-dumping measures.
Submission of this Act to the WTO for comments is being prepared.
(v) Customs valuation
79. Thailand invoked the five-year transitional period to implement the provisions of
Customs Valuation Agreement.  At present the legi slative amendments required to provide the legal
basis for the use of the Agreement is underway.  It is expected that the law will enter into force by
January 2000.Thailand WT/TPR/G/63
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(vi) Trade-related investment measures
80. Recognizing Thailand’s obligations under the TRIMs Agreement, the Board of Investment
started to phase out some local content requirements in April 1993.  As a result, the local content
requirement previously imposed on a number of activities has been abolished.  Some activities that
remain subject to the local content requirement include the manufacture of milk and diary products,
some types of automobile engines and autom obile assembly.  The remaining local content
requirements will be phased out in accordance with the timeframe provided in the TRIMs Agreement.
(vii) Trade-related intellectual property rights
81. Thailand is committed to implement its obligati ons under the TRIPS Agreement.  It has been
reviewing existing laws and regulations relating to the protection of intellectual property rights and
has drafted new ones in order to comply with its commitments.
82. The current status of various draft laws and amendments are as follows:
- Copyright Act:  the amendment of the Copyright Act was approved in 1994 and
entered into force in 1995.  Thailand considers that the Act has fully complied with
the TRIPS requirement;
- Patent Act:  the amendment of the 1979 Patent Act (previously amended in 1995) will
enter into force on 27 September 1999;
- Trademark Act:  the draft amendment of the 1991 Trademark Act is undergoing
consideration by the House of Representatives;
- Plant Varieties Protection Act:  the bill is under supervision of the Ministry of
Agriculture and Cooperatives and is undergoing its first reading in the House of
Representatives;
- Protection of Layout-designs of Integrated Circuits Act and the Protection of
Geographical Indications Act:  the bill has been approved by Office of the Council of
State and will be submitted to the House of Representative shortly;
- Protection of Geographical Indications Act and Trade Secrets Act:  these two bills are
under consideration of the Office of the Council of State.
(viii) Trade in services
83. Thailand has made substantial commitments under GATS in ten sectors covering over
100 activities.  According to the secretariat paper on “Recent Development in Services Trade –
Overview and Assessment”, Thailand is among the 30 WTO Members with the most liberalized
services commitments.
84. Thailand participated fully and actively in the post-UR works on extended sectoral
negotiations.  Thailand took part in the negotiation on maritime transport and still maintain our
commitments in this area even though the negotiation in this sector was suspended.  Furthermore, we
have made additional commitments on basic telecommunications and financial services to allow
greater foreign participation.  Our recent commitment in basic telecommunications will allow
foreigners to take part in public domestic and long distance and international services of voicetelephone, telegraph, telex, and facsimile services by the year 2006.  Our latest improvement inWT/TPR/G/63 Trade Policy Review
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financial services include the withdrawal of MFN exemptions in banking and other financial services
as well as increasing foreign equity participation.  Foreigners are permitted to own up to 100% of
commercial banks, finance companies and credit foncier companies for a period of ten years with the
condition that after ten years, although foreigners will not be forced to sell their shares, they may not
buy any additional shares, unless the foreign shareholding is less than 49% of the total shares.
V. PARTICIPATION IN REGIONAL GROUPINGS
(i) APEC
85. In spite of the severe economic crisis experienced by Thailand and other countries in the
region over the last two years, the Thai Government’s position with respect to regional cooperation,
including APEC, is unchanged.  APEC’s goals to achieve trade and investment liberalization by 2020
is still on course, even though the speed at which liberalization had previously progressed has beenslowed down by the economic downturn.  Resistance by the private sector and domestic industries to
liberalize trade and investment, whether it be through tariff reductions or privatization, has made it
difficult for the government to advance towards APEC’s goals at the desired pace.  Nevertheless, the
government has continued successfully to reduce any resistance from the private sector by providing
reasons and promoting awareness of the benefits to the country as a whole from trade and investmentliberalization.
86. Thailand has played an active role in APEC and participated in a number of APEC
projects/activities.  With regard to the Indivi dual Action Plan (IAP), Thailand continues to make
significant improvement to free up trade and investment in all relevant areas such as tariff reduction,
non-tariff measures, investment and intellectual pr operty rights.  Thailand has also cooperated with
other APEC members to carry out work progra mmes under the Collective Action Plans (CAPs) to
promote trade and investment facilitation within the Asia-Pacific region including economic andtechnical cooperation by focusing on HRD, transfer of technology and development of SMEs in
parallel with the liberalization of trade and investment.
(ii) ASEAN
87. The financial and economic crises have severely affected the ASEAN economies and
business dynamism in the region.  In order to regain business confidence, enhance economic recoveryand promote growth, Thailand has actively advocated to accelerate the implementation of AFTA.
Acceleration of AFTA
88. The ASEAN Leaders agreed to accelerate the implementation of the ASEAN Free Trade
Area.  The six original members (Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore and
Thailand) will advance the implementation of AFTA by one-year, from 2003 to 2002.  Theacceleration will be accomplished in stages.  Each country is committed to achieve a minimum of
85% of the Inclusion List with tariffs of 0-5% by th e year 2000.  Thereafter, this will be increased to a
minimum of 90% of the Inclusion List in the 0- 5% tariff range by the year 2001.  By 2002, 100% of
items in the Inclusion List will have tariffs of 0-5%.
89. Member countries also agreed to deepen tariff reduction to 0% and accelerate the transfer of
products, which are currently not included in the tariff reduction scheme, into the Inclusion List as
soon as possible.  All the non-tariff barriers (NTBs) in ASEAN will also be removed.Thailand WT/TPR/G/63
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90. Thailand's 1999 CEPT package consists of 9,066 tariff lines in the Inclusion List which
account for 99.52% of total tariff lines.  There are 37 tariff lines in Temporary Exclusion List and
seven tariff lines in the Sensitive List.
(iii) ASEM
91. The first Asia-Europe Meeting in Bangkok which took place in March 1996, marked a
historic turning point in relations between Asia and Europe.  The leaders of 25 Asian andEuropean countries together with the President of the European Commission laid down constructive
cooperation guidelines covering political, economic and social issues.
92. In the past three years, member countries made a strong effort to come up with concrete
results as intended by the first ASEM.  For economic cooperation, the Investment promotion Action
Plan (IPAP) which was initially drafted by Thailand and subsequently endorsed by the second ASEMin London, April 1998, has been implemented actively in order to create a better investment
atmosphere between the two regions.  The Trade Facilitation Action Plan (TFAP) which was also
endorsed at the second ASEM, is another achievement aiming at reducing non-tariff barriers and
promoting trade opportunities in Asia-Europe region.  The TFAP consists of trade facilitation goals in
several priority sectors, such as customs procedures, standards and certification, and quarantine andSPS procedures.  Thailand continues to play an active role in the ASEM economic cooperation.
(iv) Subregional cooperation
93. Thailand continues close relationship with her neighbouring countries through economic links
and cooperation under two major subregional groupings, i.e. the Indonesia-Malaysia-Thailand Growth
Triangle (IMT-GT) and the Greater Mekong Subregion (GMS-EC).
94. The IMT-GT was established in 1993.  The objective of the growth triangle is to provide
economic and social support for the three countries by promoting joint usage of economic resources.It is hoped that efficient utilization of resources to achieve maximum production capacity, greater
technology transfer and linkage of basic infrastructure will help reduce transportation costs and enable
higher competitiveness on the world market.
95. There are ten major areas of cooperation namely:  Land Transport and Maritime Transport;
Energy;  Agriculture and Fisheries;  Industry;  Tourism;  Trade;  Investment and Finance;
Human Resource Development and Labour Mobility;  Air Transport;  and Telecommunications.
96. Future Work in IMT-GT will concentrate on promoting trade and investment, identifying
common areas for joint development and exploring ways to establish a system for making payments
that would reduce reliance on the U.S. dollar amongst the three countries.
97. The GMS-EC was established in 1991 and comprises six countries:  Cambodia, China
(Yunnan Province), Myanmar, Laos, Viet Nam and Thailand.  The cooperation is supported by the
Asian Development Bank (ADB) which provides technical assistance in seven areas namely:
transportation, energy, communications, human resource development, tourism, environment and
natural resource management, as well as trade and investment.
98. Results of various projects under the GMS-EC are mainly focused on land transportation
linkages across member countries with common borders, such as the East-West Economic Corridor
Development project.  Other projects under the GMS-EC include development of water resources
aimed at generating electricity supply within the Subregion, and project involving trade andWT/TPR/G/63 Trade Policy Review
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investment which have been initiated and will be undertaken by the Trade Facilitation Working Group
which will be set up.
VI. FUTURE POLICY DIRECTION
99. Although Thailand is beset with one of the most serious economic crises the country has ever
experienced, the government remains fully committed to trade liberalization and intends to carry out
all the commitments made in ever y forum.  Thailand is an active member of the Friends of a New
Round which is pushing for a new round of trade negotiations to be launched at the 3rd
WTO Ministerial Conference to be held in Seattle this year.  Thailand is also a member of theCairns Group which played an instrumental role in agriculture negotiations in the Uruguay Round and
continues to be a major force in the same area until today.  Thailand will continue to participate
actively in the WTO with a view to contributing to the improvement of the multilateral trading
system.
100. Thailand's trade policies continue to aim at ma intaining an open trade regime so that trade
growth contributes to sustainable economic growth.  It has been the government's policy to allow
market forces to determine pattern of trade and to ensure non-discriminatory access to markets.  All
measures that cause inconvenience to importers and exporters will be minimized.  The governmentwill continue to pursue policies aiming toward greater liberalization in our economy.
101. Another area of importance is tariff reform.  Although Thailand has undergone a tariff
restructuring a few years ago, the government recognizes that further reform is still needed.  The
Ministry of Finance is in the process of preparing a comprehensive reform of the country's tariff
structure in line with the country's developm ent and forthcoming international commitments.
102. Thailand will continue to be open to foreign investors.  The government has made reduction
of investment barriers and deregulation one of its priorities in economic reform.  At present, a numberof bills that will ease up investment criteria and allowing for more foreign-ownership are in the
parliament.  It is hoped that the new laws and regulations will bring in greater transparency and
predictability, conditions which are important to foreign investors.
103. Lastly, the government's policies will continue to focus on accelerating the privatization
programme, strengthening financial and capital market, encouraging private investment andimproving quality of skilled manpower.
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