WORLD TRADE
ORGANIZATIONWT/TPR/M/63
18 January 2000
(00-0213)
Trade Policy Review Body
15 and 17 December 1999
TRADE POLICY REVIEW
THAILAND
Minutes of Meeting
Chairperson:  H.E. Mr. Jean-Marie Noirfalisse (Belgium)
Page
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 3II. OPENING STATEMENT BY THE REPRESENTATIVE OF THAILAND 4III. STATEMENT BY THE DISCUSSANT 7
IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY 10
V. REPLIES FROM THE REPRESENTATIVE OF THAILAND AND
ADDITIONAL COMMENTS 17
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 26ANNEX ADVANCE WRITTEN QUESTIONS AND RESPONSES BY THE 29
DELEGATION OF THAILANDWT/TPR/M/63
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I. INTRODUCTORY REMARKS BY THE CHAIRPERSON
1. The third Trade Policy Review of Thailand was held on 15 and 17 December 1999.  The
Chairperson welcomed the delegation of Thailand, led by H.E. Ms. Apiradi Tantraporn, and thediscussant, Mr. Philip Sparkes (Australia).  As usua l, the discussant spoke in his personal capacity and
not as a representative of his country.  In accordance with the established procedures, the discussant
had made available, in advance, outlines of the main issues he intended to raise.
2. The Chairperson recalled the purpose of the Trade Policy Review Mechanism and the main
elements of the procedures for the meeting.  The report by the Government of Thailand was containedin document WT/TPR/G/63 and that of the WTO Secretariat in document WT/TPR/S/63;  the main
issues raised by the discussant were containe d in document WT/TPR/D/43.  Copies of advance
written questions, submitted by nine delegations (Australia;  Canada;  the Czech Republic;  the
European Union;  Hong Kong, China;  Japan;  the Republic of Korea;  New Zealand;  and the
United States) were transmitted to the delegation of Thailand.  Replies to these and other questions
raised on the first day of the meeting are reproduced at Annex.  If full replies could not be provided
during the meeting, supplementary written replies could be provided later.WT/TPR/M/63
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II. OPENING STATEMENT BY THE REPRESENTATIVE OF THAILAND
3. The representative of Thailand remarked that Thailand had been the first country in Asia to
experience the crisis in mid-1997.  Pressure on the Thai currency had built up in the first half of 1997.
As a result, the Government decided to abandon the baht's parity to the U.S. dollar, and adopted the
floating exchange rate system in July 1997.  To deal with external imbalances, Thailand had sought
financial assistance from the International Monetary Fund (IMF) in August 1997.  The underlying
objectives behind the adjustment programme were to restore confidence, bring about an orderly
reduction in the current account deficit, reconstitute foreign reserves and limit the rise in inflation.
(i) Recent economic developments
4. As expected, rigorous measures imposed on the country brought about the  inevitable hardship
as a trade-off for greater stability and restoration of investor confidence.  Thailand thus witnessed
severe contractions in the economy, rising inflation, unemployment, difficulties in the financial sector,
as well as massive business consolidation and restructuring.  In August 1998, the Government
announced a reform package, focused on four aspects:  (i) accelerated consolidation of bank and
finance companies through interventions;  (ii) encouragement of private investment in bankingsystems;  (iii) provision of public funds to re-capitalize financial institutions;  and (iv) development of
a framework for the creation of private asset management companies.
5. In 1999, the Thai economy had improved markedly.  In the second quarter, GDP recorded a
3.5% growth.  Moreover, the manufacturing index, composite private consumption index, private
investment index and exports had all shown signs of recovery.  As a result GDP growth had beenrevised from the initial target of 1% to the present target of 4%.  In March 1999, the Government
injected an additional B 3.3 billion to stimulate the economy, while on 10 August 1999 the Cabinet
approved a landmark fiscal and monetary package to encourage private investment.  The package
consisted of tax and tariff measures to stimulate production and consumption, and encourage
corporate restructuring;  measures to encourag e equity investment in new commercially viable
projects and facilitate corporate debt restructuring;  measures to promote the recovery of the real
estate sector;  and measures to restructure financial facilities for small and medium enterprises
(SMEs) in the medium and long term.
6. Regarding international trade, the United States was still the largest export market accounting
for about one fifth of Thailand's total exports, fo llowed by ASEAN, the EU, and Japan.  Exports were
showing positive growth, with current accounts and balance of payments projected to be in surplus of
US$11.8 billion and US$3.5 billion respectively.  Gi ven these positive developments, by the third
quarter of 1999 the Thai Government had decided not to withdraw more funds from the International
Monetary Fund.
(ii) Trade policies
7. International trade continued to be the Government's top priority despite the current economic
crisis.  Although there had been some calls for protectionism, the Thai Government continued to
liberalize the economy as well as adhering to its WTO commitments.  Over the past four years
Thailand had made significant progress in the implementation of more outward-oriented policies, and
efforts had been made to improve market access in several areas.
8. Tariff reform began in 1990 and was completed in 1997.  Under this reform, the structure of
Thailand's tariff classification was reduced from 39 tariff-rate categories (or bands) to only sixcategories;  average tariff rates were lowered from 30% to 17% in 1997.  In addition, as a result of the
August 1999 financial reform package, the temporary 10% import duty surcharge was removed andWT/TPR/M/63
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import duties reduced on 639 items covering capital goods, raw materials and other products.  A new
tariff restructuring was under way with a view to simplifying tariff structuring to three rate categories,
to be completed by early 2000.
9. The Thai Government had also made serious efforts to improve customs services as part of its
efforts to enhance Thailand's economic  competitiveness.  Express shipment handling was now in
place and documentation had been simplified.  Businesses and investors had reported their satisfaction
with these improvements.  The Electronic Data Interchange (EDI) was now operational in an effort to
develop Thailand's import and export systems to international standards.  Furthermore, theGATT/WTO customs valuation system would be implemented by 1 January 2000.  Since 1995,
import licences had been abolished for a number of products and most, if not all, products could be
imported freely into Thailand.
10. Thailand had taken serious steps in order to achieve effective intellectual property rights
enforcement through sweeping institutional improvements.  In 1997, the Cabinet approved the
establishment of a specialized division within the police force to deal specifically with intellectual
property infringements.  On 1 December 1997, the Office of the Attorney General set up a specialsection to deal with intellectual property, namely, the  Department of Intellectual Property and
International Trade Litigation.  Concurrently, the Intellectual Property and International Trade Court
had also been established.
11. In line with Thailand's obligations under the  TRIMs Agreement, the Board of Investment had
phased out some local-content requirements since April 1993.  A few remaining local-contentrequirements would be abolished by 1 January 2000.
12. In October 1999, the Foreign Business Act had passed Parliament.  The new legislation,
which was scheduled to go into effect on 4 March 2000, would offer substantially increased market
access to foreign investors.  In addition, since 1997 the Government had autonomously liberalized the
financial services industry by permitting greater foreign participation in banking and securitiesbusinesses through shareholdings in existing privately and publicly owned commercial banks.  The
previous maximum foreign ownership of 25% for banks and 49% for securities companies had been
relaxed.  It was now legally possible for foreign inve stors to hold majority ownership in banking and
financial businesses given a case-by-case approval from the Finance Minister with appropriate
recommendation from the Bank of Thailand.
13. Insurance services continued to be progressively liberalized.  The first step of the
liberalization plan for insurance had been completed with the establishment of 25 additional insurance
companies.  The legislative amendment required to increase foreign equity participation in insurance
companies, which was part of the second step of the liberalization plan, was under way, while the last
step involved the possibility of revising insurance laws to grant market access for foreign insurers viacommercial presence as full branch.
14. In order to improve accounting and auditing standards, all listed companies were now
required to have an internal auditor and accompanying programmes to provide necessary training to
prospective internal auditors.  The Institute of Certified Accountants and Auditors was in the process
of developing much higher standards of accounting and auditing.
15. Liberalization via the Master Plan for telecommunications development had been formulated
in 1995 and subsequently revised in November 1997.  This liberalization would provide a greateropportunity for local and foreign firms to apply fo r licences to operate telecom services.  Foreign
companies would be able to participate in telecommunications businesses in the year 2006 throughWT/TPR/M/63
Page 6
joint ventures with local firms.  The Government wa s also in the process of accelerating privatization
of many state-owned  enterprises in order to improve the efficiency of the economy.
(iii) Regional cooperation
16. Despite the economic crisis, the Thai Government's position with respect to regional
cooperation had not changed.  Thailand continued to play an active role in regional fora, namely
ASEAN, APEC and ASEM, with a vi ew to promoting and strengthening regional cooperation towards
economic development and liberalization.
(iv) Future policy directions
17. Although Thailand had yet to fully recover from the  economic crisis, sweeping economic
reforms as well as confidence-building measures were being carried out unabated.  The Government’s
top priorities included the ongoing process of corporate debt restructuring in order to reverse the
growth in non-performing loans of financial institu tions.  Most importantly, the Government remained
fully committed to trade liberalization and intended to carry out its commitments in every forum.
Policy reforms in other areas were continuing with even greater confidence and determination to
maintain an open trade regime so that trade growth would contribute to sustainable development.  Itwas the Government's policy to allow market forc es to determine trade patterns and to ensure
non-discriminatory access to markets.
18. Thailand would continue to be open to foreign investors, and the reduction of investment
barriers and red tape was a priority as enumerated in the newly enacted Foreign Business Act.  The
new laws and regulations would bring greater transparency, public accountability and predictability,conditions that were important to foster a sustainable economic development.  Lastly, the
Government's policies would continue to focus on addressing corporate debt restructuring,
accelerating the privatization programme, maintaining prudent fiscal and monetary policy,
strengthening capital markets, encouraging private investment, and greater competition among
businesses.
(v) Clarifications on the Secretariat Report
19. The representative of Thailand noted that the unabridged version of Thailand’s opening
statement was being circulated, as well as a separate document providing additional clarifications on a
number of issues mentioned in the Report by the Secretariat.WT/TPR/M/63
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III. STATEMENT BY THE DISCUSSANT
20. The discussant (Mr. Philip Sparkes) considered that Thailand’s experience in dealing with the
financial crisis that developed from mid-1997 was a salutary one for many economies, particularly for
developing countries that had sought, through targ eted trade and investment policies, to accelerate
their integration into the global economy.
21. Thailand’s rapidly increasing integration during the period of sustained rapid economic
growth up to 1996 had been predominantly positive.  Economic growth recorded around 8% a year
from 1987-1995, and translated into a substantial increase in real per head incomes.  Butdevelopments which first emerged in 1996, and which evolved rapidly and dramatically from
mid-1997, forced many, including the Government of Thailand itself, to ask questions not just about
trade and investment policy settings, but also about broader issues of public policy and private sector
behaviour.
22. A number of institutional weaknesses, which had not been addressed during, and were
probably disguised by, the period of rapid growth, c ontributed to the speed and depth of the crisis.
Many of those weaknesses had since become the focus of an ongoing reform agenda.
23. A real test for any government in the circumstances in which Thailand found itself in
mid-1997 was to resist the pressure to turn inward and become defensive.  As the Secretariat Report
noted, “notwithstanding the severity of the crisis and the consequent recession, the Thai Government
had, by and large, resisted protectionist pressures, opting instead for measures aimed at reinforcing its
already increasingly outward-oriented trade and investment policies so as to foster economicrecovery.” This response had, in his view, contributed significantly to the recovery.  It had also
enhanced the confidence of the international community in the future strength of the Thai economy.
24. As readily acknowledged by the Government of Thailand in its own report, more needed to be
done.  Again this acknowledgement had been important in setting the future directions of trade and
trade-related policies, thereby enhancing confidence  that the Government's approach to the current
circumstances was consistent with a sustained recovery.  He asked in which areas more needed to be
done, how rapidly, and what were the impediments to reforms.
25. Thailand’s experience suggested that benefits from the rapid opening of economies,
particularly to substantial capital inflows, required the right institutional framework.  The latter should
deal adequately with rapid change, be transparen t and consistent in implementation and governance.
Failure to address these issues adequately could destabilize economic performance, particularly in
economies heavily integrated into the global economy.
(i) Long-term orientation of trade and investment policy
26. Thailand’s strong economic performance prior to 1997 had partly been the response to
market-oriented structural reforms undertaken by successive governments during the 1980s, togetherwith a strong domestic saving rate.  That high savings rate was not sufficient, however, to fund
domestic investment.  The need for further finance, together with Thailand’s growth prospects and
open investment regime, had led to a rapid increase in overseas investment.
27. The correspondingly large and growing current account deficit, together with the progressive
accumulation of public and private external debt, meant that the financial system had been vulnerable
to a sudden loss of confidence.WT/TPR/M/63
Page 8
(ii) The crisis of 1997 – causes and effects
28. Such a loss of confidence emerged in 1997 when commercial banks reported significant
increases in non-performing loans at the end of 1996.  Furthermore, exports declined in 1997.  Adramatic flight of capital and heavy losses of foreign reserves led to the large depreciation of the
Thai baht in July 1997.  This translated into heavy losses in corporations’ balance sheets because of
their high reliance on foreign debt, and many therefore faced bankruptcy.
29. Real GDP fell by nearly 2% in 1997, and by over 10% in 1998, leading to increased
unemployment and falling personal incomes, and ge nerating a full-blown crisis with far-reaching
social repercussions.
30. The causes of the crisis had been frequently analysed.  As the Secretariat Report had
observed, the crisis had been attributed mainly to generalized weaknesses in the governance of
financial institutions and corporations.  These weaknesses included, in particular, poor accounting
practices and lack of transparency in management, as well as inadequate supervision of banks and
financial institutions.  Moreover a fixed nominal exchange rate was maintained until mid-1997.  This,
combined with the encouragement of special offshore banking facilities, had led banks and companiesto borrow heavily from abroad in foreign currenci es.  Banks borrowed mostly on a short-term and
unhedged basis so as to exploit interest rate differentials, thereby exposing themselves to risk of a
sharp decline in the exchange rate.
(iii) Policy reactions to the crisis
31. The financial crisis highlighted the need for a more transparent, competitive, and rules-based
business environment.  The Thai Government’s response was to establish a market-based exchange
rate system.  Initially, Thai authorities also tightened monetary and fiscal policies to restore
confidence in the economy.  These policies were later relaxed as the depth of the recession emerged.
32. Measures were also implemented in order to ensure greater government transparency and
accountability, including counter-corruption measures;  measures to enhance consumer protection;streamlining of import and export measures, including revised customs valuation;  ongoing reductions
in tariffs – although accompanied by a number of substantial increases;  modification of legislation to
implement the WTO TRIPS Agreement;  greater conformity of Thai standards with international
standards;  and liberalization of the energy market.
(iv) Future directions of trade and investment policy
33. Any reform programme aimed at enhancing the level of governance in the private and public
sectors needed a sustained effort.  Introducing legislation was an obvious first step, but required
support both from law-makers and from the broad community, as well as financial and human
resources to ensure implementation.  Ironically, success of economic recovery itself could take
pressure off governments to follow through on reform programmes, as the immediate stimulus forchange weakened.  He therefore asked whether there would be difficulties in sustaining the reform
programme as growth resumed.
34. The discussant asked whether difficulty in securing passage of reform legislation through the
National Assembly, such as in the case of the new legislative framework for foreign investment, and
"fierce opposition from labour" to the privatization of STEs, might deter the Government from its
commitment to reform.  At a more detailed level, he flagged a number of measures that might
encourage further instability and were inconsistent with a liberal market environment:WT/TPR/M/63
Page 9
- conditions for foreign trade and investment continued to be largely determined
according to the latest ministerial announcement, to change conditions for
investment, implement border tax changes, regulate trade defence, change theconditions for export assistance, implement changes in direct and indirect internal
taxes, and amend government procurement rules.  This reduced the stability,
predictability, and perhaps the overall coherence of the trading and investment
regime.
- Corporate debt needed to be restructured further, as manifested in the high level of
non-performing loans, to avoid hampering the recovery of private investment.
- While the overall trend was downwards, and the average applied tariff in
September 1999 was 18% (compared with 23% in 1995) tariff peaks could be as high
as 80%, and protected producers of agri-food products, clothing, and motor vehicles;
further, 31% of tariffs on industrial products were unbound.
- Tariff increases during the period under review had in several cases caused applied
MFN rates to exceed WTO bound rates, requiring a certificate of origin from WTOMembers to have bound rates apply – complicating trading procedures for WTO
Members.
- While standards had been harmonized, rather stringent food and drug regulations, in
effect, created a system of exclusive importers, as only one applicant held the
information required for registration and licensing, thereby preventing parallelimports of such products.
- The publication of a consolidated customs tariff containing the tariff rates applicable
to WTO Members would aid transparency, and avoid situations where foreign
suppliers based their decision on shipments on the so-called “applied” rates, unaware
that the WTO bound rate was applicable.  In mid-1999 it had been necessary toconsult five separate tariff publications to ascertain the applicable customs duty.
- A considerable amount of uncertainty persisted in the fact that Customs continued to
have the authority to specify the import price on which the customs duty was levied.
If the official decided to reject the market value notified by the importer, the official
may instead determine the market value as the highest price of the last 30 days at thesame port of entry – some 20% of imports were subject to such “uplift”.
35. These examples, in his view, were against the long-term commitment to integrate further
within the global economy, and the added urge ncy imparted to this approach since 1997.WT/TPR/M/63
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IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY
36. Members appreciated Thailand’s strong commitment to the WTO, and unanimously
congratulated Thailand for generally resisting protectionism in the wake of the financial crisis of1997-98.  They welcomed the structural reforms undertaken by the authorities to facilitate foreign
trade and investment and achieve a transparent, rules-based economy.  Members also looked forward
to receiving replies to their advanced written questions.
37. The representative of Japan noted the importance of the economic relationship between
Thailand and Japan.  Japanese industries had been vigorously moving into Thailand since the
mid-1980s, and more than 1,000 large Japanese companies were currently implanted in Thailand with
more than ¥1,200 billion in total accumulated investment in March 1998.  This represented a
significant factor for Thailand's economic development.  Furthermore, Japan had been Thailand's
number one trading partner for a long time:  in the first half of 1999, trade between the two countries
amounted to approximately US$10 billion, about 18% of Thailand's total trade.
38. He welcomed the positive signs emerging in the Thai economy that economic reforms and
stimulus packages taken since 1997, such as stabiliz ation of the Thai baht and the lowering of the
inflation rate, had succeeded in restoring growth.  Japan had extended its support to the
Thai Government to overcome its recent economic difficulties, including support under the New
Miyazawa Initiative, aimed at improving the balance of payments and stabilizing the Thai economy,
and support for measures to help the socially vulnerable, such as job training projects for young
people.
39. Being a largest investor in Thailand, Japan had had a keen interest in its investment regime.
He therefore appreciated the recent emphasis of  the Thai Government towards building a modern
legal framework, including streamlining bankruptcy and foreclosing procedures.  He called for extra
efforts towards enforcing economic laws more effectively and in a more stable manner through a
uniform interpretation and application of these laws.  He hoped that the new foreign investmentlegislation would further liberalize the services sector which had been subject to limitations on foreign
equity participation and on the number, or ratio, of foreign personnel, especially in the financial
services subsector.  Japan was also interested in  reviewing the MFN exemption in subsectors such as
auditing services and transport services.
40. He registered concerns over the high tariff rates imposed on certain products.  He also noted
that Thailand had committed itself to fully implement the TRIPS and TRIMs Agreements by
l January 2000, and requested clarification regarding enforcement of TRIPS.
41. The representative of Brunei, speaking on behalf of ASEAN considered that this Trade Policy
Review of Thailand had come at an opportune time to review the state of Thailand's economy now on
the path to recovery.  Though Thailand had been the first to be hit by the financial crisis, theGovernment had managed to maintain its open regime and had reinforced the already increasingly
outward-oriented trade and investment policies.  Throughout its economic difficulties, international
trade remained and continued to be the Government's top priority.  Despite persistent calls for a return
to protectionism, the Thai Government had continued the liberalization of its economy as well as
adhering to its WTO commitments.
42. He remarked on the fact that Thailand had reduced or exempted, on a permanent basis, tariffs
on capital goods, raw materials, and other products totalling more than 630 items;  streamlinedcustoms procedures;  and adopted international standards as a basis for Thai Industrial Standards
(TISs).  The Thai Government had likewise progressed in establishing a modern legal framework
consistent with its WTO commitments, including the amendment of the Customs Act, and anWT/TPR/M/63
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Anti-Dumping and Countervailing Act.  In the field of intellectual property rights, Thailand had also
modified its intellectual property legislation, particularly its Patent Act, consistent with its
commitment to implement the TRIPS Agreement.
43. Thailand had continued to liberalize the financial and energy sectors, which were previously
largely state-owned.  He also noted the move towards greater international competition and
investment opportunities for foreign equity holders in the transport sector, insurance, banking, and
securities businesses.  By maintaining an open and liberalized regime, Thailand had recovered
strongly from the economic setback of the past two years.  This recovery had been underpinned by thevarious initiatives undertaken by the Thai Government in order to improve consumer and investor
confidence, both domestically and abroad.  He encourage the Thai Government to continue these
current economic reforms, which were not only essential to the Thai economy itself but also to the
entire ASEAN region.
44. The representative of Australia congratulated Thailand for its handling of the crisis, noting in
particular the August 1999 package of tariff cuts on capital goods and raw materials and the
legislative reforms to further liberalize trade and investment and encourage greater competition,transparency and accountability.  These actions had supported the return to positive economic growth.
45. The turnaround in the bilateral trade balance between Thailand and Australia demonstrated
how trade could contribute to economic recovery, the Thai export sector having been one of the
driving forces lifting the Thai economy out of recession.  The legislative improvements in the
financial sector, on bankruptcy and foreclosure, and most recently the Foreign Business Law wouldimprove business confidence.  The new Competition Act would help to strengthen the domestic
competitive environment.  However, many business interests remained somewhat cautious about the
new legislative framework, which was still largely untested with many remaining opaque business
regulations and practices.
46. He welcomed the reduction on over 600 tariff lines and the removal of the 10% import duty
surcharge, but noted that Thailand's simple average tariff rate remained the highest amongst major
ASEAN countries.  He hoped that the expected tariff reform would further expose Thai industry to
increased global competition.  Reductions in tariffs on automotive components, cheese, confectionery
and wine, would make these products cheaper for Thai consumers, manufacturers and hospitality
services providers, and help increase productivity.
47. While Thailand was an efficient agricultural exporter, price support policies for some
products encouraged production in less efficient parts of the sector.  He noted that the issuing of
quotas for skim milk powder lacked predictability, and that pre-market clearance of imported food
was a protracted process.  He urged for recent policy reforms so commendably introduced over the
past two years to be applied throughout the economy.
48. He regretted the persistence of foreign investment restrictions, mostly in services sectors,
notwithstanding the recent amendment of the Alien Business Law.  He called for a phase-out of
restrictive regulations that hindered the expansion of trade, and for the relaxation of restrictions on
foreign investment and the limitations on foreign nationals working in Thailand.
45. The representative of New Zealand noted that Thailand had long been a supporter of trade
liberalization in AFTA, APEC, the Cairns Group and the WTO, particularly for trade in agricultural
products.  The recovery that Thailand was now experiencing testified to the wisdom of Thailand'soutward-looking attitude to trade and investment policies.  He also commended recent tariff decreases
and looked forward to further such reductions in future.  He was concerned, however, by the
continuing high level of tariffs on agricultural products, which had scarcely changed since the lastWT/TPR/M/63
Page 12
Trade Policy Review in 1995.  Moreover, some three quarters of peak tariffs, that is, tariffs in excess
of 50% were found in the agriculture sector.  He joined previous speakers in deploring the timing of
issuance of licences for skim milk powder, which disrupted the market and limited the quantity of
product actually imported.  He urged a review of the tariff quota administration with a view to
obviating such difficulties so that commodities such  as SMP could be marketed in an orderly and
predictable manner.
46. New Zealand was pleased to note that a special task force had been established to improve the
integrity of Thailand's customs regime and that legislation was promised to implement the WTOCustoms Valuation Agreement.  These were areas where he believed there was wide scope for
improvement, and he encouraged the Thai authorities to move quickly to bring present practices into
line with international standards.
47. The representative of Hong Kong, China noted that Thailand's testimony in the past four years
witnessed the faith of developing country Members in the Multilateral Trading System.  He welcomed
the announced reform of Thailand's tariff regime, and expressed confidence that with more speedy
growth, some peaks in the tariff structure would even tually be levelled off and the tariff rates would
be restored to the pre-crisis level.  He also note d Thailand's initiative to review end-use provisions in
its tariff regime, and looked forward to learning its progress.
48. Considerable effort had been made to liberalize the services sectors, in particular Thailand's
commitments in insurance, banking services, basi c telecommunications, and the maritime transport
regime.  The insurance market in Thailand was to a very large extent open to foreign participation,with further improvements made by the implementation of the three-stage liberalization of the
insurance industry.
49. He was glad to note the positive response generated by reforms including express shipment
handling and document simplification.  He encouraged the Thai authorities to continue reforms in
customs operations to enhance its competitiveness as a regional hub.
50. In the area of government procurement, he was pleased to know that Thailand was working
towards a more open, transparent and fair government procurement system, but noted that preferences
were still being provided to domestic suppliers and products, and that there were restrictions on
foreign suppliers and products.  He encouraged Thailand to remove these preferences and to consider
joining the Government Procurement Agreement.
51. He praised Thailand's active participation in th e Multilateral Trading System, as exemplified
by its being a founding member of the Advisory Centre on WTO Law.  He noted the close trading
relationship between Thailand and Hong Kong, China,  and looked forward to continued partnership in
fending off protectionism as well as in the pursuit of trade liberalization.
52. The representative of the European Union had been impressed by the Thai economy's
recovery from the recession.  Before the economic crisis in mid-1997, Thailand had been enjoying
fairly steady growth, on the back of greater political stability, the liberalization of the energy market,
generally positive investor sentiment in the Asian region, and economic reforms characterized by
greater openness and liberalization.
53. Thailand's increase in exports, an important factor in the current recovery, was due partly to
resistance to protectionist pressures in the EU and elsewhere.  He therefore noted with pleasure the
present government's commitment to continue the re form process and to maintain a liberal trade and
investment policy, as subscribed to under the AS EM Trade and Investment Pledge.  Under the ASEM
Trade Facilitation Action Plan, partners were working together to reduce non-tariff barriers andWT/TPR/M/63
Page 13
transaction costs.  Under the ASEM Investment Promotion Plan partners aimed to enhance the
investment environment in order to  promote two-way investment flows.
54. He joined others in urging a phase-out of recent tariff increases in order to give the right
signal to industry and help boost investor and consumer confidence.  Noting that trade also required
simple customs and administrative procedures, he expressed concern about inspection and valuation
procedures for certain goods, and about time-consuming registration and authorization of new
products in the food and drugs sector.  He recommended the introduction of best practices on the
analysis of the goods and on decision criteria.  While welcoming the decision to align new localstandards to international ones, he was concerned that all old Thai standards remained unaligned and
were not scheduled to be fully aligned in the near future.
55. He also welcomed the new Anti-dumping  and Countervailing Act and hoped that
implementing the WTO Custom Valuation Agreement by the target date of 1 January 2000 would
definitely resolve the issue of customs "uplift".  He  joined others in calling for further improvement in
the areas of IPR enforcement, to combat, for inst ance, the rampant counterfeiting of trade marks and
of compact discs.
56. He drew attention to weaknesses in Thailand's competition policy, which could reduce the full
benefits to industrial and domestic consumers of Thailand's liberalization effort.  While awaiting the
publication of implementing regulations (e.g. Trade Competition Act and Price of Goods and Services
Act), he asked for confirmation of Thailand's strategy in this area.  He asked which sectors, currently
in the negative list for foreign investment, were considered as priorities for future liberalization.
57. Finally, he noted with some concern the reappearance of some protective reflexes in specific
sectors, such as textiles and clothing (where most tariffs were raised, above bound levels, to 60%)
mineral waters, marble and granite, ceramic tiles, spirits and wines, automobiles and six-wheeled
buses.  These cases underlined the need for Thailand to ensure that its body of legislation was fully
compatible with the WTO and to further improve its implementation of existing regulations.
58. The representative of the United States noted that bilateral trade amounted to over
US$18 billion annually.  The United States was Thailand's second largest foreign investor, with total
accumulated direct investment of over US$15 billion, Thailand's largest single market for exports and
the second largest source of imports.  Thailand was the single largest beneficiary of the U.S. GSP
programme.  The United States' open market policies had contributed to the long-term growth andcurrent stabilization of the Thai economy.
59. She was encouraged by Thailand's August 1999 package of measures, but noted that the 1997
increase in applied tariff rates on nearly 550 items at levels above MFN bindings had not yet been
fully reversed.  She asked for an update regarding the status of implementation of the WTO Customs
Valuation Agreement and the In formation Technology Agreement.
60. Despite some improvements in intellectual property rights laws and administrative structures,
violations continued to be a severe problem and a major detraction for investors.  She joined others in
encouraging Thailand to redouble efforts to improve its IPR regime and its enforcement.
61. She also invited Thailand to consider new comm itments in accounting, legal, insurance, and
engineering services, remarking that many services were unbound for mode 1 (cross-border supply).
Such actions would better prepare the Thai economy for a return to solid, sustainable, balanced
growth.WT/TPR/M/63
Page 14
62. She welcomed Thailand's support for an Agreement on Transparency in Government
Procurement and encouraged Thailand to obtain observer status and to participate as actively as
possible in the Government Procurement Committee.  In particular, she asked for a contributionrelating to the ongoing review of the GPA.  One of the main purposes of that review was to make the
GPA more accessible to Members who were considering joining the Agreement.
63. The representative of Canada noted that since its last review, and following the Asian
economic crisis, Thailand was benefiting from increased financial discipline, economic reform, and
trade liberalization.  He believed that government reforms to strengthen the Thai economy in the wakeof the 1997 crisis had helped put the country back on the path to growth in 1999.
64. Canada and Thailand had enjoyed 32 years of diplomatic relations;  the Thai-Canada Bilateral
Economic Commission held its 5
th biennial meeting in Bangkok in September 1998.  A 1997 foreign
investment protection agreement provided security for Canadian companies investing in Thailand and
vice versa.  A double taxation agreement, as well as a number of memoranda of understanding and
other instruments, facilitated trade and investment.  Canada and Thailand had worked together
effectively in different regional fora, includin g APEC and ASEAN.  The regional downturn had had
very negative consequences for Canadian exports to Thailand, which fell by 42% from 1996 to 1998,
to Can$297 million.  Thai exports to Canada, on th e other hand, had increased by 22% during the
same period, to Can$1.3 billion.
65. He welcomed the new Constitution, adopted in 1997, and the policy of greater transparency
and accountability.  He was encouraged by the decision to establish a new NationalCounter-Corruption Commission and the creation of a special task force to improve the integrity of
the customs regime.  He look forward to increased privatization initiatives, which would allow foreign
participation in the energy, transportation, telecommunications, education, health, and water sectors.
The new Foreign Business Act should increase foreign direct investment.  He joined previous
speakers in urging better IPR enforcement and reversal of the increased border taxes on severalconsumer products since 1997.
66. The representative of the Czech Republic joined others in welcoming the efforts of the
Thai Government to overcome the financial and economic crisis without protectionism.  He found the
Thai customs procedures not always simple and fully transparent and asked about the possible
liberalization of imports of milk powder and skimmed milk powder.
67. He also enquired about a new amendment to the Thai Alien Business Law and the system of
excise taxes in imports of lead crystal glass products.
68. The representative of the Republic of Korea noted that bilateral trade volume had declined
from US$39 billion in 1996 to US$2.3 billion in 1998 due to the Asian crisis.  However, between
January and August 1999 it bounced back to US$1.8 billion, following an agreement for Letter ofCredit Confirmation between the respective export and import banks.  Korean firms established in
Thailand imported inputs from Korea, transformed and processed them in Thailand – thereby adding
much value – and then exported finished products from Thailand to third countries.
69. Noting that the recovery had gained pace, he worried that the Government might succumb to
domestic pressures to put off fundamental reforms that were necessary to generate sustainable growth.
He asked about developments regarding customs valuation, about the new foreign investment regime,
and enquired whether certain tax holidays that could constitute subsidies contingent upon exportperformance would be phased out.WT/TPR/M/63
Page 15
70. Foreigners were allowed to own only up to 25% of stocks in insurance and leasing areas,
compared to more than 50% of stocks in banking.  He asked whether this 25% limit would be
increased to allow greater foreign participation in insurance and leasing sectors and whether theauthorities were planning to further relax conditions for foreign ownership of land.  He hoped that the
Thai Government would promptly lower tariffs peaks and expand the number of tariff bindings.
71. The representative of India joined others in congratulating Thailand for the recovery and for
resisting protectionist measures.  He noted the March 1999 economic stimulus package aimed at
stimulating private consumption and investment and increasing public expenditure, and the August1999 package aimed at encouraging private investment.  These had resulted in a turnaround of the
economy.  Indian investments in Thailand were also growing and were concentrated in relatively
high-tech and capital intensive areas.  The Board of Investment had ranked India among the country's
top ten investors.  Thailand had emerged as an important investor in India.  The main areas of Thai
investment in India were telecommunications and fisheries.
72. An Indo-Thailand Joint Commission for Bilateral Cooperation was in existence.  Other
bilateral agreements included the Agreement for the Avoidance of Double Taxation, an Air ServicesAgreement, a Co-operation Agreement between the Board of Investment of Thailand and the Foreign
Investment Board of India.  He remarked that e xporters from developed countries were preferred to
exporters from Asia when bidding for purchases of drugs and pharmaceuticals by government
hospitals in Thailand.  This was managed through a point system in Thailand under which one point
was to be deducted for raw materials supplied from Asia and Eastern Europe, with no such deductionmade in respect of procurement from developed countries.  He thought this might be in violation of
the basic WTO MFN principle.  He requested the Thai authorities to look into the matter and ensure
that all discrimination was eliminated.
73. Another issue of concern related to valuation by Thai Customs of steel imports from the Usha
Siam company, based not on the invoice, but instead on a five-year-old standard value.  He hoped thatthe new amendment to the customs valuation legislation would resolve that problem.
74. The representative of Uruguay joined others in commending Thailand for keeping a generally
non-protectionist stance throughout the crisis, and for the considerable legislative programme
achieved since 1995 to implement the WTO Agreement.  Within the Cairns Group, the two countries
fully collaborated to achieve market-based and equitable trade in agriculture.
75. The representative of Norway referred to a 1996 exemption of the import duty on fish and
aquatic animals imported through customs houses, except those imported through airports.  Fish
products imported through airports were considered to be luxury products and continued to be subject
to high tariffs.  For instance fresh salmon imported through airports was subject to a 60% import duty.
Thailand had committed to reduce most tariffs on fish, including salmon, to 5% or 6% by 1999, andhe therefore called for a reduction in such duties.
76. He remarked that the Thai Government could require goods purchased by government
agencies or enterprises to be carried by Thai flag vessels.  This created problems when reloading
cargo to foreign owned ships.  As foreign shipping companies had limited control concerning the
costs of the local intermediary vessels, this practice could result in higher prices.  Further, he asked
why taxes on Norwegian cargo in Thailand amounted to 1.5% of the cargo's value, whereas Swedish
cargo was exempt from these taxes.  He also asked about details of the new Foreign Business Act.
77. The representative of Switzerland joined others in complementing Thailand for its
commitment to openness, and highlighted issues that should nevertheless be addressed with high
priority so as not to endanger future development.  He stressed that the new Foreign Business ActWT/TPR/M/63
Page 16
should be carried out with a minimum of bureaucr atic hurdles and asked how the new law would
allow for more foreign participation.  He also quer ied the reasons for the current limits both to foreign
cross-border supply and foreign commercial presence in insurance and telecommunication services.
78. He was surprised to learn that applied rates for some products (luxury goods) were higher
than WTO bound rates and expressed concern that it was still necessary to consult five separate tariff
publications to ascertain the applicable custom duty.  He asked what the Thai Government was doing
in order to increase transparency.  He asked whether there was not a danger that under certain
conditions, the exception clauses in the Thai Copyright Act of 1994 could cause tremendous damageto the holder of such copyrights;  and why Thailand's Patent Act of 1979 and its 1999 amendment had
adopted the principle of national treatment only on a reciprocal basis.WT/TPR/M/63
Page 17
V. REPLIES BY THE REPRESENTATIVE OF THAILAND AND ADDITIONAL
COMMENTS
79. The replies by the representative of Thailand were divided into three main themes:
(i) economic environment;  (ii) trade policies and measures;  and (iii) sectoral policies.  They were
based on written responses, which were circulated to Members.  Thailand would provide further
answers in written form within the time allowed under the TPRM.  Following the replies, the
Chairperson opened the floor to TPRB members for further comments and questions.
(i) Economic environment
(a) Economic prospects
80. The representative of Thailand outlined the measures taken to restore confidence in the
financial system.  These included (i) improving standards of supervision of financial institutions by
establishing the Bank Examination School, (ii) reduction of non-performing loans, (iii) restoring baht
stability, and (iv) drafting the new financial institution legislation.  The new legislation would enable
authorities to take prompt corrective actions to solve problems of ailing financial institutions, adopt
consolidated supervision, and improve corporate governance in financial institutions.
81. These measures had started to bear fruit and the Thai economy had begun to show recovery
signs. The inflation rate averaged 0.4% during the first nine months of 1999.  Both the balance of
payments and current account balance had recorded a surplus, despite the acceleration of imports and
continued foreign debt repayment, particularly by the Bangkok International Banking Facilities
(BIBFs).  In the first eight months of 1999, the country’s total foreign debt had fallen byUS$6.4 billion.  The ratio of non-performing loans to total loans had started to stabilize and decline
somewhat.  The sale of the two intervened banks had been completed and this was expected to help
improve market competition and efficiency in the system.  Moreover, the authorities were in the
process of selling another two banks.  This indica ted that foreign investors had strong confidence in
the Thai economy and financial system.  It was foreseeable that the Thai economy was on therecovery path and back on track.  Most importantly, the Thai Government would continue to address
the remaining weaknesses and underlying problems.
(b) Non-performing loans;  new bankruptcy, foreclosure and financial legislation
82. The authorities were fully committed to so lving the non-performing loan (NPL) problem.
Firstly, priority had been given to encouraging financial institutions to undergo corporate debtrestructuring, either by the Corporate Debt Restructuring Advisory Committee or by commercial
banks themselves.  The authorities had improved accounting and tax regulations in order to accelerate
debt restructuring and reducing relevant costs.  Secondly, interest rates in the domestic and overseas
markets had been equalized to reduce interest burdens on debtors.  This would help enable corporate
companies to service debt repayments and continue their business operations.  Thirdly, the selling ofthe four "intervened" banks – two of which had been  completed and the other two were in the process
– together with the establishment of Asset Management Corporation would improve the NPL
situation.
83. The Financial Institutions Act draft had been completed.  The inputs obtained from several
public hearings would be incorporated in the final draft, which would be proposed to the Parliament
for approval by the end of the year 2000.  The new Bankruptcy Act of 1999 had entered into force on
22 April 1999.  Foreclosure proceedings, as part of the Code of Civil Procedures, were being amendedto streamline the court process for the settlement of claims.  The Secured Transaction Act was also to
be amended to increase the provision of secured credit and facilitate the foreclosure process.  TheseWT/TPR/M/63
Page 18
amendments were designed to give creditors more power in the seizure of bankrupt companies, and
hence facilitate corporate rehabilitation and debt restructuring.
(c) New competition legislation;  prospects for privatization
84. A new competition law had become effective on 30 April 1999.  Its objective was to
encourage and promote fair business practices by prohibiting abuse of market dominance, as well as
to create opportunities for new entrants.  The enforcement and implementation of the Act was under
the responsibility of the Committee on Business Competition, chaired by the Minister of Commerce.
The Committee, set up on 16 November 1999, comprised sixteen members from government and theprivate sector.  The Committee would hold its first meeting in January 2000 to discuss merger
guidelines and define “dominant firms” in terms of market share, sales, capital and asset size, etc.
85. Over the past ten years, more than 40 of the 100 state enterprises had been successfully
privatized.  The authorities had decided to accelerate the privatization programme in response to the
economic crisis, in sectors such as electricity supply, telecommunications, port services, and aviation.
All these sectors, as anticipated, were met with opposition both from the employees and from
members of the public, who were sceptical of the effectiveness and benefit of privatization.  Certainsectors, particularly the electricity power services, saw major protests against privatization plans
forcing the Government to constantly delay any possible progress.  Attempts to sell shares of state
enterprises to foreign interests were also opposed by members of the public who favoured national
ownership.
86. Despite these challenges, the Government had privatized several key state-owned enterprises
such as Thai Airways International, the Telephone Authority of Thailand, and the Electricity
Generating Authority of Thailand.  The representative believed that this long-term commitment would
bring about a more efficient and competitive economic environment.
(d) New foreign direct investment legislation and land ownership
87. The Foreign Business Act, the new legislation to replace the Alien Business Law, had already
been published in the Royal Gazette.  It would become effective on 4 March 2000.  The new
legislation would substantially increase foreign market access.  Business activities were no longer
subject to any foreign equity restrictions, include d retailing and wholesaling, provided a minimum
capital of at least approximately US$2.5 million was invested.  Brokerage in security trading would
also be liberalized, as well as services related to trading in agricultural commodity futures and
financial instruments.  Foreigners would also be allowed to invest in large-scale construction of some
public utilities and communications, and in the manufacture of pharmaceutical products, silk yarn,
garments and footwear, and beverages.
88. For most restricted business activities, the foreign equity restriction would be waived for
companies approved by the Board of Investment or the Industrial Estate Authority of Thailand.  TheBoard of Investment maintained no equity restrictions in manufacturing.
89. The number of foreign shareholders in a juridical person would no longer be a consideration
for determining whether that person was an “alien”, re sulting in a narrower scope of application of the
new legislation.  There would no longer be any lim it in ownership in other businesses.  Further, the
Foreign Business Act stipulated that the lists of restricted businesses would be revised at least once a
year.
90. The Land Code Amendment Act had been effective since May 1999.  This Act allowed
foreigners to purchase up to 1 rai (approximately 1,600 square meters) of land for residential purposesWT/TPR/M/63
Page 19
by investing at least B 40 million (approximately US$1 million).  Moreover, the Condominium Act of
April 1999 allowed a foreigner to purchase condominiu m units as long as foreign ownership in the
condominium complex did not exceed 49% of the total floor area.  This 49% cap was waived forcondominiums located in specified areas.
(e) Investment incentives
91. The Board of Investment was in the process of revising its investment promotion policy
package to ensure consistency with the SCM Agreement, in particular through the phasing out of the
remaining export requirements.  The revision was also designed to enhance human resourcedevelopment and technological capability while main taining the decentralization theme.  It would
continue to facilitate foreign investment.
92. The inputs from the private sector, other government agencies concerned, and academia were
actively sought in the review process through a series of consultative meetings held over the past
several months.  The new policy package, which would become effective in the year 2000, would
continue to be applied on an MFN basis.  Moreover, existing investment projects that had already
been granted would not be affected by the new package.
93. The discussant remarked on the strength of current macroeconomic indicators and asked
whether the Government maintained any targets for private and public debt, government deficits, and
savings and investment ratios.  He also asked what effect the recent relatively large fiscal stimulus
packages would have on government balances;  what were the target levels and the timetable for
reducing non-performing loans (NPLs);  and what wa s the Government's current strategy given the
current popular opposition to privatization.  Finally, he asked for Thailand's views regarding the
concerns about International Banking Facilities.
94. The representative of Japan asked whether foreign land ownership was still restricted to two
years, and called for legal certainty in the application of the new bankruptcy and foreclosure
legislation.
95. In response, the representative of Thailand rema rked that International Banking Facilities had
been a conduit for foreign borrowing, mostly because of the fixed exchange rate system.  The
borrowing through these institutions had been considerably reduced as borrowers now faced the true
cost of hedging.  She also indicated that IBFs had abolished tax incentives for short-term borrowings.
Reducing NPLs was the Government's top priority, and the authorities were closely monitoring the
level of private and public debt.  While it was difficult to fix the timeframe for privatization because
of the strong political resistance, it would however remain a government priority as a way to increase
productivity.  Foreign land ownership was not limited in time.
(ii) Bilateral and regional treaties and arrangements
96. The representative of Thailand stated that tariff reductions would not be delayed on any
product under AFTA as such a delay would delay AFTA and would have negative effects on
ASEAN’s credibility and economic recovery.  Th e ASEAN Framework Agreement on Services was
not yet operational.
97. The AFTA was expected to further increase intra-ASEAN trade through the tariff reductions.
In 1992, before AFTA had established, Thailand’s exports to ASEAN amounted to US$4.5 billion,
with ASEAN ranking fourth after the U.S., EU an d Japan.  Since then, ASEAN had gradually become
Thailand’s major market.  During 1995-97, it ranked first in terms of trade value with 21% ofThailand’s total exports.  Industries that had difficulty adjusting to greater competition could beWT/TPR/M/63
Page 20
temporarily placed under the Temporary Exclusion List, although eventually their sectoral tariff
would decrease to 0%.
98. For the six original members, the implementation of AFTA had been accelerated by one year
from 2003 to 2002.  By then, 100% of the Inclusion List would have tariffs of 0-5%.  Also, ASEAN
members had agreed to advance the target date for 0% tariffs to 2010 for the six original member
countries (and to 2015 for the new member countries).
99. Under the Agreement on ASEAN Investment Area (AIA), most industries had been opened
up and national treatment had been made fully available in April 1999 for ASEAN investors inmanufacturing, subject to certain exclusions that would be phased out by 2003 instead of 2010.
Furthermore, the AIA agreement would be expanded to cover services, agriculture, forestry, fishery,
and mining.
100. The AICO scheme offered participating companies preferential tariff rates of 0-5%, and the
30% national equity requirement was waived for 1999-2000.  The ASEAN framework on the
Facilitation of Goods in Transit would be operational by the year 2000.  The Green Lane System had
been implemented since 1 January 1996 in order to reduce transaction costs and expedite customsclearance for intra-ASAEN trade.
101. The Programme of Action planned to esta blish an ASEAN Trademark System and an
ASEAN Patent System for region- wide protection of trade marks and patents by the year 2000.
Further information could be found in the ASEAN Internet site (www.asean.org).
102. The Treaty of Amity was a bilateral treaty between Thailand and the United States, signed
before Thailand became a member of GATT.  When Thailand joined GATT, MFN treatment was
accorded to other WTO Members in the areas of goods and TRIPS.  However an MFN exemption in
the area of services had been specified for ten years in the Schedule of Commitments.
(iii) Trade policies and measures
(a) WTO implementation
103. The representative of Thailand stated that Thailand was committed to implementing the
provisions of the Customs Valuation Agreement by January 2000.  In line with the obligations under
the TRIMs Agreement, remaining local-content requirements in the manufacture of milk and dairy
products, certain types of automobile engines, and automobile assembly, would be abolished by
1 January 2000.
104. Thailand was fully committed to implementing its obligations under the TRIPS Agreement.
The current administration had undertaken all the work required under its executive power to ensure
that all WTO-related legislation was on schedule.  The Copyright Act had been in effect since 1994;
the Patent Act had entered into force on 27 September 1999.  All additional
intellectual-property-related laws had been drafted and approved at the administrative level and wereawaiting parliamentary approval.
105.  The Thai Government had made serious efforts to improve customs services in the past two
years as part of its efforts to enhance Thailand's economic competitiveness.  The majority of
businesses had reported their satisfaction with the improvements made.  The Electronic Data
Interchange (EDI) system was in full operation at the Bangkok International Airport and would cover
all customs-entry points in the near future.WT/TPR/M/63
Page 21
106. Thailand was on schedule to implement the Customs Valuation Agreement by January 2000.
Then, the risk of conflict between the market value notified by the importer and that of the Customs
Valuation Unit would be eliminated.  It was certain that the minimum import prices would be droppedonce the transaction value was employed under the new Customs Act.  In another words, the practice
of taking the highest price as the basis on which to levy duty would cease once the transaction value
method was adopted.
107. The Thai Government was considering binding more tariff lines and was prepared to bring the
bound rates into line with the applied rates, and to reduce current tariff peaks in the context of a newround of negotiations.
108. The recent tariff increases had in some cases resulted in “applied rates exceeding the WTO
bound rates”.  The representative clarified that applied rates did not and could not exceed the legal
bound rates for WTO Members, and no WTO Members were levied import duties above the bound
rate.  The system of origin indication was not meant to further complicate trading procedures, but was
required for statistical purposes.
109. She took note of the concerns regarding the five separate tariff publications, and would seek
improvement in order to facilitate trade and increase transparency.  A substantial number of everyday
users, e.g. shipping agents, importers, found the current five tariff publications to be convenient.
110. The Thai Excise Department did not apply the Codex Alimentarius definition of mineral
waters because it was non-mandatory and not relevant for the application of excise tax laws. Excise
taxes applied equally to domestic and foreign producers.  The Excise Department had taken legalactions against some producers not in compliance with the regulation.
111. The discussant enquired about the overall objectives of Thailand's tariff policy, noting that
high tariffs applied in some cases to unprocessed agricultural products used in the domestic
processing industry, to goods not domestically produ ced, as well as to products exported by Thailand.
He expressed interest in the ongoing tariff review and asked for more information regarding theproposed three-tier tariff.  He found that the administration of tariff quotas appeared to reveal certain
inconsistencies.
112. The representative of the European Union expressed concern about Thailand's management of
its border duties.  Tariff increases could take place at any time by regulatory announcement without
the need for parliamentary approval.  The fact that applied tariffs exceeded bound rates, including forsome IT products, was also a subject of concern.  There were no published rules defining WTO
origin;  it was therefore difficult to ensure that products originated in WTO countries would benefit
from the bound rates.  If the purpose of the higher applied rates was to levy higher duties on
non-WTO members, these should be singled out rather than complicate the procedures for WTO
Members.
113. In response, the representative of Thailand agreed that customs implementation was
sometimes innovative and difficult to understand.  The three rates envisaged in the new tariff were
0-5%, 10%, 20%, as well as a special 30% for products requiring special protection.  ITA
implementation had been late because of the tariff restructuring process currently under way.  While
the Cabinet was empowered to change tariffs, extensive consultations had to be first carried out with
business groups and within government.
114. She confirmed that the system of tariff quotas established by the Thai Government under the
WTO Agreement on Agriculture was transparent and did not appear to constitute a barrier to trade.
With regard to imports of skimmed milk powder, the allocation of the quota was on a pro-rata basisWT/TPR/M/63
Page 22
according to the demand of each different user including newcomers.  Import licences were divided
into two periods in order to enable the markets to absorb the flow of imports and prevent price
speculations.  The size of the SMP allocation was greater than WTO commitments.  Thailand wasprepared to negotiate the administrative aspect of tariff quota allocation.
115. Thailand was a major producer and exporter of certain products under tariff quotas, such as
rice, sugar, and longans.  Therefore, demand was largely met by domestic production and tariff quotas
were not filled, except when domestic products were not of the required quality or domestic
production was low.  Produce under tariff quotas was in some cases imported fromnon-WTO members.  For the time being, Thailand had not considered moving the tariff quota to
another regime.
(b) SPS measures, standards
116. The representative of Thailand described instances where international standards had been
found inadequate.  For example, certain testing standards could not be applied as the testing
equipment was not available in the country;  further, the testing temperature specified in international
standards was usually 20ºC while that suitable for Thailand was 27ºC.  Thai Industrial Standards wererevised every three to five years.  Therefore, those standards that were not yet harmonized with
international standards would be revised and be based on international standards, except when
international standards did not exist or were inappropriate.  Thailand had notified all its
standards-related TBT measures to the WTO Committee.
117. Thailand’s registration process for packaged food items was not exclusive in nature, and
therefore different importers could register and be granted licenses to import the same food items into
the country.  Thailand’s food labeling requirements were designed to protect consumers’ health and
safety, were transparent, and were in line with the SPS and TBT Agreements.
(c) Government procurement and countertrade
118. The newly enacted Anti-collusion Law was designed to prevent bogus bids being submitted
by domestic firms to exclude foreign competition.  The Counter-Corruption Commission was also the
authority empowered to oversee this matter.
119. Domestic preferences also applied to procurement contracts from state enterprises.  There
were no statistics available regarding the size of Thailand’s government procurement market.
Thailand had no intention to accede to the WTO Government Procurement Agreement.
120. Thailand’s current countertrade policy, approved by the Cabinet in 1995, was a
supplementary measure to promote Thai exports and to mitigate the trade imbalance problems.  The
procedure was straightforward and transparent.  The countertrade requirement applied only to the
procurement contracts undertaken by government agencies and state enterprises for imports of goods
and services above B 300 million (about US$7 millio n).  Countertrade procedures and practices were
operated on the principle of fair trade practices, non-discrimination, and transparency.
(d) Export financing schemes
121. The value of loans earmarked for the packing credit scheme had remained stable since the
entry into force of the Agreement on Subsidies and Countervailing Measures (SCM), except during
the crisis when it was raised to ease severe liquid ity problems in the financial market. Currently, the
amount of loans stood at lower levels than before the crisis, and would be further reduced to be in lineWT/TPR/M/63
Page 23
with the SCM Agreement.  Other schemes maintained by the Exim Bank were provided at market
conditions.
122. The discussant asked whether the preferential export financing schemes had been useful in
alleviating the effects of the financial crisis, and whether the countertrade policy was easy to
implement.
123. In response, the representative of Thailand stated that newly enhanced export financing
schemes may constitute some form of export subsidy, as provided for by the eight-year transition
period specified in the WTO Agreement.  The Export Packing Scheme would be phased out by theExim Bank.  Current interest rates under the scheme were above market rates, and most of the funding
came from international sources such as the Asian Development Bank and Japan.
(e) Intellectual property rights and enforcement
124. The Government had been vigorously taking all possible measures to step up its enforcement
effort against IPR infringement.  Apart from establishing several enforcement agencies to specifically
deal with this matter (e.g. the Economic Crime Investigation Division of the Royal Thai Police;  the
Coordinating Center for the Suppression of IPR Violat ion of the Department of Intellectual Property;
and the IP and International Trade Court), the Government was drafting and amending related laws
and regulations to effectively cope with the importation of machines and equipment used in producing
infringing goods.  It was also drafting a new law to control the production of optical discs.
125. Special police units had been set up to daily monitor infringing activities at major shopping
centres in Bangkok, and to combat infringing activ ities in other provinces.  Attention was focused on
the suppression of activities at all levels, i.e. manufacturers and distributors as well as retailers.  A
public awareness campaign had been launched to improve understanding on the importance of IPR
protection.  Moreover, the authorities were doing their best to cooperate closely with the rightholders
in the combat against piracy, assisting them to identify the seized infringing goods.  Rightholders
were also encouraged to use all available civil and criminal remedies.
126. A few rightholders, including the International Federation of Phonographic Industries (IFPI),
the Business Software Alliance (BSA), and the Motion Pictures Association of America (MPAA) had
cooperated with the authorities.  However, a number of rightholders had not been consistent in
contacting enforcement agencies in order to identify seized infringing goods.  This was the main
reason for the release of these unidentified IPR infringing products.  One notable example wasrightholders of entertainment software.  Some agents of the rightholders claimed that they were not
given authority to act on behalf of the rightholders and therefore were not able to identify the
infringing materials or file the case in the co urt.  The rules of the Intellectual Property and
International Trade Court enabled rightholders to file  for all the provisional measures in line with the
TRIPS requirements, prior to instituting an action.  The rules also prescribed the petition or motion fora court order directing the evidence to be taken at once.
127. A working group chaired by the Director-General of the Department of IP and International
Trade Litigation, Office of Attorney General, had been established to draft a bill on CD production
control.  The law was in the drafting process and, when completed, would be submitted for approval
to the Cabinet and the Parliament.  The drafting was expected to be completed within eight weeks.  It
was likely that the law would be in force in 2000.  The Thai Government was in the process of setting
up enforcement funds in the approximate amount of B 40 million per year for a period of three years.Half of the amount (about US$500,000) was expected to be supported by the rightholders.WT/TPR/M/63
Page 24
128. Thailand would maintain such exception concerning personal use as it did not conflict with
normal exploitation of the work and did not unreasonably prejudice the legitimate interest of the
rightholder as stipulated in Article 13 of the TRI PS Agreement.  Retail pricing of legitimate software
and other goods in general were not regulated in comparison with global pricing unless such goods
were regulated according to Thailand’s Law on the Price of Goods and Services (1999) or the
entrepreneur’s action was considered as a monopoly or unfairly restricting competition in trade under
the Law on Competition in Trade (1999).
129. While Thailand was expanding its IP regime to new areas of technology, it was short of
skilled human resources in relevant areas and thus unable to enlarge the structure of the Government
agencies.  Training and study visits were being provided, both at the Government's expense and with
external assistance.
(iv) Sectoral policies
(a) Financial services
130. The representative of Thailand described the liberalization in the financial sector since 1998;
up to 100% foreign ownership was allowed in banks and finance companies if it was deemed
necessary to improve their financial position.  Although the relaxation was for a ten-year period,
foreign shareholders would not be required to dilute their stake thereafter, but would not be able to
buy additional shares until foreign ownership dropped below 49%.  Therefore, in essence, the 25%
ceiling that was previously in place had been raised to 49% indefinitely.  If no additional shares were
issued after ten years, foreign investors could maintain their majority stake indefinitely.
131. The Government had progressively relaxed the limitations regarding the number of foreign
personnel working in foreign banks’ branches since the establishment of Bangkok International
Banking Facilities (BIBFs) and Provincial Internat ional Banking Facilities (PIBFs).  Moreover, the
quota of foreign expatriates working for foreign banks had never been reduced despite massive
layoffs in the financial sector as a result of the crisis.
(b) Telecommunications
132. Maximum foreign equity participation had been increased from 20%, as set in the Master Plan
on Telecommunications Development, to 25%.  New telecommunications legislation, in line with the
revised Master Plan, was expected to be enacted in the year 2000.  There would be no commercial
limit in the number of licences granted to services providers.
(c) Accountancy and legal services
133. Thai law did not currently permit foreign nationals to practice accountancy services in
Thailand.  Accounting standards in Thailand were based on, and similar to International Accounting
Standards.  Thailand would consider the possibility of further liberalization in this sector in the
context of the new round of negotiations in services.
134. A work permit was granted to foreigners to act as legal advisors (providing legal advice but
not litigation work) based on economic benefits, necessity, and national security.  Commercial
presence in legal services was permitted as long as foreign equity participation did not exceed 49% of
the registered capital.
135. The discussant asked about prospects for liberalization in telecommunications services.WT/TPR/M/63
Page 25
136. The representative of Japan asked whether there were any plans to relax current limits on
foreign personnel, and whether the new Master Plan of telecommunication, when enacted, would
allow immediate entry of new service suppliers.
137. The representative of Korea found that one-year working permits were too short.
138. In response, the representative of Thailand considered that the free flow of personnel would
occur in the long run;  the current unemployment problem, however, as well as the need to develop
local skills, for the time being prevented any relaxation of restrictions on foreign personnel entry.
Once the Master Plan had been enacted, hopefully in 2000, Thailand would be in a better position tonegotiate greater market access in telecommunications services.  Working permits could be extended
very easily.WT/TPR/M/63
Page 26
VI. CONCLUDING REMARKS BY THE CHAIRPERSON
139. We have had a most interesting and timely review of Thailand's trade and foreign investment
policies, which provided much insight into how Th ailand has grappled with the financial crisis that
erupted in 1997 and the numerous legislative and regulatory developments currently taking place.
This was made possible both by the comprehensive information about recent and ongoing reforms
provided by Ambassador Apiradi and her delegation, and by the high quality of the questions posed
and comments made by the discussant and Members participating in this TPRB.  The large number of
questions and comments reflect the widespread interest of Members in recent developments inThailand as well as the importance they attach to Thailand's role in the WTO.
140. Members were unanimous in congratulating Thailand on the fact that, notwithstanding the
severity of the crisis and the consequent recession, the Government had, by and large, resisted
protectionist pressures, instead taking steps to reinforce its already increasingly outward-oriented
trade and investment policies so as to foster economic recovery.  These steps include progressively
streamlining and liberalizing Thailand's trade regime.  In this regard, Members took note of Thailand's
commitment to implement on time all WTO agreements, notably Customs Valuation, TRIPS andTRIMs, and expressed their confidence that the recent streamlining and computerization of customs
procedures would facilitate trade.  Moreover, Members recognized that Thai standards and regulations
were now systematically based on international norms.  Members also looked forward to receiving the
new Anti-dumping and Countervailing Act.
141. On the other hand, most Members expressed concern over some recent increases in tariffs,
which in several cases (including some ITA products) exceeded WTO bindings.  Furthermore, they
pointed out that tariffs were high by regional standards;  agri-food products, fish, clothing and motor
vehicles were the subject of most tariff peaks, frequently ranging to 60% or 80%.  Members noted that
tariffs had recently been reduced and a surcharge eliminated in the recognition that this would assist
private investment and economic expansion.  They called upon Thailand to reduce tariffs further,especially to bring all applied tariff rates into  line with WTO commitments, and to publish a single
consolidated tariff.
142. At the same time, Members recognized the large number of legislative changes already
implemented to improve transparency and accountability as well as to ensure adequate supervision of
the financial system, although they did note the persistently high level of non-performing loans.Members also expressed much interest in the new competition and foreign investment laws, and noted
in particular the further opening of several sectors, notably in manufacturing and banking, to foreign
investment notwithstanding the recession. The mo st recent economic growth indicators show that
these reforms are already bearing fruit, and Members encouraged Thailand not to relax this process,
now that the economy was recovering.
143. Members also asked for details in a number of more specific areas including:
- import price "uplifts", and whether they would be eliminated upon adoption of the
Customs Valuation Agreement;
- import licensing procedures, which remained opaque and appeared to constitute
quantitative restrictions, particularly for certain new and most used motor vehicles,
and for imports of skim milk powder;
- food and drug import regulations, which continued to constitute a barrier to imports
because of lengthy pre-market approval and a system of exclusive import permits;WT/TPR/M/63
Page 27
- Thailand's plans regarding the recently enhanced preferential export financing
schemes;
- IPRs, where there still remained substantial room for improvement in enforcement,
notably to combat counterfeiting;
- government procurement, with Members encouraging Thailand to become an
observer in the Government Procurement Committee, to provide its new regulations
on public purchases and to remove current buy-Thai provisions;
- state-owned enterprises slated for privatization;
- the prospects for binding a larger number of services for mode 1 (cross-border
supply) in Thailand's GATS schedule;  and
- calls to allow greater foreign equity participation in insurance and
telecommunications services.
144. Members appreciated the frank and comprehensive responses provided by the
Thai delegation, noting in particular the assurance that ongoing reforms were designed to reduce
barriers to foreign participation in the Thai economy, based on the belief that an open trade andinvestment regime contributed to sustainable deve lopment;  the reform programme, which would not
be relaxed, should add further transparency, public accountability and predictability to the business
environment.
145. In conclusion, despite being one of the countries hardest hit by the Asian crisis, Thailand's
prompt and faithful implementation of its WTO obligations together with the additional reforms it isundertaking to reinforce its outward-oriented trade and investment strategy, all demonstrate Thailand's
faith, as a developing country, in the multilateral trading system and the Trade Policy Review process.WT/TPR/M/63
Page 29
ANNEX
ADVANCE WRITTEN QUESTIONS AND RESPONSES BY
THE DELEGATION OF THAILAND
AUSTRALIAGeneral
Thailand has achieved much in a relatively shor t time following the East Asian financial crisis, with
growth forecast of around 4% in 1999.  As Thailand's recovery is in progress, it is important that the
Royal Thai Government remain committed to further economic and financial reforms to ensure
sustainable economic growth.  How does Thailand intend to progress the implementation of ongoing
structural reform to improve co mpetitiveness and good governance, and to continue with further
restructuring, particularly in the areas of privatization, and market opening?
In order to address the issue of competitiveness and good governance the Thai Government
has put in place a number of programmes. In particular in the area of accounting and auditing, there is
now a requirement that all listed companies need  to have an internal auditor and accompanying
programmes to provide necessary training to prospe ctive internal auditors.  Regarding privatization
and market opening, there is a Master Plan for the Privatization of State Enterprises andthe Government is in the process of accelerating the privatization of state-owned enterprises such as
Thai Airways International and Telephone Authority of Thailand.
Tariffs
While the removal of the 10% import duty surcharg e and the recent announcement of tariff cuts are
welcome, Australia remains concerned that Thailand's rate of simple average tariff is the highest in
ASEAN – around 15-16% (Australia's is less than 5%).  It is Australia's experience that lower tariffs
promote greater competition and improve productivity.  What is Thailand's long-term approach to
tariff reform?
When can we expect Thailand to announce further tariff cuts, particularly on products which
Thailand is not producing or producing in small quantity, including on cheese, confectionery,
automotive components, specific types of fruit and wine?
We understand there is a plan to reclassify CKD (completely knocked down) car kits (currently
attracting a 33% tariff rate) that could result in these kits attracting CBU (completely built up) 80%
tariff rate.  Could the Thai delegate advise if Thailand is proceeding with such a plan, and if this is an
attempt to use tariff classification as a means to increase tariff rates?
While we understand the temptation for Thailand to increase duties on some luxury imported items,
we query the proposed inclusion of such common grocery items as cheese, confectionery and wineunder this category.  Preliminary studies have shown that high rates of duty on these items have had a
negative impact on Thailand's foreign exchange earning from foreign tourists.  Will Thailand
consider either to separate these items from its "luxury" tariff category or not to increase duties on
these items further?
Thailand’s long term approach to tariff reform  is to streamline the country’s tariff structure.
Substantial reforms have taken place and since 1990 the country’s tariff rates have been reduced from
39 tariff rates categories to only six categories in 1997.  Further restructuring is underway with theWT/TPR/M/63
Page 30
aim of reducing the tariff structure to three rates categories, and is expected to be completed by early
next year.
For the time being, we do not have any plans to announce tariff cuts on cheese, confectionery,
automotive components, fruits and wine.
Under existing law, CKD and CBU fall under the same tariff category which is subject to
80% duty.  However, in the past with local content requirement in use, a 20% import duty on CKDwas collected.  The Government’s plan is not to reclassify CKD but to clarify conditions under which
imports fall under CKD category.  The increase from 20% to 33% is a means to offset the abolishment
of the local content requirement, and not an attemp t to use tariff classification as a means to increase
tariff rates.
We classify items such as cheese, confectionery and wine as luxury items.  These products are
not consumed by the general public, since more than 60% of our population are in subsistencefarming and their basic need for food is rice.  Hence, at the time being we do not have a plan to
separate these items from the luxury tariff category or to reduce their import duties.
Government Regulations
Like Thailand, Australia has stringent food labelling requirements to protect consumers.  However,
the current Thai pre-market approval process for food labels is protracted and has effectively
hindered trade in perishable food.  Will Thailand be simplifying these requirements and making them
more transparent?
This year, the biannual tranches for skim milk powder (SMP) quota were delayed because of late
issue of import licences.  Australia has proposed to Thailand's Ministry of Commerce that a single
annual allocation for SMP quota, announced in November every year, would introduce predictability
and transparency for foreign exporters and Thai import ers.  Issuing import licences well in advance
of the quota periods would also allow normal commercial procedures to be conducted.  Will Thailandbe moving to this system to provide quality access to quota allocations of SMP?
Will Thailand further relax laws regulating foreign in vestment, particularly in the insurance sector to
allow up to 49% foreign equity?
The objective of Thailand’s food labelling requirements is to protect consumers’ health and
safety.  Our labelling requirements are transparent and in line with SPS and TBT agreements.
However, we take note of Australia’s concern.
We would like to reconfirm that the system of tariff quotas established by the
Thai Government under the WTO Agreement on Agriculture is transparent and does not appear to
constitute a barrier to trade.  In addition, we do not receive any negative feedback from local
importers on the system.  With regards to imports of SMP, the quota allocation is on a pro-rata basisaccording to the demand of each different users including the newcomers.  Import licenses was
divided into two periods in order to enable the ma rkets to absorb the flow of imports and prevent
prices speculations.  The Australian Delegation should also take note that the size of SMP allocation
is greater than the qualities committed.
For the time being, Thailand does not plan to move to the quota allocation of SMP as
suggested by Australia.  However, we are looking forward to discussing this issue under agricultural
mandated negotiations.WT/TPR/M/63
Page 31
The Foreign Business Act, the new legislation to replace the existing Alien Business Law, has
already been published in the Royal Gazette.  It will therefore become effective from 4 March 2000
onwards.  Main features of the new legislation are as follows:
(i)  more market access for foreign investment
The new legislation will offer substantially increased market access to foreign investors.  The
scope of restricted businesses will significantly reduce under the new legislation.  Business activitiesthat will be no longer subject to any foreign equity restrictions include retailing and wholesaling with
minimum capital of at least approximately US$2.5 million;  brokerage in security trading or services
related to trading in agricultural commodity fu tures and financial instruments;  large-scale
construction of some public utilities and communications; manufacture of pharmaceutical products,
silk yarn, garments and footwear, and beverages.  For most restricted business activities, companies
approved by the Board of Investment or the Indus trial Estate Authority of Thailand will be waived
from the foreign equity restriction.  To encourage foreign investment, the Board of Investmentmaintains liberal policies with no equity restrictions in manufacturing.
(ii)  Narrower scope of application
The number of foreign shareholders in a juristic person will not be a consideration for
determining whether that juristic person is an “alien”, resulting in a narrower scope of application of
the new legislation.
(iii)  No limit in ownership in other businesses
The Alien Business Law of 1972 stipulates that an alien granted a license to operate in
Thailand shall not hold more than one-third of the total shares in other businesses unless permission is
granted by the Department of Commercial Regi stration.  The new legislation contains no such
limitation.
(iv)  Built-in mechanism for further liberalization
The Foreign Business Act stipulates that the lists of restricted businesses shall be revised at
least once a year.
As regards the insurance sector, Thailand has continually implemented the principle of
progressive liberalization.  The first step has been completed with the establishment of 25 additional
insurance companies.  The further relaxation to allow higher foreign equity participation is under way
as part of the second step of liberalization.
NEW ZEALAND
Tariffs on Agricultural Products:   the Secretariat Report notes (Chapter IV, para. 10) that the
average applied MFN tariff of agriculture (defined by the WTO to include processed food products)
has scarcely changed since 1995, and that three quarters of tariffs in excess of 50% are in
agriculture.
Do the Thai authorities have any plans to reduce agricultural tariffs, particularly those on products
such as cheese, which currently exceed 50%?WT/TPR/M/63
Page 32
For the time being, Thailand does not have any plan to reduce agricultural tariffs on particular
products.  However, Thailand is prepared to discuss in the upcoming Agriculture-mandated
negotiations.
Tariff Quota Administration:   the Secretariat Report notes (Chapter IV, para. 11) that the system of
tariff quotas established by the Thai Government under the WTO Agreement on Agriculture does not
appear to constitute a significant barrier to trade.   With respect to impo rts of SNP, however, the
experience of New Zealand and some other dairy exporters is that problems arise in the
administration of the quota, and in particular in the timing of issuing licences, which have the effectof disrupting the market and limiting the quantity of product actually imported.
Could the Thai authorities confirm that they are aw are of the difficulties created for exporters by the
present administration of the quota system?  Would th ey be prepared to review the system with a view
to obviating those difficulties?
We would like to reconfirm that the system of tariff quotas established by the Thai
Government under the WTO Agreement on Agriculture is transparent and does not appear to
constitute a barrier to trade.  In addition, we do not receive any negative feed-back from localimporters on the system.  With regard to imports of SMP, the allocation of the quota is on a pro-rata
basis according to the demand of each different users including the new comers.  Import licenses was
divided into two periods in order to enable the mark ets to absorb the flow of imports and prevent price
speculations.  The New Zealand delegation should also take note that the size of the SMP allocation is
greater than the quantities committed.
Foreign Investment:   the Secretariat Report notes (Chapter II, para. 47) that a new legislative
framework for foreign investment has been under discussion in parliament for seven years, but has yet
to obtain approval.  In the interim, changes in re gulations relating to foreign investment (and other
matters) have been made largely by ministerial announcement.  This detracts from the stability and
predictability of the trade and investment regime.  The Government is reviewing relevant legislationto ensure that it accurately reflects the openness of the trading system and provides a clear and stable
framework for business decisions.
Could the Thai authorities provide further details of the measures they are currently taking to
improve the stability and predictability of their trade and investment regime?
Please refer to the answer provided to Japan on Investment.
Export Finance:   the Secretariat Report notes (Chapter III, para. 65) that Thailand's present
recovery strategy is based partly on exports, and that the Thai authorities, concerned that access to
export finance may be curtailed by the financial crisis, have introduced a range of export financing
schemes which may introduce distortions and prove expensive in the long term.
Could the Thai authorities indicate how long they believe such schemes will be necessary, and
whether they have a timetable for removing them?
The Export-Import Bank of Thailand has maintained the same amount of loan earmarked for
the packing credit scheme since the entry into fo rce of the SCM Agreement, but the amount of loan
was raised during the crisis with a view to easing the severe liquidity problem in the financial market.
However, the amount of loan currently stands at the level lower than the pre-crisis level, and will be
further reduced to be in line with the SCM Agreem ent.  As regards other schemes maintained by the
EXIM Bank, they are provided at market conditions.WT/TPR/M/63
Page 33
Alien Business Law:   the Alien Business Law defines juridical persons as (i) those juridical persons
with 50% or more of their capital owned by non-Tha is. or (ii) those where at least one half of the
number of shareholders, partners or members are foreign, notwithstanding the amount of capitalinvested by aliens.  The Secretariat Report notes (Chapter II, para. 50) that this definition would
appear to be subject to a number of legal loopho les, and is reportedly to be amended in the
forthcoming Foreign Business Act, so that the restrictions would apply to equity ownership rather
than to the number of foreign shareholders.
Could the Thai authorities confirm that this is the intent of the Foreign Business Act, and indicate the
current status of the act and when it is likely to enter into force?
Yes, such is the intent of Foreign Business Act to amend the previous legal loopholes existed
under the Alien Business Law.  The new Foreign Business Act has already been promulgated since
4 December 1999 and will enter into force after 90 days from the promulgation date or on
4 March 2000.
Customs Valuation Procedures:   the Secretariat Report notes (Chapter III, para. 42) that the fact
that Customs continues to have authority to specify the import price on which customs duty is levied is
a source of continuing uncertainty.  Although the Thai authorities have expressed confidence that
legislation to implement the WTO Agreement on Customs Valuation will enter into force in
January 2000, the legislation has yet to be passed by Parliament.
Are the Thai authorities able to confirm that legi slation to implement the WTO Agreement on Customs
Valuation will complete its passage through parliament in time to be implemented in January 2000?
Thailand is committed to implement the provisions of the Customs Valuation Agreement by
January 2000.
HONG KONG, CHINA
Tariffs  (WT/TPR/G/63, p. 9, para. 28)
We note that the Tariff Restructuring Committee is cu rrently studying Thailand's tariff rates, structure
and classification.  We would like to know the details of the study when it is available.
The objective of Thailand’s tariff restructure is to develop and promote private investment,
and enhance the efficiency and competitiveness of exporters.  The Committee has finished the step of
reclassifying the product line, which comprises of raw materials, intermediate goods and finished
products.  The Committee has also appointed a working group to consult with the private sectors.  Theinformation from the working group will help the Committee in its decision making process.  As a
result, tariffs on raw materials and intermediate goods will be lowered.  The committee has expected
to complete the process and announce the new tariff structure early next year.
Customs Valuation  (WT/TPR/G/63, p. 11, para. 39;  WT/TPR/S/63, pp. 45-46, para. 43)
We are glad to note that the Thai Customs Department is in the process of introducing necessary
amendments to the Customs Act regarding transa ction value to implement the WTO's Customs
Valuation Agreement, and that th e draft amendment bill has been approved by the Cabinet and is
currently awaiting parliament's consideration.  As obligations under the Customs Valuation
Agreement shall become effective for most LDCs including Thailand by 1 January 2000, we would
like to know the status of the pa ssage of the draft amendment bill.WT/TPR/M/63
Page 34
The draft amendment of Customs Valuation Act has already been approved by the Senate
Committee on 15 December 1999.  Thailand is committed to implementing the provision of this
Agreement by January 2000.
Standard and Other Technical Requirements  (WT/TPR/G/63, p. 11, para. 41;  WT/TPR/S/63,
p. 68, para. 124)
It is reported that 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).  In 1998, 412 out of a total of 1,700 TISs were based on international standards.
Thai authorities' efforts to harmonize its stan dards with international standards are commendable,
Would the Thai Government share with us its plan, if any, to harmonize the remaining TISs with
international standards?
Please refer to the answer given to the EU.
Technical Barriers to Trade  (WT/TPR/S/63, p. 27, para. 31)
We note that the ASEAN Framework Agreement on Mutual Recognition Agreements (MRAs) signed in
1998 stipulates the general principles for developing sectoral MRAs amongst ASEAN member states,and for eliminating technical barriers to trade with in ASEAN.  We would like to know if any sectoral
MRAs have been concluded since the establishment of the Framework Agreement.  If so, we are
interested to know whether such MRAs are consistent with provisions under Article 6.3 of the
TBT Agreement.
Since 1998, no sectoral MRAs have been concluded thus far.  At present, ASEAN is in the
process of conducting feasibility studies for MRAs on cosmetic products, drugs and medical products,
and electrical equipment.
Banking and Other Financial Services  (WT/TPR/S/63, p. 105, para. 125)
It is noted that the number of foreign personnel allowed per foreign bank office is rather limited.
Does the Thai authorities have any plans to relax the restrictions in this regard?
Thailand’s policy on foreign personnel allowed per foreign bank office is based on the
principle that foreign banks are expected to transfer technology and technical know-how to local staff.
Moreover, with local managers, foreign banks are expected to be willing to do business with local
enterprises, not concentrating only on conglomerates originated from their home countries.  However,
as the economy expanded and BIBFs (Bangkok International Banking Facilities) and PIBFs(Provincial International Banking Facilities) have been established, the number of expatriates has
been increased.  The quotas for foreign expatriates working for foreign banks have never been
reduced despite massive layoffs in the financial sector as a result of the crisis.
Telecommunication Services  (WT/TPR/S/63, p. 107, para. 135)
Although foreign telecommunications suppliers are not allowed to establish companies in Thailand,
they may own up to 40% of the equity of registered Thai companies providing such services.  It is
mentioned that current regulations would appear to be more liberal than those in Thailand's WTO
commitments.  Does the Thai Government have any plan to bind its existing regime in order to have it
fully reflected in its WTO commitments?WT/TPR/M/63
Page 35
Thailand’s WTO commitments were made under the legislative conditions.  Foreign equity
participation in basic telecommunications services can be up to 20%, while all committed value-added
services can be up to 40%.  The RTG at this moment has no plan to bind its existing regime.
(WT/TPR/S/63, pp. 108-109, para. 139)
It is stated that no commitments were made regarding the supply of a number of services, including
electronic mail, voice mail, electronic data interchange or enhanced facsimile.  Would the Thai
authorities share with us if it has any plans to liberalize its value-added telecommunications services
like electronic mail, voice mail, electronic data interchange and enhanced facsimile service?
Thailand has a policy to promote liberalization as stated in the Master Plan on
Telecommunications Development.
(WT/TPR/S/63, pp. 109-110, paras. 144-145)
Under the Thai Government Telecommunications Development Master Plan, the Telephone
Organisation of Thailand (TOT) and the Communications Authority of Thailand (CAT) will undergo
"corporatization" and privatization programmes.  Is foreign investment allowed to participate in such
programmes?
According to the Master Plan on Telecommunications Development, CAT and TOT will be
corporatized to be the TOT Company Limited and the CAT Company Limited.  (Postal services will
be separated from telecommunications.)
The CAT Co. Ltd. and the TOT Co. Ltd will be privatized and the CAT Co. Ltd. and the TOT
Co. Ltd shall seek their strategic partners through private placement.  These strategic partners are
allowed to hold not more than 22% of the shares of each company.  Interested parties are invited to
apply under the TOR for the international bidding with transparent covenants and fairness.  Each
company shall allocate no less than 3% of its shares to  its staff.  As a result, the Ministry of Finance
will hold less than 50% of the shares in each compan y in order to expedite the privatization process.
Legal Services  (WT/TPR/S/63, pp. 112-113, para. 155)
It is reported by the Secretariat that "According to industry opinion, the number of persons admitted
to Thailand for the purpose of practising law is limited, which in turn may hamper the supply of legal
services by foreigners".  We would like to know the Thai Government's views on the report.
Legal services are professions that affect social and legal practices.  Not only written laws and
evidences but also traditional and cultural values have to be taken into account.  Therefore, legal
services are part of the annex attached to the Ro yal Decree Prescribing Works Relating to Occupation
and Profession in which an Alien is prohibited to engage.  However, each country has limitations in
granting permission to foreigners to practice legal services.WT/TPR/M/63
Page 36
EUROPEAN UNION
Government Report (WT/TPR/G/63)
Para. 32 (Trade Policy):   Export system:  can you indicate specifically which products are subject to
the requirement of prior approval and for which reason respectively?
See Table III.7 p. 51 of the Secretariat Report.
Para. 37:   when exactly does the Thai Government intend to ratify the Kyoto Convention?
Thailand was not a signatory to the Kyoto Convention.  Although, the new version of the
Convention has been approved by Members, the Prot ocol of Amendment must be endorsed by at least
40 Members before it goes into force.  Thailand is currently studying the revised Kyoto Convention.
Para. 42:   could Thailand give some examples of where international standards have been found to be
inappropriate for Thailand?
Instances where international standards have been found in such manner for Thailand can be
summarized in two aspects as follows:  (i) technological infrastructure:  certain standards on testing
methods cannot be applied as the equipment used in testing is not available in the country
(ii) atmosphere for conditioning and testing:  test ing temperature specified in international standards is
usually 20ºC while that suitable for tropical country like Thailand is 27ºC.
Para. 47  (Intellectual Property):   which measures is the Thai Government planning to undertake to
reduce the large amount of IP-infringements  (732 reported from January to June 1999)?
The Thai Government has taken all possible measures to step up its enforcement effort
against IPR infringement.  Apart from establishing several enforcement agencies to specifically dealwith this matter (e.g. the Economic Crime Investigation Division of the Royal Thai Police;  the
Coordinating Center for the Suppression of IPR Violat ion of the Department of Intellectual Property;
and the IP and International Trade Court), the RTG is drafting and amending related laws and
regulations to effectively cope with the importation of machines and equipment used in producing
infringing goods.  It is also drafting a new law to control the production of optical discs.  Furthermore,it has set up special police units to daily monitor infringing activities at major shopping centres in
Bangkok and, special police task forces to combat infringing activities in other provinces.  The
Thai Government focuses its attention on the suppression activities at all levels, i.e. manufacturers,
distributors as well as retailers.
Para. 49 (Intellectual Property):   can you provide a time schedule for Thailand’s accession to the
Paris Convention and the patent Co-operation Treaty?
Regarding Thailand’s accession to the Paris Convention and the Patent Cooperation Treaty,
the Ministry of Commerce is in the process of consulting with all agencies concerned and is planning
to accede to the Convention and Treaty in question as soon as possible.
Para. 50 (Services):   could Thailand consider reducing the restrictions on foreign ownership in Joint
Ventures, which is now limited to 49%?
Under the new Foreign Business Act which has already been announced in the Royal Gazette
and will enter into force on 4 March 2000, the new legislation will offer substantially increased
market access to foreign investors.  The Government of Thailand might reduce restrictions on foreignWT/TPR/M/63
Page 37
ownership in joint venture to allow over 49% of foreign equity participation in numerous business
activities controlled under the Act.  Certain activities are subject, however, to the permission of
Minister of Commerce with the approval of Cabinet while certain activities are subject to thepermission of Director-General of the Department  of Commercial Registration with the consent of
Alien Business Committee.
Para. 52 (Services):   can Thailand provide a time schedule for the liberalization in the insurance
sector?
The Government of Thailand has introduced the draft insurance bill with a view to reducing
restrictions on foreign equity participation.  Since the passage of the bill is subject to the approval of
the National Assembly, it is not possible to provide a time schedule for the liberalization of the
insurance sector.
Para. 54 (Services):   in which way and to what extent can foreign companies participate in
telecommunication services before and after the year 2006?
Foreign companies can, in fact, participate in various telecommunication services, particularly
those value-added or enhanced telecom services even before the conclusion of the UR of MultilateralTrade Negotiations.  It is subject, however, to limitation on foreign equity participation which will not
exceed 40%.  As for those basic telecom services, from 2006 all foreigners will be allowed to engage
in public telephone, telegraph and facsimile servic es.  This is subject, however, to limitation on
foreign equity participation which will not exceed 20% and is also conditional upon the passage and
entry into force of the necessary telecom laws and regulations concerned, and certain other conditionsspecified in the Schedule of Specific Commitments of Thailand.
Para. 58:   could Thailand provide information on the current status of the new Foreign Business Act
which has been drafted to replace the Alien Business Law;  when will it come into effect and what
sectors will remain restricted with regard to foreign participation?
The new Foreign Business Act has already been promulgated since 4 December 1999 and will
enter into force after 90 days from the promulgation date or on 4 March 2000.  The new Act lists
business activities reserved for Thai nationals into three categories.  The first category comprises the
business activities closed to foreign nationals for specific reasons.  The second category is those
businesses involving national safety or security, those affecting arts and culture, traditional customs
and folk handicrafts, and those affecting natural resources and environment.  The third category isthose businesses which Thai-nationals are not yet ready to compete with foreign nationals.  Foreign
majority participation in those businesses under category two may be allowed by the approval of
Minister of Commerce with the approval of Cabinet.  While those under category three may be
allowed by the permission of the Director-General of Commercial Registration with the consent of
Alien Business Committee.
Para. 58:   could Thailand provide further information on (i) which activities exactly are reserved for
Thai nationals and (ii) for what reasons respectively?
Please also refer to answer given to Australia.
Paras. 60-66:   can Thailand provide closer information on the nature of the Investment Incentives, in
particular if they are in line with MFN and national treatment?
The nationality of companies applying for investment incentives is not a consideration in
determining the types and magnitude of tax incentives to be granted.  The same criteria are equallyWT/TPR/M/63
Page 38
applied to both Thai and foreign investors.  These criteria include such factors as locations of
investments.
Para. 79:   does Thailand remain on course to implement the provisions of the Customs Valuation
Agreement by January 2000?
Thailand is committed to implement the provisions of the Customs Valuation Agreement by
January 2000.
Para. 85:   the report mentions resistance by the private sector and domestic industries to liberalize
trade and investment;  can Thailand be more specific and give details of these particular sectors?
Privatization:   During the economic crisis, which began in 1997, Thailand was in the process
of undertaking a substantive liberalization and privatization programme involving various sectors of
the economy.  Privatization initiatives focused on sectors such as electricity supply,
telecommunications, port services and aviation.  All these sectors, as anticipated, were met with
opposition from both the employees as well as fr om members of the public at large, who were
sceptical of the effectiveness and benefit of the privatization plan.  Certain sectors, particularly the
electricity power services, saw major protests against privatization plans forcing the Government toconstantly delay any possible progress.  Attempts to sell shares of state enterprises to foreign interests
were also opposed by members of the public who favoured national ownership.  Nevertheless,
the Government is committed to continue with the privatization programme and hope to realize its
policy goal at the earliest time frame.
Tariff reforms:   Thailand has undertaken the first major tariff in 1997.  The second
restructuring was initiated again in 1998.  Products to be included under the restructuring plan were
carefully selected so as not to create instability among domestic industries and producers.  Once
again, as expected, certain private sector group s voiced their opposition against the Government’s
liberalization policy.  Sectors that were not in favour of tariff reduction included such products as
oil seed, chemical products, forestry and automotive products.  It was claimed that the protection ofthese products were vital for the survival of their domestic industries, and in some cases became
politically sensitive issues.  Thailand has nevertheless made ground in other sectors and has managed
to complete its restructuring plans, which comprise tariff reductions covering 639 tariff lines in 1999,
and is expected to announce tariff reductions on an additional 9000 tariff lines in the year 2000.
Secretariat Report
Summary Observations
Para. 11 refers to complex licensing legislation, which remains unnotified to the WTO;  could reasons
be provided for the lack of notification?
A number of import licensing measures maintained by Thailand have already been notified to
the WTO under the Committee on Agriculture.  Given the recent restructuring and reform policy inthis area, Thailand is currently undertaking steps to  notify the remaining measures to the Committee
on Import Licensing by next year (2000).
Para. 18 refers to insufficient cooperation from rights holders in conducting raids or taking cases to
the courts;  we understand that the industry is very cooperative especially the IFPI, could Thailand
expand on this lack of cooperation and the reasons behind it?WT/TPR/M/63
Page 39
A few right holders, e.g. the IFPI, BSA and the MPA have expressed its willingness in the
suppression activities.  They have been providing active cooperation with the authorities.  However, a
number of right holders have not been consistent in contacting enforcement agencies in order toidentity seized infringing goods which is the main  reason for the release of unidentified IPR infringing
products.  The notable example is the right holders of entertainment software.  Some agents of the
right holders claimed that they were not given authority to act on behalf of the right holders and
therefore were not able to identify the infrin ging materials or file the case to the court.
Chapter II(2)Does a practice exist for the scrutiny of legislation on petroleum products entering the country so that
if it does not impinge upon multilateral commitments?
Thai legislations are open to public scrutiny, examination and review so as to ensure that its
original, underlying objectives are met.  Thailand’s multilateral commitments are fully taken into
account when these legislations are under the drafting process.
Para. 12:   reference is made to the ability of the Cabinet to increase tariffs to “the statutory rates
(which are frequently considerably higher than a pplied rates)”.  What are “statutory rates”?  Do
they differ from bound rates in the WTO tariff schedule of Thailand?  Does this mean that Cabinet has
the ability to increase tariffs at any point of time all the way up to WTO bound levels without any
legislative intervention?
Statutory rates are tariff rates which are legally established under the Thai law, the Customs
Tariff Decree B.E. 2530.  They do not always differ from the WTO bound rates.  In fact, a number ofWTO bound rates are the same as statutory rates.  The Decree empowers the Cabinet to make
adjustment to the tariff rates as deemed appropriate.  However, before such a decision can be made, a
careful policy formulation must be deliberated, endorsed and then put forward to the Cabinet by the
Committee on Customs Tariffs comprising various government agencies.  In another words, tariff
increase cannot be arbitrarily carried out by the mere discretion of the Cabinet, but must go through awell-formulated process.  However, should such tariff adjustment exceeds the WTO bound rates, the
rates shall only apply to non-WTO members only.
Chapter II(3)
Table II.I .  We note that there is no reference to Thailand having made an Article 15.2 notification
under the TBT Agreement?  Has such notification been made, if not what are the reasons for it?
We understand that there could be a typographical oversight in the mentioned Table.  The
notification was made and circulated  on 6 August 1997 as G/TBT/2/Add.38.
Chapter II(3)(i)
The Secretariat reports that "laws remain to be adopted or amended to conform with WTO
provisions".  Would the Thai Delegation confirm that required changes to these remaining lawswould be introduced within the timeframe provided by the WTO Agreement?
The current administration has undertaken all the necessary works required under its
executive power to ensure that legal reform pr ogramme, with the policy thrust towards greater
openness, competition and public accountability, is on schedule.  Except for the amendment of the
Patent Act which has entered into force since 27 September 1999 and the Copyright Act of 1994
which is already TRIPS-consistent, all IP laws have been drafted and approved at the administrativeWT/TPR/M/63
Page 40
level.  Though pending parliamentary approval, they are expected to be enacted within the required
time period.
Chapter II(4)(i)
Would the Thai Delegation inform if it is envisaged under the existing legislation to open in Thailand,
and during the year 2000, a majority participation of foreigners in hotels and travel agencies?
According to the existing Alien Business Law which will be terminated by 3 March 2000, a
majority foreign participation in hotels may be permitted if they are granted investment promotion bythe BOI.  However, majority foreign participation in travel agencies are not currently allowed.  From
4 March 2000 onward when the newly promulgated Foreign Business Act enters into force, the
Director-General of the Department of Commercial Registration may grant foreign nationals
permission to have majority participation in hotel business subject to the approval of the Alien
Business Committee, while majority foreign participation in travel agencies are still not allowed.
The EU would like to express that it considers the ABL as the best answer to the financial crisis.  Are
there more opening laws like this one to be expected?
There are similar laws in the pipeline at th is stage, for example, the reform bills on
telecommunications and insurance businesses.
Chapter III(1)
The Secretariat reports that "trade-related policy continues to rely to a large extent on regulations
and notifications formulated by the Cabinet, thus no t requiring legislative approval”.  If this has the
advantage of flexibility, on the other hand it could introduce an element of unpredictability in trade
policy implementation.  Would the Thai Delega tion explain how they intend to minimize this
unpredictability and on the other hand maximize the transparency of the trade policy implementation?
Can the RTG confirm that it will review its export incentives, such as fiscal incentives, credit,
guarantee and insurance activities to ensure consistency with its WTO obligations?
Over the past few years, Thailand has taken a lot of liberalization efforts, both unilaterally and
under international commitments.  These changes that have taken place are all directed towards more
liberalization.  These changes could not have been implemented in a timely manner if parliamentaryapproval had been required.  A certain degree of flexibility is needed to effectively respond to the
changing business environment.  The Thai Government  is of the view that the introduction of changes
that do not require legislative approval does not necessarily imply unpredictability, and confirms that
it will continue to pursue efforts consistent with liberalization.  The passage of the new
Foreign Business Act, which provides for greater market access for foreign investors, clearly indicatesthis commitment.  As regards transparency, the information on the changes already introduced is
available through a number of channels, including the internet.
The Secretariat reports that "the authorities have introduced or reinforced an array of export
financing schemes, at least one of which involves preferential terms".  The report says also that these
measures may introduce distortions and could prove expensive in the long run.  We would like to
obtain the Thai Delegation’s point of view on the Secretariat’s statement.
The Thai Government confirms that it will review its export incentives to ensure consistency
with its WTO obligations.  In particular, the BOI is in the process of revising its investment promotion
package which will not be contingent upon export performance.WT/TPR/M/63
Page 41
The Export-Import Bank of Thailand has maintained the same amount of loan earmarked for
the packing credit scheme since the entry into fo rce of the SCM Agreement, but the amount of loan
was raised during the crisis with a view to easing the severe liquidity problem in the financial market.However, the amount of loan currently stands at the level lower than the pre-crisis level, and will be
further reduced to be in line with the SCM Agreem ent.  As regards other schemes maintained by the
EXIM Bank, they are provided at market conditions.
Chapter III(2)(i)
Will the RTG consider binding more of its tariff lin es and bringing the bound rates into line with the
applied rates to increase tariff predictability for trading partners?
The Thai Government plans to consider bindin g more tariff lines and together prepared to
bring the bound rates into line with the applied rates in the context of the new round of negotiations.
In relation to Box III.1;  what is the timescale from the final decision to raise a tariff and its
implementation?
The duration from the final decision to raise a tariff and its implementation can vary from
case to case.
The Secretariat reports that "in mid-1999 it was necessary to consult five separate tariff publications
to ascertain the applicable customs duty".  The publication of a single and comprehensive tariff
containing MFN and preferential duties would, as al ready noted in Thailand’s 1995 review, greatly
enhance the transparency of the import regime.  Would the Thai Delegation confirm that an actionwould be undertaken in simplifying and rendering more transparent and comprehensive the tariff
duties?
The Secretariat reports that “it is likely that ad valorem rates are the rates actually levied and that
the ad valorem component provides a realistic estimate of actual tariff levels.  Nevertheless, therelatively widespread use of non-ad valorem tariffs reduces transparency and predictability, and may
be a source of economic distortion”.  Would the Thai Delegation specify what are the applied
procedures and what are the measures undertaken to avoid economic distortions?
The Secretariat reports that "under the 1997 Info rmation Technology Agreement, Thailand committed
itself to eliminate duties on an MFN basis in two equal annual rate reductions ending in
January 2000 on approximately three quarters of products covered by the ITA.  In early 1999, applied
rates exceeded WTO bound rates on approximately one quarter of IT items.  This share was reduced
following the package of autonomous tariff reductio ns on 10 August 1999 to a few items".  Following
Verbal Note by the Commission in September 1999, Thailand has modified its official tariffs to therates foreseen by the Thai ITA schedule.  While we should thank Thailand for prompt action that has
been taken, we would highlight that the new rates are applied only as of 1 January 2000 and therefore
one year behind schedule.
Would the Thai Delegation inform on the steps that the RTG intends to undertake in lifting some of
the existing tariff increases, introduced at the beginning of the crisis on certain goods considered as
luxurious, and in particular on wines?
Can the RTG specify when it intends to reduce the existing tariffs on imported products for buildings,
such as ceramic tiles and marble granite?WT/TPR/M/63
Page 42
Thailand takes note of the concerns regarding the current system, i.e. maintaining five
separate tariff publications, and shall do its utmost to seek improvement in order to facilitate traders
and to increase transparency in the tariff classification system in the future.  However, it is worthmentioning also that a substantial number of everyday users, e.g. shipping agents, importers, etc.
found the current five tariff publications to be of convenient for their daily usage, i.e. being less bulky
and each volume is designed to provide specific information for which they frequently seek.
There are only 84 items which are non- ad-valorem .  The rule of thumb in applying is
whichever rate is higher between the two, i.e. specific vs ad valorem , that rate will be applied,
however not beyond the WTO bound rate.
Thailand is on track to eliminate duties on 153 ITA items by January 2000 and to eliminate
duties on the remaining 37 items by year 2005 in accordance with its ITA schedule.
The reduction of tariff in luxury good items as well as wine may be possible under the
ongoing tariff reform plan.
The current tariffs on building products, such as ceramic tiles and marble granite, are subject
to the bound WTO commitments.
Chapter III(2)(ii)(b)
Can the RTG examine and prevent the risk of conflict  on the market value notified by the importer and
the Customs Valuation Unit?
Could the RTG provide a read-out of its readiness  to adopt the transaction value import valuation
method in place of the temporary export value method by 1 January 2000?  Does that mean that the
practice of taking the highest price as the basis on which to levy duty will then cease?
Will maximum import prices be dropped once the "transaction value" is adopted?  If not, why not to
adopt a minimum import price?  And how will any conflicts between them be resolved?
Once the legislation of Customs Valuation is enacted, the risk of conflict on the market value
notified by the importer and the Customs Valuation Unit will be eliminated.
The practice of taking the highest price as the basis on which to levy duty will cease once the
transaction value method is adopted.
It is certain that the maximum import prices will be dropped once the transaction value is
adopted upon the revised Customs Valuation Legislation, which has been drafted in conformity with
the provisions of the WTO Agreement, is enacted.
Chapter III(2)(iii)
When joining the WTO in 1995, Thailand had sought infant industry protection products as granite
and marble.  This protection is based on discretionary import licensing established since 1991 and
extended a year later.  This licensing system operates as a de facto import prohibition.  The
European Union has highlighted the problem of imports of marble and granite since Thailand joined
the WTO in 1995.  However, so far, all bilateral contacts have not produced results and the
Thai authorities still apply non-automatic licensing for the products in question.  On the occasion of
the most recent EU-Thai Senior Officials Meeting, Thailand stated that the Government did not
currently envisage a change of the legal situation.  The EU would like to request Thailand toWT/TPR/M/63
Page 43
withdraw its legislation on non-automatic licensing.  (The case is included in the WTO pipeline of the
European Commission's Barriers Removal Programme.)
Thailand maintains import restrictions on imports of used cars, used buses, motorcycles and used
engines on public health grounds.  Due to the fact that licenses are available only to the public
authorities, the restrictions is effectively an import ban for the private sector.  It is prima vista not
obvious why certain goods are considered as problematic for public health for the use by private
operators, but considered acceptable for public use.  Moreover, the arbitrary distribution of importlicenses gives reason for serious concerns. EU exports of the categories of used
cars/buses/motorcycles and engines were divided by 14 from the 1995 and 1996 level to reach a level
of almost zero in 1998.  The measur e in question should be urgently modified in order to allow market
access for products that are compatible with European and international standards public health
considerations should be addressed by a non-discriminatory to justify the measure.  (The case is
included in the WTO pipeline of the European Commission's Barriers Removal Programme.)
The EU is of the view that Thailand’s imposition of an import ban on six wheel buses by invoking
GATT’s safeguard clause may not be in line with its WTO obligations.  Could the Thai Delegation
comment on this?
Thailand should withdraw its legislation on non-auto matic licensing concerning import of marble and
granite.  Is this to be foreseen for the closer future?
Import licensing is still required for 56 types of products.  Will a relaxing of these requirements be
considered within the next year?
The FDA-registration requirement has an equivalent effect to non-tariff import restrictions and the
decision criteria are not very transparent.  Every new product has to go through its own registration
process, which takes between a few months and one year.  Are there improvement to be foreseen in
this respect in the close future?
Thailand is in the process of reviewing the status of this matter.Thailand considers that the current measure is in compliance with the WTO provisions.
Given the current restructuring and reform policy in this area, Thailand is undertaking steps to
undertake serious consideration and review on this matter.
Chapter III(2)(v)(c)
Despite some move towards liberalization, procurement in Thailand seems to be subject to high levels
of protection.  What proportion of contracts typically have three or more bidders, and what
safeguards are in place to prevent bogus bids being submitted by domestic firms to exclude foreign
competition? Finally, what is the approximate size of the Government procurement market in
Thailand?
Will Thailand soon be ready to sign the GPA?In Government Procurement Thai products benefi t from a favourable treatment (they receive 10%
higher prices if they meet certain standards and 3% even if they don’t).  Is Thailand considering a
possible change of this practice?WT/TPR/M/63
Page 44
The EC believes that Thailand follows an offset policy.  Could Thailand provide us with detailed
information on this policy?
The Anti-collusion Law, to deal with the mentioned problem, has been announced on
13 December 1999, now awaiting to be published in the Royal Gazette.  The Counter Corruption
Commission is also the authority empowered to oversee this matter.  There is no statistics readily
available on the approximate size of the Government procurement market in Thailand.
At this moment, Thailand has no plan to accede to the GPA.
There is no plan for such change for the time being.Thailand’s current countertrade policy, approved by the Cabinet on 6 June 1995, is a
supplementary measure implemented to promote Thai exports and to mitigate the trade imbalance
problems.  The procedure is straightforward and transparent.  Any procurement made by the
Government agencies and state enterprises for items of import value over B 5 million are subject to
countertrade in which all bidders are informed of countertrade terms and conditions in advance.
Chapter III(4)
Since the previous Trade Policy Review in 1995, excise taxes have been increased on most products,
and duties were newly imposed.  The Thai excise tax law has been in place for a long time, and
complies with the MFN and national treatment principles.  However, in 1998, the Thai excise
authorities decided in an arbitrary manner to change the classification of certain mineral waters in
the category of other non-alcoholic beverages.  As a result, these waters are now subject to a 20%
excise tax.  This measure has been introduced without any advance warning, but also with retroactiveeffect leading to a requested tax payment for the total quantity of imported mineral water for the last
ten years.  Due to the fact that numerous bilateral contacts have not so far paved the way for a
solution, the EU would like to ask Thai land to answer the following questions:
For which reasons does the Thai Excise Department not apply the definition of mineral waters as laid
down in the Codex Alimentarius and therefore refuses to recognize certain mineral waters as a
natural mineral water?
Does Thailand effectively collect excises on domestic waters that fall under the same definition of
mineral waters?  Is this measure based on the same legal basis and is the same ad valorem rateapplied?  Is the measure applied with the same retroactive effect to local waters as for imported
waters?
Table III.9 shows the ad valorem and specific excise tax rates for various products.  We welcome the
fact that brandy and whisky are taxed at the same specific rate of B 150/litre of pure alcohol, as this iscompliant with GATT Article III.  However, we note that for ad valorem whisky is taxed at 35%
compared to brandy at 25%.  What plans does Thailand have to bring this anomaly into line with
GATT rules by reducing the rate on whisky to 25% ?
The definition of mineral water in the Codex Alimentarius are not applicable to the Excise
Tax Act B.E. 2527 (1984) and Excise Tariff Act B.E. 2527 because they serve different objectives
and purposes than that of collection of excise taxes.  The definitions of mineral water in the Codex
Alimentarius are simply non-mandatory international standards which a country should follow if these
definitions fit in the context of is relevant excise tax laws.  But this is not the case for Thailand.WT/TPR/M/63
Page 45
The Excise Department had properly notified both the domestic and imported water producers
of the same ad valorem  tax rate in accordance with the Excise Tax Act B.E. 2527.  Apparently, some
domestic producers failed to comply with the regulation.  Consequently, the Excise Department hastaken legal actions against these producers in order to bring them into compliance with the regulation.
Excise Department collects excise tax on both domestic and imported  producers of whisky
and brandy at the same ad valorem  and specific rates.  Thailand has fulfilled its national treatment
obligations according to the GATT Article III.
Chapter III(4)(iii)
Foreign companies are finding it extremely diffic ult to make headway against counterfeiting products.
What is the RTG doing to ensure a healthier Intellectual Property environment?
Para. 120 of WT/TPR/S/63 states that Thailand has am ended its legislation in order to implement the
WTO Agreement on TRIPS.  In this context, could the Thai authorities clarify how Article 50 of the
TRIPS Agreement has been implemented into Thai law to allow for provisional measures to enforceintellectual property rights?
Following the discussion in the latest meeting of the Tripartite Working Group on 5 November 1999,
in which the Thai side (Department of Intellectual Property of the Ministry of Commerce) stated the
intention to introduce an Optical Media Control Regulation to reinforce the fight against piracy ofsound recordings, could Thailand give an update on the current state of such regulation?  What is the
time-frame for its drafting, approval and enforcement?
Could Thailand provide details on the latest initiatives concerning the fight against piracy and
enforcement of copyright laws, such as the constitution of an anti-piracy fund?
Apart from enforcement activities, the RTG is promoting public awareness campaign to
create better understanding on the importance of IPR protection.  Moreover, it is doing its best to
closely cooperate with the right holders in the combat against piracy, e.g. using all possible means to
inform the right owners to identify the seized infr inging goods.  It has been using other laws apart
from the intellectual property laws to enhance enforcement of IPRs.  It is also encouraging the rightholders to make use of all the available legal remedies, civil and criminal, to fight against IPR
infringement.
In 1997, the Intellectual Property and International Trade Court issued its Rules for IP and
International Trade cases.  These Rules enable the ri ght holder to file for all the provisional measures
in line with the TRIPS requirements prior to instituting an action.  The Rule also prescribes thepetition or motion for a court order directing the evidence to be taken at once.
A working group chaired by the Director General of the Department of IP and International
Trade Litigation, Office of Attorney General, has been established to draft a bill on CD production
control.  The law is in the drafting process and, when completed, will have to be submitted for
approval by the Cabinet, and the Parliament.  The drafting is expected to be completed within eight
weeks.  It is likely that the law will be in force within 2000.
The Thai Government is in the process of setting up enforcement funds in the approximate
amount of B 40 million per year for a period of three years.  Half of the amount (about US$500,000)
is expected to be supported by the right holders.WT/TPR/M/63
Page 46
Chapter III(4)(iv)(a)
We welcome the 1997 Thai decision to base new standards on international standards (para. 124).
Are there any plans to review existing standards, e.g. pre-1997, and bring them into conformity with
international standards too?
It is a normal practice for any national standards body that its published standards are subject
to periodic review.  Thai Industrial Standards are also normally revised every three to five years.
Therefore, the Thai Industrial Standards (TISs) which are currently in use, but are not yet harmonizedwith international standards will be revised  and according to this new policy, will be based on
international standards, except when internationa l standards do not exist or when there is certain
necessity.  However, Thailand had duly notified all of its standard-related TBT measures to the
respective Committee which was subject to comments from WTO Members.  Thailand believes that
its application of national standards is consistent with the WTO provisions.
Miscellaneous
Buy Thai campaign:  can Thailand ensure that no such campaign will be launched again?
The Buy Thai Campaign was initiated under the administration of Prime Minister Chuan
Leekpai as a contingency measure to help alleviate the country’s economic hardship during the
financial crisis which occurred in 1997.  An ad-hoc committee was set up with a primary objective to
promote and raise public awareness about the need for every Thai citizen to collectively help solve
national problems at that time.  Financial assistance to help with the campaign came mostly from thelocal private sector.  Since then, the Buy Thai Campaign had seen most of its activities virtually
ceased to be effective.
Chapter IV(8)(ii)
The Secretariat Report indicates that "it is still unclear whether the enactment of the
Trade Competition Act B.E. 2542 has resulted in any change in regulatory measures to preventanti-competitive practices by liner conferences".
The EC considers that the FTCA lacks legal clarity in one important respect insofar as it does not
provide for exemptions in favour of liner shipping conferences and liner shipping consortia.
Although this piece of legislation does not appear to create any conflict of laws with the EC
competition rules, it would nevertheless be useful if Thailand could align itself with the rules currentlyapplied by its main trading partners by introducing such exemptions.  This would make it possible to
achieve a similar treatment of similar situations in  different countries, account being taken of the
diversity of local conditions.
In order to assist in this process, we are prepared to hand over written suggestions to the Thai
Delegation.
For the time being, maritime transport is not an exemption to the Trade Competition Act
B.E. 2542.  Nevertheless, Thailand is prepared to give consideration for such exemption in the future.WT/TPR/M/63
Page 47
CANADA
Secretariat Report (WT/TPR/S/63)
Summary Observations, para. 17
The Report refers to tax and non-tax incentives granted by the Board of Investment (BOI).  We
understand that BOI is drafting a new incentives promotion package to address some of the
shortcomings in the existing policies.  Furthermor e, we understand that the BOI is considering the
rearrangement of the existing zone structure, thereby reducing the incentives of some zones which
could affect the existing BOI-promoted companies,  especially industrial estates, to ensure the
long-term sustenance of these entities, will the BOI ensure that provisions are made in the new
package to protect them?
The new investment promotion policy package will not be applied retroactively to existing
BOI-promoted investment projects.  In fact, the BOI has held a series of public hearing sessions with
local and foreign business communities to ensure that the concerns of parties involved are properly
addressed.
Summary Observations, para. 20The Report states that all public sector imports above US$7 million must have related countertrade
transactions.  This imposes an additional cost to international transactions.  Is consideration being
given by Thailand to terminating the countertrade re quirement?  If yes, when would this likely occur?
The Thai Government does not have any plans to terminate our countertrade requirement at
this stage.
Summary Observations, para. 31
The Report refers to the problem of the high level of non-performing loans (NPLs).  In spite of the fact
that new Bankruptcy and Foreclosure Acts have been passed, and even though due to recent financial
restructuring, many loans have been reclassified out of NPL status, NPLs have not been significantly
reduced.  We understand that very few new cases have been brought before the recently-establishedBankruptcy Court.  What, if any, further measures are being considered to lower the NPL rate?
Further measures are:
The establishment of Corporate Debt Restru cturing Advisory Comm ittee (CDRAC) under the
BOT:  this was set up in early 1999 and is to ac t as an intermediary between creditors which are
commercial banks – Thai as well as foreign – and major debtors with a view to accelerating debtrestructuring.  In the beginning, CDRAC selected around 400 major debtors and later added about 200
more to the programme.  Between January to 15 November 1999, 509 debts were restructured,
totalling B 345,679 million (US$9.1 billion).  There are 33 remaining debts awaiting restructuring,
amounting to B 137,543 million (US$3.6 billion).
Encouraging commercial banks to initiate in-house debt restructuring through various
incentives as follows:
- amending rules on debt classification:  debtors whose debts have been restructured will
be automatically reclassified as performing loans, provided that they meet certainWT/TPR/M/63
Page 48
conditions, instead of waiting for three months or three payments period as previously
prescribed;
- improving accounting/bookkeeping entry method for debtors who have gone through a
restructuring process.  In cases where the reserve allocated by the commercial bank for
that debtor is higher than losses incurred as a result of restructuring, the bank can
instantly reverse that reserve out of its account.  However, the total amount of the bank’s
reserve must not go below the required level;
- allowing finance and securities companies to conduct hire purchase and leasing
businesses on the assets that have been transferred to them as part of the debt
restructuring contracts;
- improving reserves estimation method:  losses incurred following debt restructuring will
be deducted from the total loan amount before calculating the reserves.  If the newly
calculated reserves are higher than the previously set-aside level, the commercial banks
will not be required to add further reserves and can write-off the exceeding amount.
However, if the new estimated reserves are lower than the existing level, the banks willhave to set aside more reserves.
Privatizing intervened banks:  at present, two commercial banks have been privatised, namely
Nakornthon Bank and Radanasin Bank, with the agreement that the Financial Institutions
Development Fund (FIDF), and office under BOT, guarantees losses that might occur from NPLs of
those two banks.  As a result of the privatization, the NPL/total credit ratio of the intervened banks
and the banking system has decreased from 65.57% to 61% and 44% to 43% respectively.  Two more
banks – Siam City Bank and Bangkok Metropolitan Bank – are undergoing privatization.  If the
privatization is completed, it is anticipated that NPLs in the system will be reduced even further.
Encouraging commercial banks to establish their own Asset Manage ment Company (AMC)
to separate NPLs and allow professionals to manage them with a view to minimizing losses:  theGovernment is considering amending some regulations to facilitate the operations of an AMC.
Chapter II(3)(iii), Box II.2:  Ta riff elimination under the ASEAN
The Report refers to the CEPT tariff reduction programme with IS products covered under the "Fast
Track Programme." Due to the economic recession in Thailand and a resultant inability to compete in
some product areas (oil, ceramics, cement, steel), we understand that Thailand is consideringassisting local producers by delaying tariff reductions on these products.  Could the Government of
Thailand comment on the consistency of these proposals with the terms of the CEPT agreement?
Thailand will not delay tariff reductions on any product since the Government is of the view
that such a delay will result in the delay of the actualization of AFTA and will have negative effects
on ASEAN’s credibility and economic recovery.
Chapter II(3)(iv), para. 45
The Report refers to the Treaty of Amity and Economic Relations between Thailand and the
United States.  Is the agreement in place for an inde terminate period of time?  Is consideration being
given to making these provisions available to other countries?
The Treaty of Amity is a bilateral treaty between Thailand and the U.S. signed before
Thailand became a member of WTO.  When Thailand joined WTO, the MFN treatment was accordedWT/TPR/M/63
Page 49
to other WTO Members in the area of goods and TRIPS.  However MFN exemption in area of
services was reserved for a period of ten years as specified in the GATS Schedule of Commitments.
Chapter II(4), paras. 47, 48, and para. 49When does the Government of Thailand expect to adopt the new Foreign Business Act?  Will this new
legislation replace and eliminate the different elements of Thailand legislative framework on
investment such as the:
- Alien Business Law of 1972/Announcement of the National Executive Council
No.281;  Investment Promotion Act of 1977;
- Royal Decree of 1973;
- Board of Investment (BOI) announcement No . 1/2536 of April 1993;  and other BOI
announcements made in March and November 1998.
The Foreign Business Act will be effective from 4 March 2000 onwards.  This new legislation
will replace the Alien Business Law of 1972 and the Royal Decree of 1973.  However, it will not
eliminate the legislation and announcements related to investment promotion as they deal with
different issues.  The new legislation deals with the establishment of commercial presence while theBOI announcements referred to and the Investment Promotion Act largely involve the granting of
investment incentives.
The RTG has taken several measures to facilitate foreign business operations as regards to
land and property ownership.  The Land Code Amendment Act has been effective from 19 May 1999
onwards.  This Act allows foreigners who make  an investment of at least B 40 million
(approx. US$1 million) to acquire not more than 1 rai (or approximately 1,600 square meters) of land
for residential purposes.  Moreover, the Condominium Act, which has been effective since April
1999, allows a foreigner to purchase condominium units as long as foreign ownership in the
condominium complex does not exceed 49% of the total floor area.  This 49% cap is waived for
condominiums located in specified areas.
Chapter II(4)(i), paras. 50-55
With reference to the Alien Business Law and restrictions on land ownership, the Report states that
"foreigners must not normally own land or property."  With the exception of "property funds, only
business promoted by the Board of Investment is allowed to own property.  Will Thailand consider
allowing other businesses to own property in order to facilitate operations?  If yes, when would thisoccur?
Chapter III(2)(i), paras. 6-7
We note that the applied tariff rates for some products have been greater than the WTO bound tariffs.
Thailand has indicated that importers of products from WTO Members can ask to be "taxed" at the
(lower) WTO bound rate.  We appreciate that some efforts have been undertaken by Thailand toinform importers of Thailand's WTO bound tariffs.  Ho wever, we are strongly of the view that in the
interest of greater transparency for all parties (importers and exporters) Thailand should publish a
consolidated customs tariff with tariff rates applicable to WTO Members.  Could Thailand confirm if
it has plans to do this?WT/TPR/M/63
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The Customs Department publishes tariff schedules for WTO bound rates in order to facilitate
import of goods from WTO Members.
Chapter III(2)(ii), para. 37Comment:  Canada looks forward to Thailand's upc oming implementation of the Customs Valuation
Agreement.
Chapter III(2)(ii)(b), para. 42
The Report highlights the considerable uncertainty that persists with regard to the continued
authority exercised by customs officials to specify the import price on which duties are applied, couldthe Government of Thailand outline any measures it is considering to replace this discretion so as to
improve consistency, accuracy, transparenc y, and opportunities for appeal for importers?
The WTO Agreement on Customs Valuation will be implemented within the deadline of
1 January 2000.  This requires the Customs Department to revamp its existing customs valuation
system, switching from the present method based on so-called Brussels Definition Value (BDV) to the
Transaction Value by revising the Custom Valuation Legislation.  This will create better customs
administrative procedures and also definitely provide importers opportunities to appeal.
Chapter III(4)(iii)(a), para. 107
The Report refers to exception clauses regarding copyright infringement in the case of computer
software for personal use.  Does Thailand plan to maintain this exception?  Does Thailand plan to
implement measures designed to ensure that retail pricing of legitimate software in the country is on
par with global pricing?
Thailand is of the view that the Personal Use exception for copyright infringement is
consistent with TRIPS Agreement.  We, therefore, plan to maintain this exception. Since Thailand
adheres to the market economy system, we believe that it is up to each company to design its own
pricing policy as long as such policy is consistent with the Thai domestic legislation and Thailand’s
international obligations.
Chapter III(4)(iv)(b), para. 129
Comment:  We are concerned about the current requirement that manufacturers provide a detailed
list of ingredients and a description of the manufacturing process if their products are to receive an
import license.  We see this requirement to provide proprietary information on a particular product
as an impediment to trade which should be eliminated.
We are also concerned with the reported length of time (up to six months) it takes for an import
permit to be issued.  Could Thailand provide the reason behind this timeline?
Chapter III(4)(iv)(b), paras. 130-131
The registration process for packaged food items has the effect of creating a system of exclusive
importers for that product.  This places the exporter and the Thai consumer at a disadvantage byrestricting the distribution channels available for a product, does the Government of Thailand
contemplate changes to this system?WT/TPR/M/63
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Thailand’s registration process for packaged food items is not exclusive in nature, and
therefore different importers can register and be granted licenses to import the same food items into
the country.
Chapter III(4)(v)(h), para. 136
Will the publicly owned companies that are directly or indirectly involved in trade of goods or
services, as noted in the 1995 Secretariat Report on Thailand, be included in the next full Notification
by Thailand to the Working Party on State Trading Enterprises?
When does Thailand foresee the submission of a new and full Notification to the Working Party on
State Trading Enterprises?
It is noted that Thailand does not consider the Cane and Sugar Corporation to be a state trading
enterprise, yet Table III.14 – Selected publicity owned commercial companies, 1999 – lists the Cane
and Sugar Corporation as having a role in exports.  Could Thailand clarify the relationship between
the Government and the Cane and Sugar Corporation and/or the Sugar Distribution and Production
Centre/Sugar Board, particularly with respect to the powers the corporation has over exports, the
nature and extent of these powers, and the authority under which these are granted?
Many state enterprises listed in the 1995 Secretariat Report have either been terminated or
privatized, and only three state enterprises, as defined by Article 17 of GATT 1994, remain active,
namely the Public Warehouse Organization (PWO),  Liquor Distillery Organization (LDO) and
Thailand Tobacco Monopoly.  Thailand notified the WTO in 1995 and again in 1997.  The
Government is compiling a list of state enterprises and will make the next new full Notification in the
year 2000.
The Thai Cane Sugar Company (CSC) is an enterprise with a special organizational
arrangement.  It is held by three groups, namely, sugar cane growers, millers and the Government
(Ministry of Commerce, Ministry of Industry, and Ministry of Agriculture).  The main objective in
setting up this enterprise was to provide a mechanism to establish a reference export price which is tobe used in the calculation of cane price under th e revenue sharing system between cane growers and
millers.  In this context, the role of the Government is limited to only monitoring the policy where all
decisions are the result of compromised positions based entirely on business between millers and cane
growers.  We would like to stress that the prim ary function of the CSC is to export sugar but not
activities related to imports.  In addition, exports of sugar by the CSC is purely based on marketoriented and profit making motives as other private company.  The Government does not intervene in
the decision making by the CSC.
Chapter III.(4)(iv)(c), paras. 137-138
What is the intention of Thailand with respect to its accession to the WTO Agreement on Government
Procurement?
At present Thailand does not have any intention to accede to the Agreement on Government
Procurement.
Chapter IV(2)(ii), para. 10
The Report states that three quarters of tariffs exceeding 50% are in agriculture.  Canada appreciates
the Thai Government's agreement earlier this year to reduce to 5% the tariffs on canola meal and
alfafa.  What are Thailand's plans for reducing tariffs on feed peas?  Decreasing the tariff on thisWT/TPR/M/63
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product would have no negative impact on Thai agriculture or farmers as there is no local production
of feed peas.  Moreover, this would result in lower feed costs for Thai hog and poultry producers.
Thailand will consider this issue in the context of negotiations on agriculture.
Government Report (WT/TPR/G/63)
Chapter III(i), para. 26
The Report states that in view of the economic crisis and the shortfall in government revenues, tariffs
on certain items were increased and that additional surcharges were introduced, although tariffs and
surcharges have been lowered on some items, does  the Government of Thailand have a timetable for
the removal of the other temporary measures as economic recovery continues?
Resulting from the 10 August 1999 package announced by the Ministry of Finance the 10%
import surcharge has been removed. Moreover, import duties on capital goods, raw materials and
other products totalling 639 items were reduce.
Chapter III(iv), para. 36
The Report states that the EDI sy stem for importers will be in force by 1 November 1999, yet to our
knowledge the system has not yet been implemented.  Could the Government of Thailand provide
clarification on the schedule of im plementation of the new system?
The Customs Department implemented EDI for imports on September 1999; however the
manual system is still available for importers who have not yet prepared themselves for EDI.  On
1 January 2000 Thai Customs on-line system will be completely operational for both import and
export.  For those who are not ready for the transmission of data through EDI, Customs Departmentofficers will enter the data into the system instead.  Thus, there will be no effect on the
implementation of GATT Valuation.
Chapter III(vi), para. 39
The Report states that the GATT/WTO valuation system will be implemented within the target date of
1 January 2000.  Will the delay in implementing the EDI system affect this target date?
The GATT/WTO valuation system will be implemented within the target date of
1 January 2000.
Chapter III(x), para. 47
Canada commends the Government of Thailand for its efforts to curtail intellectual property rights
violations, appreciates the complexity of the challenge, and understands that there are stillwidespread problems to be addressed.  Could the Government of Thailand outline its plans to address
IPR problems which remain outstanding?
The Thai Government has taken all possible measures to step up its enforcement effort
against IPR infringements.  Apart from establishing several enforcement agencies to specifically deal
with this matter (e.g. the Economic Crime Investigation Division of the Royal Thai Police;  theCoordinating Center for the Suppression of IPR Violat ion of the Department of Intellectual Property;
and the IP and International Trade Court), the RTG is drafting and amending related laws and
regulations to effectively cope with the importation of machines and equipment used in producingWT/TPR/M/63
Page 53
counterfeit goods.  It is also drafting a new legislation to control the production of optical discs.
Furthermore, it has set up special police units to daily monitor infringing activities at major shopping
centers in Bangkok, and special police forces to comb at infringing activities in other provinces.  The
RTG focuses its attention on the suppression activities at all levels, i.e. manufacturers, distributors as
well as retailers.  Please also see answer to EU.
Chapter III(xiii), para. 58
The Report refers to a new Foreign Business Act to replace the Alien Business Law, which has the
effect of allowing foreign participation in a wider range of activities.  The new Foreign Business Act
is a welcome step towards encouraging foreign entities to do business in Thailand.  However, the new
legislation contains provisions which limit compet ition in many business areas (i.e. Lists I and II).
Could the Government of Thailand outline its plans for opening these business sectors to foreign
participation in the near future?
It has taken seven years for the Foreign Business Act to be passed.  The new legislation
contains exceptions; however these are not totally restrictive. Business areas in List II can be
approved by the Minister of Finance on a case-by-case basis.  Moreover, the FBA stipulates that thelist of restricted businesses shall be revised at least once a year.
Secretariat Report (WT/TPR/S/63)
Chapter IV(6)(i), para. 133
The Report states that there are 15 Internet service providers operating under joint ventures.  Are
these providers required to be licensed in Thailand?  Are foreigners allowed to provide Internetservices only via joint ventures?  Are there limits on foreign equity in these joint ventures?
Under existing law, private companies are allo wed to provide internet operating under joint
ventures.
Chapter IV(6)(i), para. 135
The Report states that foreign telecoms suppliers are currently not allowed to establish companies in
Thailand, nonetheless, they may own up to 40% of the equity of registered Thai companies supplying
basic telecoms.  "Hence, current regulations would appear to be more liberal than those reflected in
Thailand's WTO commitments." May we know if the Government of Thailand plans to reflect this
liberalization in the Thai services schedule?
The Thai Services Schedule is made under legislative conditions.  Foreign equity participation
in basic telecommunications services can be up to 20%, while all committed value-added services can
be up to 40%.
The steps contemplated to facilitate concession conversion are as follows:
Legislative Progress
A Draft Act on the establishment of the Na tional Telecommunications Commission (NTC), a
new regulatory body approved by the House of Representatives in October 1999 is being considered
by the Senate and expected to be approved within the present session.WT/TPR/M/63
Page 54
Related Draft Access;  New Telecommunications Act, New Broadcasting Act, New Radio
Communications Act, are being scrutinized and will be submitted to the House of Representatives
within the present session and expected to be enacted within the year 2000.
Future Policy Intentions
Conversion of current concessionary arrangement .  States Enterprises Policy Committee
(SEPC) and the Cabinet have agreed on the criteria proposed by Thailand Development Research
Institute (TDRI) to be implemented by partners.
Interconnection arrangements .  Preparation on Interconnection arrangements have been
made to be considered by NTC.
Universal Services Obligation .  Universal services policies have already been determined in
the Master Plan on Telecommunications Development and the Draft Act on the Establishment of NTC
is to be promulgated soon.
Chapter IV(6)(iii), para. 146
According to the Report, the Telecom Master Plan aims to convert existing 15 to 30-year
build-transfer-operate (BTO) concessions for tel ecommunications services into build-own-operate
(BOO) licences.  The Report notes that numerous issues need to be addressed, including the future of
licensing, interconnection fees, conditions of competition with newcomers, concession net present
value determination, and the current revenue-sharing  system.  Concerns have been raised regarding
delays related to differences between licensors and licensees on these issues.  Could the Government
of Thailand comment on what steps are contemplated to facilitate concession conversion?
Government Report (WT/TPR/G/63)
Chapter III(xiv)
Although para. 67 makes no mention of the International Convention for the Prevention of Pollution
from Ships 1973, as modified by the Protocol of 1978 relating thereto (MARPOL 73/78), we
understand that Thailand has recently adopted this convention.  May we know your timetable for itsimplementation?
Does Thailand intend to be a party to the International Convention on Civil Liability of Oil Pollution
Damage 1969?  If yes, when?
Para. 71 notes that the Ministry of Science, Technology and Environment is in the process of
considering appropriate environmental taxes and char ges, will these environmental taxes be applied
at the point of manufacture (to cover environm ental damage of manufacture and, therefore, not
applied to imported products) or at the point of sale (to cover use and, therefore, be applicable to
domestic and imported products)?  Will the funds be used for a specific purpose (e.g. funding of
regulatory agencies, monitoring or public awareness programmes) or placed in a general fund?
This Convention is under review by the Cabinet.  At the same time, domestic legislation is
being amended in order to correspond to the Convention.  As soon as this Convention is approved by
the Parliament and domestic legislation is amended, Thailand will be in the position to implement this
Convention.WT/TPR/M/63
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Yes, Thailand intends to be a party to the International Convention on Civil Liability of Oil
Pollution Damage 1969. At present, this Convention is also under review by the Cabinet.
At present, the Government is in the process of considering the imposition of environmental
taxes and charges.  It has not been decided how these taxes will be collected.
Secretariat Report (WT/TPR/S/63)
Summary Observations, para. 17
The Report refers to tax and non-tax incentives, granted by the Board of Investment (BOI).  We
understand that BOI is drafting a new incentives promotion package to address some of theshortcomings in the existing policies.  Will these new incentives be reflected in Thailand's
commitments to the WTO in the area of services (i.e . the right to own land or to invest in activities
previously closed to foreigners)?
The new investment promotion package will continue to be directed towards further FDI
facilitation.  The BOI is revising its investment  promotion policy package, with the following
objectives:
to ensure consistency with the SCM Agreement, in particular, through the phasing out of the
remaining export requirements although Thailand, as a developing country, can benefit from
the eight-year transitional period;
to place more emphasis on the enhancement of Thailand’s long term competitiveness such as
human resource development and technological capabilities while maintaining the
decentralization theme;  and
to continue to facilitate the entry of foreign investment.
The new policy package will become effective in the year 2000 and MFN treatment will be
accorded as in the past.
As regards the foreign investors’ right to own land, the BOI has granted and will continue to
grant foreign companies promoted by the BOI right to own land to conduct the promoted investment
projects as part of its facilitation efforts.  In addition, please refer to our answer to question on
Chapter II(4), paras. 47,48 and 49.
Summary Observations, para. 26
We recognize the efforts of the Thai Government to continue liberalization in the face of the crisis and
recession, especially in the financial services sector.  In the Secretariat Report, it is stated that a new
Financial Institution Law is being drafted to address prior weaknesses in governance of financial
institutions.  May we have an update on the progress of this legislation?
The draft of the new financial institution legislation has been completed and will be proposed
for parliamentary approval.  New principles that are introduced in this draft include:
prompt corrective action measures  that the BOT has to take in order to solve problems
related to financial institutions.  In the past, there were no specific or clear guidelines as to
measures that the authorities concerned have to take to rectify the financial position of
troubled financial institutions.  The new legislation will address this weakness by establishingWT/TPR/M/63
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steps that the BOT must take if it encounters problems of financial institutions.  Failure to
follow the specified steps will result in the BOT being accused of negligence;
consolidated supervision  in order to strengthen the financial position of financial
institutions.
The Act will prescribe that in maintaining capital adequacy ratios of a bank, it has to
consolidate exposure of its subsidiaries (which bank hold more than 50% of shares of such
companies).  It is intended to force banks to have adequate capital to support their group.
Imposing corporate governance on financial institutions .  One measure that has already
been taken concerns executive directorship in debtor companies.  The measure incorporates
the following requirements:
banks’ directors or executive officers must not concurrently hold directorship in more
than three other companies.  In particular, they should not take executive director
positions or become managing directors;
any debtor companies, in which one or more of the banks’ directors is also their director,
cannot receive credits from the bank in an amount more than 50% of the company’sequity or 25% of the company’s total liabilities or 5% of the bank’s first-tier capital;
the bank’s directors or executive officers who hold directorship in any company cannot
hold more than 1% of the shares sold of such company.
At present, the BOT is seeking technical assistance loans from the World Bank to study
additional measures leading to improved corporate governance in financial institutions.
Chapter I(2)(ii)(d), para. 18
Privatization and competition policies are described in  the Report.  It is noted that there are plans to
privatize key sectors (energy, telecommunications, and transportation services) and that new
competition legislation is being introduced to ensure the privatization process does not result in the
creation of private monopolies, new trade and investment opportunities are foreseen as a result ofthese reforms.  May we have an update on the privatization process and the implementation of
competition legislation?
Over the last two years, more than 40 state enterprises have been sold to the private sector.
There is a Master Plan for State Enterprises Reform whereby state enterprises in the energy,
telecommunications, and transportation services sector are to be sold to the public. Competition lawhas already been enacted.
Chapter II(2), para. 8
New trade and investment legislation is mentioned in  the Secretariat Report.  Thailand has introduced
the Price of Goods and Services Act.  Please indicate which services are subject to price controls.
At present there are no activities in the services sector which are subject to price controls.WT/TPR/M/63
Page 57
Chapter II(3)(iii), para. 32
Has the ASEAN Framework Agreement on Services been notified to the CRTA of the WTO?  What is
the proposed timetable for liberalization of services under this agreement?
The ASEAN Framework Agreement on Services is not yet fully operationalized.
Chapter II(4)(i), para. 50
The Report makes reference to the Alien Business Law (ABL).  The recently revised ABL apparently
requires permission of the Director General of the Department of Commercial Registration and
approval of the Alien Business Board before foreign firms can engage in certain service activities(e.g. accounting, legal services, architectural services).  Can the Thai authorities clarify how this
registration requirement is reflected in their GATS Schedule of Specific Commitments?
The registration and approval of Alien Business Board for foreign firms to engage in certain
service activities is not reflected in the GATS Schedule of Specific Commitments.
Chapter III(4)(v)(b)
Table III.14 of the Secretariat Report lists selected publicly owned commercial companies (1999) and
their function and trade-related privileges.  Under the section on services, may we know whattrade-related privileges are accorded to companies listed there?
Trade-related privileges are accorded to Thai Airways International (TG):
- TG can ask for credit guarantee by the Royal Thai Government;  however the decision
depends on the consideration of the board which is chaired by the Minister of Finance;
- all Thai Government officials are required to travel by TG on government purposes;
- TG is responsible for the assignment of the slot allocation at the airport to any other
foreign airlines;
- for ground handling services, TG can supply such services to any airlines in the Bangkok
International Airport whereby any other airlines cannot do so.
Trade-related privileges according to Airport Authority of Thailand (AAT):
AAT can also ask for the credit guarantee by RTG.
AAT is the only public owned enterprise that pe rforms as the international airport operator in
Thailand.
AAT can also supply ground-handling services via the so-called “TAGS” company to any
airlines within Bangkok International Airport.
Trade-related privileges accorded to Communications Authority of Thailand (CAT):
The CAT is a management corporation established by the provision of the
Communication Authority of Thailand Act B.E. 2519.  Its objective is to operate andWT/TPR/M/63
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promote postal and telecommunications services and other related services for the
benefits of the public and state.  CAT has invested in and leased several satellite
transponders in order to make Thailand domestically and internationally accessiblethrough communication services ranging from voice communications, high speed data,
TV transmission, VSAT and website communication services.
JAPAN
Customs tariff
(WT/TPR/S/63)
(Para. 8, p. 34)  Please explain the present sit uation regarding the modification of Thailand's
Schedule to introduce HS96.  When is the modification expected to be completed?
(Para. 9, p. 35)  Many tariff lines remain unbound;  i.e. 30.6% for industrial products.  Some of the
products, whose tariff lines are unbound, are subject to high tariff rates.  Does Thailand have any
intention to improve the bound ratio and to lower the applied rates on those products?
Thailand has already completed the required domestic procedures in enacting the legislation
introducing HS96.  The HS96 legislation was passed by Parliament in January 1999. However,pending the consultations under Article XXVII of GATT with two WTO Members, Thailand is
obliged to maintain its waiver with  regard to the application of Article II for the time being.  It is
expected that the remaining consultations will be concluded by early next year.
With regards to tariffs reductions we consider the issue to be in the context of tariff
negotiations in the near future.
Customs valuation  (paras. 41-46, p. 45-46)
Does Thailand use reference price scheme when determining customs value on any product?  If so,
please provide the list of such products.  Does such scheme fall under Article 7:2(f) (minimum
customs value) of the Agreement on Customs Valuation?
According to para. 43, legislation to implement the Agreement on Cu stoms Valuation has not yet been
passed by Parliament, but that the authorities are co nfident that the Agreement will enter into force in
January 2000.
- When is the implementing legislation expected to pass the Parliament?
- Does Thailand fully implement the Agr eement by January 2000?  Does Thailand
request an extension of the grace period under Annex III:1 of the Agreement?
The Agreement on Customs Valuation will be implemented by the target date of
1 January 2000.  For more details please refer to answer to EU.
TBT/SPS  (para. 42, p. 11)
Efforts for adopting international standards such as ISO, IEC and Codex standards are appreciated.
However, according to the Report, 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 ofWT/TPR/M/63
Page 59
developed countries and that they are not appropriate for technical infrastructure and/or climatic
conditions of Thailand.  Please explain in more detail in which case such inappropriateness occurs.
Please refer to response to EU question.
IPRs
As of 1 January 2000, Thailand is obliged to comply with the provisions of the TRIPS Agreement.
Please describe the efforts taken so far and to be taken by Thailand to bring its legislation to
effectively conform with the TRIPS Agreement as well as regarding enforcement of IPRs.
Please explain further on the measures taken or to be taken regarding enforcement of copyrights to
cope with illegal reproduction of works.  Please also explain how the dispute settlement system is
established for right holders, including foreigners, to exercise their right, in light of the TRIPS
Agreement.
(Para. 63, p. 103)  How long does it usually take to conclude a civil trial and a penal trial,
respectively, at the Intellectual Property and International Trade Court?  Have any efforts been taken
to shorten the period?
(Para. 121, p. 67)  It is reported that at the border, customs jurisdiction allows for the seizure, solely
upon request of the right holder, of trade mark infringing goods that are being imported or exported.
Does Thailand have any intention to review the procedures to allow customs authorities for the
seizure on its own initiatives?
Japan understands that, when requesting the seizure, right holders should identify the flight or ship
number and the date.  Does Thailand have any inte ntion to review the procedures to allow such
request without identifying the flight or ship number and the date?
Please refer to para. 45 of WT/TPR/G/63 and response to EU questions.
Financial Services
(Paras. 104, 110 and 112, pp. 102 and 103)  Japan appreciates that the amendment of the existing life
and non-life insurance legislation is under way to allow foreign equity participation up to 49% ofregistered share capital.  When is the amendment expected to be completed?
Japan understands that foreign insurance companies are allowed to establish only one branch office.
Does Thailand have any intention to relax this regulation?
(Paras. 109 and 111, p. 103)  With respect to commercial presence in life and non-life insurance
services, Thailand's Schedule states that new establishment is subject to licence approved by theMinister of Commerce with the consent of the Cabinet.  Please explain the criteria for the approval by
the Minister of Commerce as well as for the consent of the Cabinet.
(Para. 125, p. 105)  Does Thailand have any intention to relax the limitation or number of foreign
personnel for the foreign bank office?
(Para. 129, p. 106)  It is reported that at least three fourths of the directors of banks should be of Thai
nationality but that this regulation on the appointment of foreign directors may now be relaxed by theWT/TPR/M/63
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Minister of Finance if "the relaxation is deemed ne cessary to improve the condition or business of the
commercial bank".
Please explain the reason for maintaining the regulation on the appointment of foreign directors.Does Thailand plan to relax this regulation?
Thailand has complied with the principle of progressive liberalization to allow a reasonable
time-frame for domestic investors to prepare them selves for a keen competition.  In the drafts
amendment of the Life and Non-life insurance Acts, foreign equity participation has been proposed to
increase from 25% up to 49% and with no limit after the new laws have been in use for five years.
Insurance brokerage is conducted by business entities separated from insurance companies
and no insurance companies either domestic or foreign branches are allowed to conduct such business.
However, foreigners are allowed to set up brokerage business in the form of joint ventures with 25%
equity.
Insurance agents are the employees of insurance companies.  One foreign branch of life
insurance company has agents of 15,522 (in 1997 from a total of 72,582) conducting life insurance
business all over the country.
Please refer to answers to Hong Kong question.
The principle on limitation of foreign directors is in compliance with the limitation on foreign
ownership.  As stipulated by the Banking Act, Thai commercial banks cannot have more than 25%
foreign shareholding as well as the number of foreign directors.
The RTG has recently relaxed this limitation.  If it is considered to be for the benefit of
rectifying the banks’ financial position, the author ity can allow banks to have more than 25% foreign
shareholding and directorship.  Recently, the authority has allowed two banks to have foreign
ownership up to 49% with commensurate foreign directorship.  In addition, another two banks have
75% foreign shareholding and have a similar percentage of foreign directors.
Telecommunications Services
(Para. 137, p. 108)  In Thailand's Schedule, Thailand undertook to introduce, by 2006, commitments
regarding commercial presence in pub lic local, long-distance, and international voice telephone
services (as well as telex, telegraph, and fax), on the basis of proposed new communications
legislation.  Please explain the content of the expected legislation.  Does Thailand intend to relax thelimitation on foreign equity participation?
(Para. 143, p. 109)  It is reported that the implementation of the Telecom Master Plan will require
new laws to establish a national telecommunication body to regulate and supervise
telecommunications services.  When are these new laws expected to be enacted?
(Para. 142, p. 109, and Chart IV.7, p. 110)  It is reported that the Telecom Master Plan proposes to
allow new entrants to provide telecommunications services.  Please explain when and in which field
such new entrants are expected to be allowed to provide services.  Please also explain if there be any
limitation on number of new entrants.WT/TPR/M/63
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Foreign equity participation which was earlier set in the Master Plan on Telecommunications
Development at 20% has been changed to 25%.  This new telecommunications legislation to be
enacted would be in line with the revised Master Plan.
They are expected to be enacted within the year 2000.
According to the Master Plan:- there is no limit in number of service providers;
- licenses will be granted to appropriate number of network providers to operate services;
- the number of network and service providers in Telecommunications services is limited.
Accountancy services
(Para. 152, p. 112)  It is reported that foreign individuals cannot be licensed as certified public
accountants (CPAs).  Does Thailand have any intention to relax this regulation?
Is International Accounting Standard (IAS) being introduced in Thailand?
Currently Thailand has no policy to allow foreigners to practice accountancy services in
Thailand.
Accounting standards in Thailand is based on, and similar to IAS.
Legal Services
(Para. 155, p. 112)  It is reported that foreigners are not allowed to practice law in courts but that,
with a work permit, they may act as legal ad visers or work as solicitors for companies.
Please explain what kind of legal activities legal advisers and solicitors can engage in.
Are there any conditions or qualification requirements for foreigners to act as legal advisers or work
as solicitors for companies?  If any, please explain  the content of such conditions or requirements.
Is it possible for legal advisers or solicitors to hire or to have partnerships (or joint enterprise) with
lawyers in Thailand?
In Thailand, a work permit is granted to foreigners to act as legal advisors (providing legal
advise but not including litigation work) based on economic benefits, necessity and national security.
Commercial presence in legal services is permitted as long as foreign equity participation does not
exceed 49% of the registered capital.
MFN Exemption
(Para. 154, p. 112)  It is reported that auditing services have been included in Thailand's list of
Article II MFN exemptions to reflect the possibility for bilateral agreement based on reciprocity but
that, so far, no such agreement has been signed with any country.  Does Thailand have any plan to
sign such an agreement in the near future?
Thailand's list of GATS Article II (MFN) exem ptions also covers publishing newspapers, computer
reservation system services and transport services.  Do the conditions which created the need for the
exemption still prevail?  If so, please explain such conditions in detail.WT/TPR/M/63
Page 62
Thailand has no plan in the near future to sign a bilateral agreement relating to auditing
services.
Regarding newspaper publishing, Thailand will grant permission to a natural person of the
countries which have treaties with Thailand.  Trade in publishing newspaper services is limited to
countries providing rights on a reciprocal basis.
For CRS, YES, the condition which creates the need for the exemption on CRS still prevails.
However, Thailand intends to open CRS to competiti on.  It would allow foreign services suppliers to
install and operate the CRS services in Thailand
Investment
Our industry sometimes faces difficulty when making investment in Thailand on points such as:
there is no system to prohibit dealing when one is dishonoured;
a civil suit for the purpose of collecting credit is not substantially operated;  and
mortgage law and bankruptcy law do not operate effectively, because of lack of a scheme to secure
the appearance in court as well as lack of clear interpretation and uniform application of those laws.
Please explain how Thail and copes with these points.
(Para. 47, p. 31)  It is reported that, since 1998, approval for foreign investment is no longer
negotiated on a case-by-case basis with the Board of Investment.  Please explain the criteria for
approving foreign investment.
(Para. 46, p. 31)  It is reported that the investment regime is in a state of flux.  Please outline the
efforts taken by Thailand for increasing transparency, such as establishing an enquiry point to obtain
information on its investment scheme.
(Para. 52, p. 32)  It is reported that, for any business under Annex B of the Alien Business Law,
Thailand allows foreign participation up to 49% unless otherwise permitted by a Royal Decree;
although for some business activities foreign participation up  to 100% can be allowed by Royal
Decree of 1973, such regulation is expected to be further relaxed.  Please explain how Thailand plans
to relax the regulation regarding foreign ownership under the Alien Business Law.
(Para. 55, p. 32)  Although restriction on land ownership by foreigners is partially relaxed, it is still
allowed only in a limited case, please explain how  Thailand plans to relax the restriction on land
ownership by foreigners.
Please refer to para. 44, p. 11 of WT/TPR/G/63.
The Board of Investment currently imposes no restrictions on investment in manufacturing.
As regards investment in agriculture, natural resource-based activities, and some services, majorityThai ownership is required.
Over the past few years, Thailand has taken a lot of liberalization efforts, both unilaterally and
under international commitments.  These changes are all directed towards more liberalization.
However, they could not have been implemented in a timely manner if parliamentary approval was
required.  A certain degree of flexibility is required to respond to changing business environments.WT/TPR/M/63
Page 63
The Thai Government is of the view that changes that do not require legislative approval does not
necessarily imply unpredictability and confirms that it will continue to pursue further liberalization.
The passage of the new Foreign Business Act, which provides greater market access for foreigninvestors, clearly indicates this commitment.  As regards transparency, the information on the changes
already introduced is available through a number of channels, including the Internet.
Please refer to our answer to the EU.
Land ownership restrictions have already been relaxed.  Please refer to the answer given to
Canada.
TRIMs
(WT/TPR/G/63)
(Para. 80, p. 17.)  The Government Report states that the remaining local content requirements will
be phased out in accordance with the time-frame pr ovided in the TRIMs Agreement.  Can this be
understood that Thailand eliminates the remaining local content requirements by 31 December 1999?
Tariff Quotas
(Para. 24, p. 41)  We note that Thailand imposes tariff quotas on 23 agricultural product groups,
while such quotas are not applied to imports from  AFTA member countries.  Could Thailand provide
the approximate ratio of the imports of th ese products from AFTA member countries?
Export Licensing
(Para. 62 and Table III.7, p. 51)  Could Thailand please explain the reason why automatic licensing
on canned tuna, canned pineapple and concentrated pineapple juice is granted only to the members of
the Thai Food Processors Association?
We note that export quota of tapioca is provided only to the EU, based on the bilateral agreement
provisions.  Could Thailand explain the details of this framework, as we are apprehensive that thismeasure could be identified as any voluntary export restraints on the Agreement on Safeguards?
IPRs
(Para. 102, p. 63) states that the Protection of Plant  Variety Act is to be adopted by Thailand by 2005
as a consequence of the TRIPS Agreement.  We understand, however, that Thailand shall provide for
the protection of plant varieties as of 1 January 2000, according to the paragraph 2 of Article 65 ofthe aforementioned agreement.  We  would like to know the ground why the Report by the Secretariat
refers to the year 2005 as the target date for implementation.
State Trading Enterprises
(Para. 136, p. 71 and Table III.14 p. 72)  According to Table III.14, Thai Cane and Sugar
Corporation exports sugar and by-products of sugar, while, according to the Notification on StateTrading Enterprises in 1995, three state trade enterprises (PWO, LDO, TTM) deal with the
international trade.  Could Thailand explain and clarify the situation concerning state enterprises of
these products?WT/TPR/M/63
Page 64
CZECH REPUBLIC
Thailand is preparing the amendment to the Alien Busi ness Law.  The list of activities, in which the
aliens cannot enterprise, should be a part of this amendment.  The approval of this list has beenpostponed.
When will this amendment with the said list of acti vities be adopted and enter into force?  Could the
Thai delegation give some information on new elemen ts of liberalization to be implemented by this
new law in Thailand and to clarify the consequences for the international entrepreneurial
community?
The customs procedures in Thailand are not fu lly transparent and simple.  The Thai Customs is
authorized to specify the import price when reje cting the market value notified by the importer.
Is there any intention of the Thai authorities to implement new transparent system of customs
procedures?  Could the Thai delegation give some information on the implementation of the EDI
(Electronic Data Interchange)?
The Czech Republic exports large quantities of milk powder to Thailand.  The costs, lengths and the
complexity of the approval process of foods and pharmaceuticals are becoming a real barrier of theimport of such items.  The Thai authorities im pose the quotas for import of skimmed milk powder.
Is there any intention to simplify the approval procedures for foods and pharmaceuticals and to
remove the quota system for the import of skimmed milk powder?
The import of the lead crystal glass is liable to the excise tax of 15%.
Could the Thai delegation give some information on the possibility of reducing or abolishing the
system of excise taxes in import of lead crystal glass?
Please refer to the answers given to the EU.
Please refer to the answers given to Canada.
The approval procedure for foods and pharmaceuticals is common to all importing countries.
The main reason for the approval procedures is to protect consumers.  We do not believe that our
system is more complicated than other countries.
With respect to quota system for imports of skimmed milk powder, we would like the
Czech Republic to refer to our answer to Australia.
Lead crystal glass is considered a luxury good and thus it is subject to excise tax (15%) in
Thailand.  At this stage, the Thai Government is not considering any reduction or abolishment of the
aforementioned excise tax.  However, we take note of the Czech Republic’s concern.WT/TPR/M/63
Page 65
REPUBLIC OF KOREA
(WT/TPR/S/63)
Customs Valuation
Para. 42, p. 45 says that "a considerable element of  uncertainty persists in the fact that Customs
continues to have the authority to specify the import price on which the customs duty is levied".  As a
result, around 20% of "all import entries are rejected for valuation purposes".  This current
procedure seems to go against the WTO Agreem ent on Customs Valuation and hamper smooth entry
of goods into Thailand.  The Report goes on to say that a new legislation to implement the WTOAgreement on Customs Valuation will change the way Customs operations are conducted.  How will
the new legislation remedy the problems referred to in para. 42?  What are the current prospects for
the new legislation to enter into force in January?
Please refer to our answer to Canada.
Incentive System for Export
Para. 90, p. 59 illustrates the numerous tax holiday s offered by the Thai Government to promote
exports.  Prima facie, it seems that these tax holiday s constitute, according to Article 1 and Annex 1 of
the SCM Agreement, subsidies contingent upon export performance that are prohibited under Article
3 of the Agreement on Subsidies and Countervailing Measures.  It is true that developing countries
were granted a transition period until 2003 to impl ement the Agreement;  however, Article 27 of the
SCM Agreement requires that export subsidies be phas ed out in a progressive manner until such year.
Is the Thai Government currently phasing out its tax holiday schemes related le export performance?
Although Thailand currently maintains tax holidays contingent upon export performance,
please note that only tax holidays granted to investments located in zone 1, which consists of Bangkok
and five neighbouring provinces are contingent upon export performance.  Tax holidays granted to
investments in most parts of the country are not contingent upon export performance.  Moreover, the
BOI will announce new criteria in granting tax incentives in the year 2000, and these new criteria willbe free from an export requirement as part of the efforts to phase out export subsidies in compliance
with the SCM Agreement.
Foreign Direct Investment:  Current and Future Framework
According to para. 47 of p. 31, FDI will soon be regulated by a new Foreign Business Act which will
replace the current two acts and several announcements.  Until then, it appears that under the present
regime that "some provisions of the April 1993 Announcement allow foreign direct investment that
would normally be prohibited under the Alien Business Law, provided that projects are carried out
under the Government's Board of Investment incentive programme" (footnote 15, of p. 31).
Are Thai Authorities envisaging pushing the maximum limit of foreign-ownership for
non-BOl-sponsored projects?  How will the new Foreign Business Act change the current regime?
Which sectors will be liberalized and how extensive (e.g. percentage of ownership) will this
liberalization be?
Please refer to the answers given to Australia, Japan, and Canada.WT/TPR/M/63
Page 66
Companies granted investment promotion by the BOI are greatly facilitated in obtaining work
permits for expatriates.  One of the non-tax incentives  provided is the permission to bring in foreign
nationals to work under promoted investment projects.
Financial Services
As for financial services, it is our understanding that foreigners are allowed to own only up to 25% of
stocks in insurance and leasing areas, compared to more than 50% of stocks in banking.  Will this
25% limit be increased to allow greater foreign participation in insurance and leasing sectors?
Land Ownership
Para. 55, p. 32 suggests that foreigners cannot own unless (i) acquisition of land by foreign interest is
part of a Board of Investment project, or (ii) land is acquired through "property funds" as defined in
para. 55.  Are the Thai authorities planning to further relax conditions for foreign ownership?  Will
the new Foreign Business Act address this matter?
Foreign Workers
It is our understanding that foreign workers in Thailand must re-obtain a working permit every year
and that a limit is imposed on the number of fo reign workers operating in foreign-invested
enterprises.  Also, it appears that this limit for a given foreign-invested enterprise is contingent on its
level sales and export.  As Korea believes that forei gn firms suffer from such restrictions, it would be
highly appreciated if the Thai Government were to prolong the validity of working permits from one
year to several years and ease the limit of foreign workers within foreign-owned enterprise.
Tariff Peaks
The Secretariat highlights at different points in the Report that many tariff peaks remain for goods
such as clothing and motor vehicles, and that several tariffs have actually increased in recent years,
notably for passenger vehicles and clothing.  For example, in 1998, tariffs on most clothing items
were raised to 60% (para. 81, p. 96) and MFN tariffs on motor vehicles have surged from 42% to
80% (para. 93, p. 99).  Also, according to the Secretariat (para. 12, p. ix), 31% of national tariff linescovering industrial tariffs are unbound.
Korea sincerely hopes that the Thai Government will promptly lower these high tariffs and expand the
number of tariff bindings.
Please refer to para.75, p. 16 of WT/TPR/G/63.
UNITED STATES
(WT/TPR/S/63)
Summary Observations, para. 10
Comment:  The United States welcomes the Royal Thai Government’s review of import-export and
investment legislation, as we share Thailand’s belief in the importance of a clear and stable
framework for business decisions.WT/TPR/M/63
Page 67
Could the Royal Thai Government provide any addi tional information on the review process with
regard to the time frame for this review, the gov ernment agencies involved, and whether the Royal
Thai Government has sought input from the private sector or other sources in this process?
The RTG has actively sought inputs from the private sector and academia in the process of
reviewing import-export and investment legislation.
Chapter I(2)(ii)(b)
Comment:  Para. 15 discusses measures undertak en by the Government to stimulate private
investment.  The paragraph describes in particular the package announced 10 August 1999, which
reduces tariffs on capital goods, raw materials and products not produced domestically, in addition to
eliminating the 10% surcharge (introduced during the financial crisis) on products with a tariff above
5%.  These and other elements of the package are very positive developments.
Please provide an assessment of progress  in implementing the 10 August plan.
Are funds established and being used?
What steps have been taken to ensure that investment capital will be allocated efficiently?The plan also included tariff reductions on a number of items.  We would appreciate your analysis of
the competitive effects of these reductions.  Will they be effective in stimulating investment and
exports?
There are three funds, having been approved by the Cabinet, included in the 10
th August plan
known as Measures to Encourage Private Investment.
(i) Equity Fund (EF) targeting large scal e enterprises as its main investors;
(ii) Thailand Recovery Fund (TRF) emphasizing on investment medium-size
corporations;
(iii) Mutual Fund for Venture Capital Investment in SMEs.
With respect to the establishment of these three funds, all of them are in the process of being
set up and registered with their respective supervisory bodies.  The TRF, having ASEAN
Development Bank (ADB) as the Organization in charge, is in the process of getting an approval of
the project from the Board of ADB whereas both EF and Mutual Fund for Venture Capital Investment
in SMEs have preliminary selected their fund managers.  All three funds should be readily operable
roughly within the first quarter of next year.
All three funds will operate on a commercial ba sis, i.e. these funds would be managed by
professional fund managers under the investment polici es stated clearly at the outset after the approval
has been granted by the Cabinet.
Since the 10 August plan emphasizes medium and long term plans, assessment at this stage
may be too early.  However, we have made some progresses that show our commitment to the plan.Apart from the funds issues, such progresses include:
Long-term funding with fixed interest rates to stimulate housing loans:   a s  o f
15 December the Government has issued both government and Government Housing Bank
bonds to solicit long-term funding for the amount of B 11 billion ($289 million) of which
about B 3 billion ($79 million) has already been granted to local customers.WT/TPR/M/63
Page 68
Encourage National Housing Authority of Thailand to buy unfinished housing projects:
announcement about this project was made by the National Housing Authority of Thailand in
August 1999.  There are 356 projects submitted for consideration.
System re-engineering and increasing e fficiency of credit guarantee for SME:   the Board
of Small Industrial Credit Guarantee Corporation has improved its system of credit approval
and undertaken the following measures:  (i) increasing its credit for individual borrowers from
10 million to B 20 million, (ii) reducing its guarantee fee to 1.75% per annum, and(iii) making the guarantee available to all financial institutions, not limited only to those
which have equity stake in the Corporation.  In addition, the Corporation will establish four
regional offices.
Restructure and increase capability of Small Industrial Finance Corporation:   the Small
Industrial Finance Corporation (i) has expanded its services to SME by increasing credit line
from B 25 million to B 50 million and changing the definition of SMEs eligible for itsservices from B 50 million to B 100 million, (ii) will establish five regional branches, (iii)
will increase its capital by B 2.5 billion, and (iv) signed MOU with the Industrial Estate
Authority of Thailand to give financial support to SME and agri-businesses.
Advisory services to SMEs :  a centre responsible for offering advisory services to SMEs was
established on 1 October 1999.
Regarding the Funds, progresses made are as follows:Equity Fund :  an MOU between the Ministry of Finance, IFC, and Lombard Investment was
signed in October 1999 to establish the Fund.  It is expected that the Fund will be in full
operation by the first quarter of next year.
Recovery Fund :  the Fund will be established by the end of this year.
Mutual Fund for Venture Investment :  The Ministry of Finance and the Ministry of
Industry have jointly appointed a mutual fund management company to manage a mutual
fund which will invest in small and medium-sized enterprises.  The Fund will be established
in early 2000.
Chapter I(3)(ii)
Comment:  Recent moves to open more of Thailand's manufacturing and financial sectors to foreign
investment and ownership are welcome, but in the case of the financial sector a number of important
limits remain.
When does Thailand plan to implement furthe r liberalization in the financial sector?
With industrial capacity utilization at such relatively low rates, how do you assess prospects for
investment in new capacity?
Can Thailand use low capacity utilization to move up to higher technology investment?
Thailand has continuously liberalized its financial sector, and recently the RTG has relaxed
foreign ownership in local banks from 25% up to 100% together with number of directors.  The RTGis of the view that there currently remain no other important limitations.  Thai banks with majorityWT/TPR/M/63
Page 69
foreign shareholding are still treated in the same way as other Thai banks.  In particular, they can own
land and link their ATM networks with other Thai banks.
Chapter II(3)(iii)(a)
Could the Royal Thai Government describe any analysis undertaken to study the positive or negative
effects of its regional trade agreements?
Apart from tariffs, we understand that ASEAN memb ers as a group continue ongoing discussions on a
range of other matters, including but not limited to services, customs, investment, intellectual property
and the ASEAN Industrial Cooperation (“AICO”)  scheme.  We would appreciate an update on
progress, objectives, and ASEAN's anticipated timeline for these initiatives.
Thailand has undertaken the analysis on the ASEAN Free Trade Area (AFTA) effects.  We
found out that AFTA will increase intra-ASEAN trade due the tariff reductions.  Thailand imports and
exports to ASEAN has been increased continuously.  For example in 1992, before AFTA established,
Thailand exported to ASEAN valued US$4,490.2 million and ASEAN ranked the fourth market afterthe U.S., EU and Japan, respectively.  After AFTA was established, ASEAN has become our major
market.  It even ranked our first market in 1995-1997 which proportion of 21% of our local exports.
For import, ASEAN ranked the third after Japan and EU.  In 1998, it moved up to be the
second after Japan which its import valued US$6,401.1 million and proportion was 15.08% of totalimports.
There are also negative effects of AFTA.  Some industries such as palm oil, petrochemical,
etc. are not competitive and need more time to adjust themselves.  Therefore, we prolonged time for
such industries by placing them either in Temporar y Exclusion List or Sensitive List which eventually
are obliged to decrease their tariff to 0%.  In the meantime, we undertaken various measures such as
tariff restructuring, industry restructuring.
ASEAN:  The implementation of the regional integration
ASEAN Free Trade Area (AFTA):   For the six original member countries, the
implementation of AFTA was accelerated by one year from 2003 to 2002 and by 2002, 100% of the
Inclusion List would have tariffs of 0-5%.  For th e new member countries, they shall maximize their
tariff lines between 0-5% by 2003 for Viet Nam and 2005 for Laos and Myanmar.
ASEAN agreed to accelerate the target of AFTA as a free trade area with tariff rate of 0% by
2010 for six original countries and by 2015 for the new member countries, but allowing somesensitive products of new member countries to follow the original date of 2018.
ASEAN are in the process of removing NTBs and provide recommendations for removing
these obstacles to trade.
Investment Liberalization:   Under short-term measures to enhance ASEAN Investment
Climate, member countries agreed to extend investment climate privileges to ASEAN and
non-ASEAN for manufacturing investment applicatio ns received and approved by the respective
ASEAN investment agencies in 1999 and 2000.
Individual ASEAN countries’ new measures we re provided to enhance ASEAN investment
climate.  Thailand, for example, will allow 100% foreign ownership for manufacturing investment
projects regardless of locations.WT/TPR/M/63
Page 70
Under the Framework Agreement on the ASEAN Investment Area (AIA) which was signed
by AEM on October 1998, all industries will be opened up and national treatment will be made fully
available in April 1999 for ASEAN investors in manufacturing sector, subject to certain exclusionwhich agreed to expand the scope of the AIA Agreement to cover services incidental to
manufacturing, agriculture, forestry, fishery and mining.
ASEAN agreed to organize a series of Joint ASEAN Investment Promo tion Missions to the
major developed countries, namely Japan, Europe an d the U.S., to show that ASEAN is on the road to
recovery and to provide ASEAN the opportunity to market the countries collectively.
Industrial Cooperation:   The objective of AICO is to promote joint manufacturing industrial
activities between ASEAN-based companies.
The AICO scheme has offered participating companies tariff privileges and other incentives.
The major privilege of AICO is that AICO products shall immediately enjoy preferential tariff rates of
0-5%.
One of eligibility criteria which ahs to be fulfilled by the prospective companies is that the
company must have a minimum 30% national equity.  However, in order to provide greater scope for
industrial cooperation in the region, ASEAN agreed to waive the 30% national equity requirement
under AICO scheme during the period 1999-2000.
There has been a significant increase in the number of applications received and approved.
To date, 31 AICO applications have been appr oved with a total of US$486 million in trade
transactions per year.  More than 90% of them are from the automotive sector.
Services:   The new round of negotiations in services has begun in 1999 and target to ending
in 2001.  These negotiations will be expanded beyond the seven priority sectors to cover all services
sectors and all modes of supply.
Transport:   The objective of Goods in Transit is to facilitate the movement of goods in
transit within and through ASEAN Member Countries by the introduction of simplified and
harmonized customs procedures and requirements.
The ASEAN Framework Agreement on the Facilitation of Goods in Transit will be
operationalized by the year 2000 and its implementing Protocols will be finalised and concluded byDecember 1999.  To date, only two Protocols of all nine Protocols had already been finalized and
signed by ASEAN Transport Minister (ATM) in September 1999.  The remaining Protocols are in
various stages of drafting and are targeted to be  finalized and concluded by September 2000 in order
to operationalize the framework agreement by December 2000.
Customs Cooperation:   The ASEAN Harmonised Tariff Nomenclature (AHTN) will be
completed by the year 2000 and implemented by all Member Countries beginning in the year 2002.
All Member countries will target to implement the GATT Valuation Agreement in the year
2000.
The Green Lane System has been implemented since 1 January 1996 in order to reduce
transaction cost to trade in ASEAN for products under AFTA and to expedite the customs clearanceof CEPT products.WT/TPR/M/63
Page 71
Cooperation in IP:  – The ASEAN Member Countries has implemented the activities in the
ASEAN Programme of Activities on IP Cooperation in 1996-1998.  The activities in the programme
included measures to enhance and strengthen IP protection, enforcement, administrative andlegislation and measures to promote public awareness and private participation.  This programme had
been extended to 1999-2001.  One of the objective of this Programme of Action is to establish an
ASEAN Trademark System and ASEAN Patent System for region-wide protection of trademarks and
patents by the year 2000.
Chapter II(4)
Comment:  As noted, foreign investment limits have been easing for some time, and the pace has
picked up since the onset of the financial crisis.  A new Alien Business Act was passed by Parliament
on 20 October and the Board of Investment is revising its overall investment promotion policies.  Both
will have major effects on foreign direct investment in Thailand.
Could the Royal Thai Government please provide in formation on the key provisions of the new law
and the time-frame for its implementation?
Some observers say the new Alien Business Law does not make significant advances in opening new
sectors to foreign participation and investment.  How do you assess this, and are there plans to
further broaden access?
Observers are concerned that new Board of Invest ment (BOI) investment promotion policies will in
fact make investment in many of Thailand's industrial estates less attractive.  While the policy
revisions are not finalized, we would appreciate your comments on the goals of the revisions.
The Foreign Business Act :  the new legislation to replace the existing Alien Business Law,
has already been announced in the Royal Gazette.  It will therefore become effective from
4 March 2000 onwards.  Main features of the new legislation are as follows:
(i) more market access for foreign investment
The new legislation will offer substantially increased market access to foreign investors.  The
scope of restricted businesses will significantly reduce under the new legislation. Examples of
business activities that will be no longer subject to any foreign equity restrictions include retailing and
wholesaling with minimum capital of at least approximately US$2.5 million;  brokerage in security
trading or services related to trading in agricu ltural commodity futures and financial instruments;
large-scale construction of some public utilities and communications; manufacture of pharmaceutical
products, silk yarn, garments and footwear, and beverages.  For most of the remaining restricted
sectors, the new legislation will continue to allow companies approved by the Board of Investment or
the Industrial Estate Authority of Thailand to be waived from the foreign equity restriction.  To
encourage foreign investment, the Board of Investment currently maintains liberal policies with no
equity restrictions in manufacturing.
(ii) Narrower scope of application
The number of foreign shareholders in a juristic person will not be a consideration for
determining whether that juristic person is an “alien”, resulting in a narrower scope of application of
the new legislation.
(iii) No limit in ownership in other businessesWT/TPR/M/63
Page 72
The Alien Business Law of 1972 stipulates that an alien granted a license to operate in
Thailand shall not hold more than one-third of the total shares in other businesses unless permission is
granted by the Department of Commercial Regi stration.  The new legislation contains no such
limitation.
(iv) Built-in mechanism for further liberalization
The Foreign Business Act stipulates that the lists of restricted businesses shall be revised at
least once a year.
Investment Incentives:   The goals of the revision of the investment promotion policy are
(i) to ensure consistency with the SCM Agreemen t through the phasing out of the remaining export
requirements despite the fact the Thailand, as a developing member, can benefit from the eight-year
transitional period (ii) to place more emphasis on the enhancement of Thailand’s long-term
competitiveness (i.e. human resource development, technological capability) while maintaining the
decentralization theme, and (iii) to continue to facilitate the entry of foreign investment.
Chapter III(2)(i), para. 7
Comment:  The Royal Thai Government has made several attempts to “rationalize” its tariff structure
in order to remove anomalies and stimulate industria l recovery.  However, at the same time VAT and
excise taxes have been applied to a range of imports, reportedly in order to make up for revenue
shortfalls.
How close is tariff rationalization to being realized and what are the obstacles that impede progress?
Please describe any plans to re-vamp the tariff structure during the forthcoming year?
Do any parts of such a programme require legislati on?  If so, have any steps been taken to introduce
such legislation?
When does the Royal Thai Government plan to rollback the increases in duties on various products
implemented in 1997 due to the financial crisis?
Ministry of Finance is under the process of tariff restructuring.  The new structure will remain
under value added escalation principle but a number of rate and the rationalization of the existing
tariff rate structure is being studied.
If new tariff rates exceed statutory rate stated in the Customs Tariff Decree B.E. 2530, they
will need to ask for parliamentary approval.  If not, they will be under power of the cabinet.
Surcharges which are collected since 1997 has been removed since 11 August 1999.  Tariff
on luxury goods such as watches, pens, cameras which was lifted to 30% in 1997 will be reduced to
5% from 1 January 2000.  Tariff on all other goods will be considered as part of tariff restructuring.
Chapter III(2)(i), para. 12
Please confirm that the Royal Thai Government has implemented the duty reductions for 1999 in
accordance with its ITA commitments.WT/TPR/M/63
Page 73
Chapter III(2)(i), paras. 13 and 14
Comment:  Pursuant to the general questions above regarding tariff rationalization, Thailand
maintains applied rates in excess of bound rates on a range of products but also has instituted tariffreductions on some goods during the past year and a half.
Please indicate when the Royal Thai Government will reduce applied tariffs that exceed the bound
rate?
Has the Royal Thai Government instituted and published clear, non-preferential rules of origin?
If not, do Thai authorities have any plans to simplify procedures for importers claiming MFN
conditions?
Will the Royal Thai Government rectify the anomaly of having higher tariffs on some raw and
unfinished material than on finished goods in some categories?
It will be considered as part of tariff restructuring.
Chapter III(2)(i)(b)
What is the legal basis for defining "primary products", "Intermediate products" and "final products."
Would you please provide us a copy of the regulations that clearly identify product categories,
particularly for food and agricultural products.
Chapter III(2)(ii), paras. 37-46
Comment:  Thailand has undertaken some Custom s reform measures during the past two years,
including expediting procedures at the ports of entry, new procedures for express carriers, and the
installation of an EDI system at the Bangkok Ai rport.  These have been welcome developments.
Please confirm that Thailand will meet its obli gation to implement the WTO Agreement on Customs
Valuation on 1 January 2000.  Please advise whether legislation and/or implementing regulations are
necessary to ensure Thailand’s compliance with its obligations in this area, and clarify the status ofsuch measures.
For what products does Thailand currently use a minimum import price to conduct customs
valuation?  Please confirm that, in accordance with conducting valuation consistent with the WTO
Agreement on Customs Valuation, Thailand will cease the practice of using minimum import or
minimum reference prices, and will also do away with the practice of valuation by reference to thehighest previous invoiced price.
Does Thailand provide, upon request from importers or exporters, binding determinations of origin
for non-preferential and GSTP or ASEAN preferential imports, including in advance of trade being
conducted?  In this regard, please provide info rmation about where such requests from importers and
exporters should be directed.
What steps have been taken to eliminate unrecorded cash transactions either before or during the
customs process?
Please describe any recent steps that have been taken to ensure that integrity is maintained in the
conducting of customs transactions.WT/TPR/M/63
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When will the EDI system be installed in the seaports?
Could you provide more information on Customs’  Special Task Force on Resolving Complaints,
including contact information and current status?
When will Thailand make available a single comprehensive tariff schedule containing MFN and
preferential duties?
Chapter III(2)(i)(d)
When does Thailand expect to lift the tariff quotas on the 23 agricultural product groups?
Chapter III(2)(iii)
Comment:  Para. 54 notes that Thailand has not ye t notified its relevant licensing legislation or
provided replies to the Import Licensing Questionnaire under Article 1.4(a), 8.2(b) and 7.3 of the
Agreement.
When does Thailand intend to undertake to provide these notifications?
Has Thailand taken any steps to make the regulations for import licensing less complex?Comment:  Table III.5 indicates that certain goods , particularly new "six-wheeled busses, seating
over 30" may be imported only with a non-automatic license.  Industry protection is not a valid
justification for such a licensing requirement, without WTO approval.
When Does Thailand intend to request a waiver for this licensing requirement?
What public health concerns are addressed by Thailand’s limitations on the importation of used
motor vehicles, used busses, used motorcycles and used diesel engines to the public sector only?
Chapter III(2)(iv)(c), para. 58
Is the Anti-Dumping and Countervailing Duty Act which became effective in July 1999 now available
in English?
Chapter III(4)(i), para. 77
When does the Royal Thai Government plan to reduce the excise taxes now imposed on a number of
products, including the excise taxes on various products which were increased in 1997 due to the
financial crisis?
Chapter III(4)(i), para. 78
Which products are subject to municipality or interior taxes?
Chapter III(4)(i),  para. 79
In light of the financial crisis, has the Royal Thai Government re-evaluated plans to increase the VAT
from 7 to 10% in 2001?WT/TPR/M/63
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Chapter III(4)(ii), para. 99
Please confirm that all TRIMs will be abolished by 1 January 2000.
Please describe the details of the plan to eliminate local content restrictions in the auto sector,
including planned changes to duties and excise taxes.
The RTG confirms that all TRIMs will be abolished by 1 January 2000.
Chapter III(4)(iii), paras. 102-122
Can you provide us with a status report on what TR IPS-related legislation is still pending, and when
you expect to pass and implement this legislation?
All rights holders appreciate the enforcement efforts of the Thai authorities.  What does the Royal
Thai Government see as the key enforcement challenges?  How does the Thai Government plan to
enhance enforcement efforts to be even more effective?  In particular, does Thailand have a strategyfor improving copyright enforcement pertaini ng to optical disk and other digital media?
The status of the pending IP legislation is as follows:
- The draft amendment of the 1991 Trademark Act has been approved by the Scrutiny
Committee of the House of Representatives and is currently pending theconsideration of the Parliament.
- The draft law on the protection of integrated circuits is under the consideration of the
Scrutiny Committee of the House of Representatives.
- The draft law on the protection of trade secret is being considered by the House of
Representatives.
- The draft law on the protection of geographical indications is being considered by the
Council of State.
The Thai Government is drafting a new law to  effectively control the importation of optical
disk making machines and equipment and to require that the optical disk manufacturing must seek
approval of the governmental authorities.
Main enforcement challenges in the view of the Thai Government are the public perception
and knowledge, cooperation from the right holders, shortage of human and financial resources.  In
enhancing enforcement effort, it set up special police units to daily monitor and tackle infringing
activities at well-known shopping centres in Bangkok and, special police task force to combat
infringing activities in other provinces.  Meanwhil e, it is in the process of setting up enforcement
funds in the approximate amount of B 40 million per year for a period of three years.  Half of the
amount (about US$500,000) is expected to be contributed by the right holders.
Chapter III(4)(iv), para. 129
Does the Royal Thai Government have any plans to modify FDA procedures for licensing food and
drug imports?WT/TPR/M/63
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Chapter (4)(iv), para. 131
Comment:  The Royal Thai Government uses a registration product system by which a range of 39
products identified as “specific controlled” must undergo a long, complex, and expensive license
application process.
Please describe any efforts by the Royal Thai Government to make the process of application for
registration of regulated imported products faster and more transparent?
When does the Royal Thai Government plan to revise its current requirements for the import of
medical devices into Thailand?
Chapter III(4)(v), paras. 137 and 139
We appreciate the steps Thailand is taking domestically  to ensure a transparent procurement regime.
In this context, we request more information on  and a copy of the 1998 amendments to Thailand’s
government procurement regulations.
With respect to Thailand’s countertrade program, has the Royal Thai Government analysed whether
this programme has affected the quality of competition and the cost of goods and services procured?Does the Government plan to make any changes to this programme?
Do procuring entities in Thailand specify in advan ce whether foreign bidders are permitted to bid on
particular contracts?
Do the domestic preferences described in the Government Procurement section apply to procurement
contracts from state enterprises as well?
With the request for a copy of the 1998 amendments to Thailand’s government procurement
regulations, We will convey this matter to the relevant agency.
Procuring entities in Thailand specify in advance whether foreign bidders are permitted to bid
on particular contacts.  The qualification of the bidders is stipulated in bid notices.
The domestic preferences described in the Government Procurement section apply to
procurement contracts from state enterprises.
Chapter IV(2)(ii), Table IV.1
Comment:  For several agricultural products on which Thailand increased tariffs above the MFN
bound rate, there is no economic rational, as no local production exists.  For example, Thailand does
not produce the russet potato (used for French fries) yet increased the tariff on frozen potatoes from a
bound rate of 45% to an applied rate of 60%.  Similarly, there is no local production of turkey,
raisins, pears, cherries or grapes, but Thailand assesses excessive rates of duty.
When does Thailand intend to examine its tariff  increases and correct such inconsistencies?WT/TPR/M/63
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Chapter IV(2), Table IV.2
A number of Thailand's Tariff Rate Quotas were not filled in 1997.  Could Thailand provide an
explanation as to why they were not filled, what steps Thailand is taking to ensure that they are filled,
and what plans Thailand has for enhancing access under TRQs and eliminating them?
The reasons for unfilled quota of some products can be summarized as follows:
- Thailand is a major producer and exporter of those products in question, namely rice,
sugar, longan and many more.  Therefore, demand is largely met by domestic
production.  There is demand for imports only under limited circumstances (i.e. when
domestic products are not of the required quality or domestic production is low).
- Imported products are not always coming from WTO members.  Therefore, Thailand
is not required to report on those quantities imported.  However, we can ensure
members that our imports of unfilled quota is transparent.  For the time being, wehave not considered to move tariff quota to other regimes.
Chapter IV(2)(ii), para. 12
Does the Royal Thai Government believe that the role of the Public Warehouse Organization in
regulating the importation of certain agricultural product can be limited or discontinued, and can thepurchasing of those imported agricultural products regulated by tariff quotas be opened to the private
sector?
The Public Warehouse Organization (PWO) operates on a commercial basis in line with
Article XVII of GATT 1994.  We do not consider the PWO’s role is a barrier to trade.  Besides, out of
23 TRQ product groups, only two products are allocated to the PWO, namely, garlic and palm oil.  In1998, the imports of palm oil exceeded the TRQ committed quantities.  In the case of garlic, there was
no request from any juristic persons due to the fact that the domestic price of garlic was low.
Chapter IV(4)(i), para. 82
Several duties on textiles items considerably exceeded WTO bindings in 1999.  Please explain the
justification for these increases.
Does the Royal Thai Government plan to eliminate the local content requirements which necessitate
import licenses for silk yarn?
Those duties are applied to only non-WTO members.
The local content requirements for silk yarns is applied to only non-WTO members.
Chapter IV(5)(i)
Comment:  We are pleased Thailand strengthened its commitments in financial services during the
last round of negotiations in 1997 and that it has liberalized market access further since then.
Although not mentioned in the report, Thailand reported to the WTO that it will permit foreigninvestors to acquire 100% equity stakes in local securities firms for a period of ten years.
This ten year time limit, which matches those in  place for banks and finance companies, would seem
to work against Thailand’s objective of attracting foreign investment to its financial sector.  Has
Thailand considered removing these limits or lengthening them?WT/TPR/M/63
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Comment:  Para. 101 discusses the role played by international banking facilities (Box on page 106
provides additional information) in the crisis and im plies that these facilities are "… conduits for
domestic indebtedness…"
Please explain the concern that offshore banking provisions still provide a "…conduit for domestic
indebtedness…" and how the design of international banking facilities "…contributed to the
expansion of the real estate bubble."
The set timeframe of ten years is not actually a limitation because the authority will not force
foreign partners to dilute their shareholdings to below 49% immediately after ten years.  Our
requirement is that they can own up to 100% through shareholding but after ten years, they will not be
able to buy additional shares should the bank needs to increase its capital.  After ten years, if the bank
does not increase its capital, foreign partners will in effect still have total control of the bank.
However, after the ten-year period, if the bank wishes to re-capitalize and causes share of the foreign
partners to fall below 49%, we will allow the foreign partners to buy additional shares in order to
maintain their 49% shareholding.
Thailand admits that, to a certain extent, the international banking facilities (IBF) was one of
the conduits for the current domestic indebtedness.  The main reason for the dramatic increase in IBF
was because in the past, Thailand maintained a fixed exchange rate system and control on foreign
borrowings was not tight.  In times, people took the fixed exchange rate system for granted and forgotto hedge foreign borrowings.  In addition, the fixed rate system coupled with high domestic interest
rates rendered borrowings through IBF more attractive since there was no single borrower lending
limit on IBF and therefore led to enormous increase in foreign borrowings.  Unfortunately, a majority
of the borrowings through IBF was not directed to the projects which borrowing companies presented
to IBF but went to real estate sector such as golf course and condominiums which, as we are aware,created the bubble economy in Thailand.
Since we adopted the floating exchange rate system, true costs of foreign borrowings have
been better reflected.  At present, only those whose income comes from foreign currency will be able
to borrow from overseas.  Moreover, our current monetary policy prescribes low domestic interestrates and thereby reducing gap between domestic and international interest rates and hence lower the
needs (or attractiveness) of overseas borrowings which, in effect, has decreased our foreign liabilities
as well.
Chapter IV(5)(ii)Comment:  We note that Thailand took important steps as part of the 1997 Financial Services
Agreement to begin opening its banking, securities and insurance markets to foreign competition.
Thailand may wish to consider the benefits of additional liberalization in this sector to help continue
the diversification of its trade and its economic growth.  This would in no way diminish the ability of
Thailand to regulate the sector as needed accordi ng to the GATS framework, including access to the
prudential measures clause.
We are intrigued by the information that the Government's long-term objective is to achieve
self-regulation in the insurance sector.  Could Thailand please provide more information on these
plans?
Actually it is now only the idea to gradually deregulate insurance business, however, it
depends on the readiness of the private sector as well.  So far, no particular policy has beenWT/TPR/M/63
Page 79
established.  Only the life-insurance agent’s examination, a process prior to the issuing of license, is
now carried out by the Thai Life Insurance Associat ion.  However, the Department of Insurance still
takes care of the question paper and the issuing of license.  Should this activity be successful morestage of deregulation may be adopted.
Chapter IV(7)
Comment:  As Thailand restructures its economy and as private business restructure their
organizations in order to deal with foreign partners, now more than ever it is important for Thaiconsumers and business concerns to have access to legal and accounting expertise.
Does the Royal Thai Government have any plans to liberalize current nationality and equity
restrictions that apply to accounting and legal services?
Considering the experience and accomplishments of foreign engineers and construction companies
and the contribution they can make to the local economy, does the Thai government contemplate
relaxing regulations that prohibit or limit the ability of foreigners to participate in construction and
engineering in Thailand?
From the standpoint that lawyers, architects and other professionals are an integral part of a
country's economic infrastructure, is the Thai gover nment considering licensing of qualified foreign
professionals, who have much to contribute to a country's efficient growth and development?
According to the new Alien Business Law, limitations on foreign equity participation in
accountancy, legal and construction services have already been relaxed.  These business activities
were moved from the first category, which comprises activities closed to aliens, to the third category
which foreign majority participation in such business might be allowed subject to the permission ofthe Director-General of Commercial Registration Department with the consent of Alien Business
Board.  At present, the Thai Government has not plan to make further liberalization.
Thailand has not considered licensing of foreign lawyers, architects and other professionals.
Please also see the answer given to Hong Kong, China.
NORWAY  (Responses to questions raised in the meeting room)
Import duties of 60% are levied on fresh salmon imported through airports because it is
considered a luxury good.  However, this amount is levied only on non-WTO members.  On the other
hand, WTO Members are subject to 5% import duty.
It is necessary that this form of indirect subsidy be resumed for certain period until the Thai
fleet becomes strong enough to compete with the foreign vessels.
In the case of double taxation, Thailand levies the tax on a non-discriminatory manner subject
to Article 8 (Shipping and Air Transport) of bot h “the Convention between Thailand and Norway for
the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on
Income and on Capital” and “the Convention be tween Sweden and Thailand for the Avoidance of
Double Taxation with respect to Taxes on Income”.
For your information, Para.1 of Article 8 of  Convention between Thailand and Norway states
that:
“Profits from the operations of ships or aircraft in international traffic may be taxed in theContracting State in which the place of effective management of the enterprise is situated.WT/TPR/M/63
Page 80
Profits from the operation of ships in international traffic may be taxed also in the Other
Contracting States, but the tax imposed in that State shall be reduced by an amount equal to
50% thereof.”
Paragraph 3 of Article 8 of Convention between Sweden and Thailand states that:“Income or profits derived by an enterprises of a Contracting State from the operation of ships
in international traffic may be taxed in the other Contracting State, but the tax imposed in thatother Contracting State shall be reduced by an amount equal to 50% thereof.”
Please refer to the answer given to the U.S.
SWITZERLAND (Responses to questions raised in the meeting room)
Chapter I(1), para. 4
We agree that the ongoing recession is partly due to weaknesses in past governance of the
financial and corporate sector, particularly ineffective supervision of banks and financial institutions
and the liberalization of capital inflows without close monitoring on the usage of funds together with
a fixed exchange rate system which distorted the real cost of funds.
The steps that the Bank of Thailand (BOT) is taking to redress these problems are:A Bank Examination School was established.  The BOT now requires that all bank and
financial institution examiners attend the school and obtain a certificate before becoming qualified
examiners.  In setting up this school for examin ers, the BOT received assistance from many central
banks including the U.S. and Australia as well as the World Bank.
The draft of the new financial institution legislation has been completed and will be proposed
for parliamentary approval.  New principles that are introduced in this draft include:
prompt corrective action measures  that the BOT has to take in order to solve problems
related to financial institutions.  In the past, there were no specific or clear guidelines as to
measures that the authorities concerned have to take to rectify the financial position of
troubled financial institutions.  The new legislation will address this weakness by establishing
steps that the BOT must take if it encounters problems of financial institutions.  Failure to
follow the specified steps will result in the BOT being accused of negligence.
consolidated supervision  in order to strengthen the financial position of financial
institutions.
The Act will prescribe that in maintaining capital adequacy ratios of a bank, it has to
consolidate exposure of its subsidiaries (which bank hold more than 50% of shares of such
companies).  It is intended to force banks to have adequate capital to support their group.
imposing corporate governance on financial institutions .  One measure that has already
been taken concerns executive directorship in debtor companies.  The measure incorporates
the following requirements.WT/TPR/M/63
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Banks’ directors or  executive officers must not concurrently hold directorship in more than
three other companies.  In particular, they should not take executive director positions or become
managing directors.
Any debtor companies, in which one or more of the banks’ directors is also their director,
cannot receive credits from the bank in an amount more than 50% of the company’s equity or 25% of
the company’s total liabilities or 5% of the bank’s first-tier capital.
The bank’s directors or executive officers who hold directorship in any company cannot hold
more than 1% of the shares sold of such company.
At present, the BOT is seeking technical assistance loans from the World Bank to study
additional measures leading to improved corporate governance in financial institutions.
Chapter I(2)(ii)(e), para. 20
The Thai Government has allowed foreign equity participation in some services with a view
to encouraging direct investment inflows. The RTG does not discriminate between FDI in
manufacturing and services sector.  In fact, there are only very limited manufacturing activities that
statutory rules require majority Thai ownership.  The new Foreign Business Act will further reduceforeign equity restrictions in manufacturing.  Moreover, for most of these remaining restricted
activities, companies that are approved by the Board of Investment or the Industrial Estate Authority
of Thailand will be waived from the foreign ownership restriction.
Para. 30:  Please refer to the answer given to Australia.
Chapter III(2)(i)(a), paras. 14 and 15
Tariff rates on some products that are higher than bound rate applies only to goods originating
from non-WTO members as stated in WT/TPR/S/63 p. 36 para.13.
Please refer to the answer given to the EU (Changes in border taxation).
Chapter III(2)(i)(b)
An increase of tariff rates on these products are within the WTO bound rate and is consistent
with Thailand’s obligation to the WTO.  As for the luxury goods, such as watches, pens, cameraswhich was lifted to 30% in 1997 will be reduced to 5% from January 2000.  Tariffs on other goods
will be considered as part of tariff restructuring.
Chapter III(2)(ii)(b), para. 43
Thailand is committed to implement the provision of the Customs Valuation by January 2000.
Chapter III(3)(iii), paras. 66-75
The Export-Import Bank of Thailand had maintained  the same amount of loan earmarked for
the packing credit scheme since the entry into fo rce of the SCM Agreement, but the amount of loan
was raised during the crisis with a view to easing the severe liquidity problem in the financial market.However, the amount of loan currently stands at the level lower than the pre-crisis level, and will beWT/TPR/M/63
Page 82
further reduced to be in line with the SCM Agreem ent.  As regards other schemes maintained by the
EXIM Bank, they are provided at market conditions.
Chapter III(4)(iii)(a), paras. 107 and 117
In the case of computer program, the exception clauses specify the acts that do not constitute
copyright infringement under the conditions that the purpose of such act is not for profit and
Section 32 para. 1 is complied with.  The user’s purpose can be determined by the nature of the actitself, for example where a number of copies of a computer program are put on sale in the market or
where a student conducts a research on a particular computer program according to his assignments.
These exceptions are unlikely to cause damages to the copyright owner because not only the purpose
of such act must be for profit, but also the safeguard in the exception under Section 32 para. 1 must be
fulfilled.  That is, the act must not conflict with normal exploitation of the copyright work by the
copyright owner and not unreasonably prejudice his legitimate rights.
Chapter III(4)(iii)(a), para. 112
There is a misunderstanding as to the application of national treatment principle under the
Thai patent law.  The 1979 Patent Act as last amended in 1999 is TRIPS-consistent and the national
treatment principle applies to all WTO countries unconditionally.  The reciprocal treatment will apply
only to non-WTO countries.
Chapter III(4)(iii)(b), para. 115
Under Section 36 para. 2 of the Patent Act, once the patentee exercises his rights, i.e. to sell or
to produce the patented product, he may not prevent others from importing or selling legitimate
patented product regardless of its price.  The Patent Act does not allow parallel import on thecondition that the import price is lower than the price charged by the patentee.
Chapter IV(5)(ii), para. 110
Thailand has complied with the principle of progressive liberalization to allow a reasonable
time-frame for domestic investors to prepare them selves for keen competition.  In the drafts
amendment of the Life and the Non-life Insurance Acts, foreign equity participation has been
proposed to increase from 25% up to 49% and with no limitation after the new has been effective for
five years.
Chapter IV(5)(ii), para. 112
Thailand does not allow majority of foreign equity participation in insurance services due to
uncompetitiveness of Thai insurance companies.
Chapter IV(5)(ii), para. 114
Insurance brokerage is conducted by business entities separated from insurance companies
and no insurance companies either domestic or foreign branches are allowed to conduct such business.
However, foreigners are allowed to set up brokerage business in the form of joint venture with 25%
equity.WT/TPR/M/63
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Chapter IV(5)(iii)
Please refer to the answers given to Hong Kong’s question under heading “Banking and
Others Financial Service”.
Chapter IV(6)(iii)
Legislative Progress
A Draft Act on the Establishment of the National Telecommunications Commission (NTC),a
new regulatory body approved by the House of Representatives in October 1999 is being considered
by the Senate and expected to be approved within the present session.
Related Draft Acts,  New Telecommunications Act, New Broadcasting Act, New
Radiocommunication Act, are being scrutinized and wi ll be submitted to the House of Representatives
within the present session and expected to be enacted within the year 2000.
Future Policy Intentions
Regarding conversion of current concessionary arrangement, State Enterprises Policy
Committee (SEPC) and the Cabinet have agreed on the criteria proposed by Thailand Development
Research Institute (TDRI), to be implemented by partners.
Interconnection arrangements
Preparation on Interconnection arrangements has been considered by NTC.
Universal Services Obligation
Universal services policies have already been determined in the Master Plan on
Telecommunications Development and the Draft Act on the Establishment of NTC to be promulgated
soon.
Chapter IV(7), para. 151
Thailand’s future policy on the domestic regulatory framework to allow more foreign access
is to prepare for the liberalization under GATS and to create more favorable climate to attract FDI in
order to contribute to the economic growth of Thailand.
Chapter IV(7), para. 153
Market access in mode 1 is of the concerns by WTO members including Thailand.  Thailand
views that this issue must be carefully examined and may be considered in the New Round ofMultilateral Negotiation.
As for limitations on foreign participation under mode 3, Thailand is not ready to allow
foreigners to establish new entities with 100% foreign ownership because local entities are not yet
competence.  Moreover, we also would like to get confident on the issue of technology transfers aswell as the need for FDI to strengthen weak local business.
Thailand has not imposed limitations on nationality requirements under mode 3.WT/TPR/M/63
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Chapter IV(7), para. 159
According to the Services Sectoral Classification List (MTN.GNS/W/120), Thailand has
made commitments for subsector F, “other business services”, covering 11 out of 20 activities whose
ability to compete in services area is inferior to developed countries.
For “other professional services”, Thailand’s Schedule of Specific Commitments is written in
the same manner as other WTO member countries including Switzerland with no commitment madefor any activities in this subsector.
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