As Thailand engages in trade discussions with the US, a leading economist advocates for sweeping domestic reforms to boost competitiveness and sustainability
As the Thai government navigates trade negotiations with the United States, a prominent economist from the Thailand Development Research Institute (TDRI) is urging a far-reaching overhaul of domestic policies, arguing that genuine long-term benefits for Thailand lie in addressing structural weaknesses rather than simply appeasing Washington's immediate concerns.
Dr Somkiat Tangkitvanich of the TDRI has offered a series of pointed recommendations that go beyond the Thai government's current 5-point negotiation framework.
While broadly agreeing with the initial approach – which includes cooperation in sectors like pet food, a flexible corn import quota, increased imports of US natural gas and aircraft, stricter export screening, and greater Thai investment in US processing – Dr Somkiat believes a more ambitious agenda is needed.
Scrapping Corn Quotas and Embracing Tariffs
A key recommendation focuses on agricultural trade.
Dr Somkiat argues for the outright abolition of import quotas on corn and soybeans, advocating instead for transparent import tariffs.
He contends that Thailand's corn cultivation for animal feed lacks a competitive edge, survives on opaque import quotas benefiting vested interests in seeds, fertilisers, and pesticides, and contributes to harmful agricultural burning and PM 2.5 pollution.
He highlights World Bank estimates that the health damage from PM 2.5 alone costs Thailand billions annually.
Eliminating these quotas, he argues, would not only reduce the US trade surplus but also benefit the livestock industry, tourism, the environment, and public health.
While acknowledging the impact on Thai corn farmers, he stresses the need for robust government support to help them adapt, preventing vested interests from using farmers to block reform.
He cautions against the government's proposed "flexible import quota," citing its inherent problems with transparency and potential for manipulation, and firmly suggests a shift to import tariffs.
Targeting Dodgy Investment, Not Just Exports
On the issue of preventing the fraudulent claiming of origin for exports, Dr Somkiat suggests a fundamental shift in focus from "screening export goods" – a potentially cumbersome process – to "screening investment."
He argues that the influx of investment specifically aimed at circumventing tariffs in countries like the US leads to minimal value-added processing in Thailand and large-scale imports of components.
He calls on the Board of Investment (BOI) to adopt much stricter criteria, promoting only investments that genuinely create significant added value, jobs, and tax revenue for Thailand.
Furthermore, he urges a review and potential revocation of existing investment promotion certificates and factory licenses if evidence of fraudulent origin claims or substandard production is found.
In a significant departure from the government's emphasis on export screening for the US market, Dr Somkiat proposes a rigorous screening of imports from countries with a history of substandard goods, citing examples of fruits and vegetables with excessive pesticide residues and industrial goods failing to meet Thai standards.
Broader Reforms for Long-Term Gain
Beyond these specific trade-related points, Dr Somkiat urges the government to seize the opportunity presented by the US negotiations to address broader domestic trade and investment barriers identified in the US National Trade Estimate 2025 report. These include:
- Ending the 30% reward for customs violation informants, which he argues fosters corruption and hinders legitimate business.
- Overhauling import and export regulations for livestock products, aligning them with scientific principles and international standards, addressing long-standing concerns from both the US and Thai businesses.
- Liberalising the services sector, particularly telecommunications, to increase competition and reduce costs, and reforming the Foreign Business Act to adopt a negative-list approach, opening up more service industries to foreign investment.
- Expanding tariff reductions and quota eliminations to other products like coffee, which he believes could unlock value-added opportunities for Thailand.
Dr Somkiat concludes that by implementing these more comprehensive reforms, Thailand can move beyond simply addressing immediate export concerns and tackle deep-rooted structural issues, ultimately leading to greater long-term economic resilience and prosperity.
- TAGS
- Thailand
- TDRI
- US tariffs
- Trade Talks
