	Why a U.S.-Thailand FTA? The Bush Administration notified Congress on February 12, 2004, that it intends to begin free trade agreement (FTA) negotiations with Thailand. This notification, which follows an October 19, 2003 announcement by President Bush and former Thai Prime Minister Thaskin of their agreement to launch negotiations, allows for talks to begin within 90 days or by mid-May 2004, after required consultations with Congress. Two negotiating sessions took place in 2004, and a third was held April 4-8, 2005, in Thailand. In the notification letter sent to the Speaker of the House and the Senate Majority Leader, then-U.S. Trade Representative Robert Zoellick put forth an array of potential commercial and foreign policy gains that could be derived from the agreement. At the same time, Mr. Zoellick alluded to sensitive issues that require attention: trade in automobiles, protection of intellectual property rights, and labor and environmental standards. Zoellick's letter states that an FTA would be particularly beneficial to U.S. agricultural producers who have urged the administration to move forward, as well as to U.S. companies exporting industrial goods and services. For agricultural producers, by eliminating or reducing Thailand's high tariffs and other barriers, the FTA offers the opportunity to significantly increase export sales to Thailand. By eliminating U.S. tariff and non-tariff barriers to Thai exports, an FTA could help increase the competitiveness and market share of Thai products in the U.S. market. Still, a number of contentious issues persist. While the United States has not filed any cases against Thailand in the WTO, it has pressed Thailand to liberalize its trade and investment regimes and to improve protection of U.S. intellectual property rights (IPR). Issues in the FTA Negotiations

Countries that form FTAs agree at a minimum to phase out tariff and non-tariff barriers (NTBs) on mutual trade in goods in order to enhance market access between trading partners. As a result, the negotiation is covering trade in goods and services, agriculture, investment, and intellectual property rights, as well as other issues such as government procurement, competition policy, and customs procedures. Similar large increases in Thai agricultural exports to the United States can be expected if substantial liberalization occurs. While Thailand has committed to open up telecommunications services to direct foreign competition by early 2006, the reform process has lagged. Liberalization of other services such as legal, construction, architecture, engineering, and accounting are also U.S. negotiating objectives. Status of FTA Negotiations

The two sides completed their sixth round of FTA negotiations in Chiang Mai, Thailand on January 10-13, 2006. Congress and the U.S.-Thailand FTA

The U.S.-Thailand FTA negotiations are of interest to Congress because (1) an agreement would require passage of implementing legislation to become operational; (2) an agreement could increase U.S. exports of goods, services, and investment; (3) an agreement could increase competition for U.S. import-competing industries such as textiles and apparel and pick-up trucks; and (4) if an agreement is implemented, Thailand would become the second Asian FTA partner (the first was Singapore) for the United States.
President Bush and former Thai Prime Minister Thaskin on October 19, 2003, agreed to negotiate a bilateral free trade agreement (FTA). Six negotiating rounds took place, the most recent January 10-13, 2006 in Thailand. U.S. trade officials had hoped to conclude the negotiations by early 2006, but the negotiations were suspended by Thailand in February 2006 due to Bangkok's political crisis. After 18 months of negotiations the two sides were wide apart on a number of issues, such as financial services liberalization and a number of other sensitive issues. Combined with considerable public opposition to the FTA in Thailand, the Bush Administration may be hard pressed to complete the negotiation before trade promotion authority expires in mid-2007. While the Thai government appointed by the military after Thailand's September 2006 coup remains committed to concluding an FTA with the United States, it also plans to submit any agreement to the 242 National Legislative Assembly (NLA) for approval—a step that deposed Prime Minister Thaskin maintained was not required. At this date, however, there are no plans (date or venue) to resume the negotiations.
In the notification letter sent to the congressional leadership, then-U.S. Trade Representative Robert Zoellick put forth an array of commercial and foreign policy gains that could be derived from the agreement. The letter stated that an FTA would be particularly beneficial to U.S. agricultural producers, as well as to U.S. companies exporting goods and services to Thailand and investing there. Mr. Zoellick also alluded to sensitive issues that would need to be addressed: trade in automobiles, protection of intellectual property rights, and labor and environmental standards.
Thailand has been viewed as a strong candidate for an FTA with the United States. Its economy has shown relatively healthy growth in recent years, rising by 6.2% in 2004 and 4.5% in 2005. Yet, Thailand maintains relatively high tariff and non-tariff barriers on a number of products and services. Secondly, an FTA with Thailand would allow U.S. exporters to gain access to Thai markets similar to that obtained by other countries through bilateral and plurilateral agreements with Thailand. Third, a U.S.-Thailand FTA would likely induce other countries to seek a trade liberalization agreement with the United States. Countries that form FTAs agree at a minimum to phase out or reduce tariff and non-tariff barriers (NTBs) on mutual trade in order to enhance market access between the trading partners. The U.S.-Thailand FTA is expected to be comprehensive, seeking to liberalize trade in goods, agriculture, services, and investment, as well as intellectual property rights. Other issues such as government procurement, competition policy, environment and labor standards, and customs procedures are also on the negotiating table.
The U.S.-Thailand FTA negotiations are of interest to Congress because (1) an agreement would require passage of implementing legislation to go into effect; (2) an agreement could increase U.S. exports of goods, services, and investment, with particular benefits for agricultural exports; and (3) an agreement could increase competition for U.S. import-competing industries such as textiles and apparel and light trucks, thereby raising the issue of job losses. This report will be updated if negotiations are resumed.