Thailand applies to join CPTPP - but can it persuade its people?

Industry News | | MIC Customs Solutions |

A Pacific trade pact may not be a simple consideration for Thailand.

Thailand has reportedly expressed an interest in joining talks that could see it gain membership to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

However, the country's desire to join has proven controversial in the past and still is not widely supported by its people. Unless certain sticking points are addressed, can the government get around the lack of enthusiasm? Here, we'll take a closer look.

Another push towards membership

Thailand has long voiced its support for the CPTPP, which was launched in 2019 to remove trade barriers in a bloc that represents 13.3 per cent of global GDP and 6.7 per cent of the world's population.

Now, Reuters quotes deputy government spokeswoman Rachada Dhnadirek as saying Thailand is again eager to join discussions with a view to becoming a member.

"Participating in the talks is in the best interest of Thai people, and it does not mean an agreement to join the pact immediately," she said, adding that there are benefits and negative aspects, as well as terms that could be negotiated before any decision is made.

Thailand's foreign minister Don Pramudwinai is now expected to present a letter of intent to his cabinet that could lay the foundations for his country's accession. Meanwhile, prime minister Prayut Chan Ocha is urging ministers to expedite the process if possible as the country tries to claw its way out of the economic damage caused by the COVID-19 pandemic.

This comes hot on the heels of China's application to join the CPTPP and suggests Thailand is becoming fearful of being left behind by its neighbors and competitors in terms of trade.

Advantages of joining the CPTPP

Indeed, the Asian nation has not really fostered any new economic links with other countries since its signing of a free trade deal with Australia back in 2005, so reminding the world of what it has to offer from a business standpoint may certainly not be a bad thing.

Another potential plus point is the boost to the economy membership could offer. Figures from Reuters suggest joining could increase exports by 3.47 per cent and add 0.12 per cent to Gross Domestic Product, as well as providing a lift to foreign direct investment and employment.

Opposition to membership

However, there are a number of major issues that could be presented by CPTPP membership. In order to meet the criteria, Thailand must implement trade liberalization as well as tariff cuts, which could have a significant and adverse impact on a number of sectors.

For example, it would be necessary to ratify the International Union for the Protection of New Varieties of Plants (UPOV91), which means large agricultural companies would have the rights to plant breeding for 20 years. This would mean small-scale farmers having to buy seeds from approved sellers every season, rather than reusing seeds from past crops.

In a report for Channel News Asia last year, farmers explained how worried they were about this and the associated rise in costs - and food prices - as a result.

Another concern is the energy sector, as electricity is currently subsidized by the government. Without this support, energy prices could skyrocket.

So potentially huge would the changes be in Thailand should the CPTPP come into effect that some economic analysts have warned smaller Thai firms may not survive at the expense of larger multinational companies. 

What next?

The Thai government appears to be more aware this time of the need to address these concerns if it is to succeed in its goal of CPTPP membership. It has reportedly set up a PR team to deliver official messages to its people and to counter potentially damaging 'fake news' on the subject, the Bangkok Post reports.

It is also reportedly looking at possible funding to help the sectors that could find themselves in difficulties should new terms from the pact come into effect.

However, chief trade negotiator Auramon Supthaweethum told the Post the CPTPP needs to be a key consideration, particularly after China's move towards it.

"The expansion of new CPTPP members to cover China and the UK will increase the attractiveness of CPTPP. Thailand needs to reassess its benefits and the effects that will be emerging carefully," he added.

A parliamentary committee was tasked with assessing the pros and cons of membership last year and was supposed to have made a decision by September 2020, but this is clearly an issue that is presenting challenges that cannot be scaled by simple deadlines alone.

"The road ahead will be very bumpy. Thailand's CPTPP negotiation process might very well be pending for a long time," said independent analyst Tita Sanglee in a column for the Diplomat.