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Cablegate: Ambassador Presses Commerce On Trade and Investment

VZCZCXRO7364
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHBK #1599 0750954
ZNR UUUUU ZZH
R 160954Z MAR 07
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC 5634
RUCNASE/ASEAN MEMBER COLLECTIVE
RUCPDOC/USDOC WASHINGTON DC

UNCLAS BANGKOK 001599

SIPDIS

SIPDIS

STATE PASS USTR
STATE PASS USPTO
USDOC FOR JKELLY

E.O. 12958:N/A
TAGS: ECON ETRD KIPR TH
SUBJECT: AMBASSADOR PRESSES COMMERCE ON TRADE AND INVESTMENT


1. Summary: On March 15, Ambassador met with Minister of Commerce
Krirk-krai Jirapaet to discuss three pressing issues: currency
controls, proposed Foreign Business Act (FBA) amendments, and
compulsory licenses on pharmaceutical products (CLs). Krirk-krai
offered no assurances that policy changes could be expected to ease
industry and USG concerns on those issues, but agreed in principle
with USG positions, including the need to consult widely before
enacting new broadly impacting economic policies. Krirk-krai
brought the long-standing complaint on bond requirements for Thai
shrimp exports, and inquired about the possibility that Thailand
would soon be placed on the Special 301 Priority Watch List. End
Summary.

2. Currency Controls: The Minister explained that per his
discussions with the Bank of Thailand (subtly making the point that
it was not his portfolio), the original policy to require compulsory
30 percent deposits of incoming capital was put in place to
stabilize the currency markets, but the controls had since been
relaxed. He noted the stock market was sensitive to such moves and
felt the trend was toward using interest rates adjustments to
stabilize the currency. He admitted that too much intervention in
the markets would weaken the system but was optimistic about the
overall picture.

3. Foreign Business Act amendment: The Ambassador noted that he
was present when the Minister addressed the Joint Foreign Chambers
of Commerce regarding the FBA and asked if there had been any
updates since that time. The Minister reiterated that the intent of
the proposed FBA amendment was not to close the door on foreign
investment, but rather to bring clarity and good governance to the
regulation of foreign buskness. He admitted that the perception in
the foreign business community was negative but felt they did not
fully appreciate the fact that he was "pardoning" all those
companies that had been using nominees over the past few decades. He
noted that both the National Legislative Assembly (NLA) and the
Council of State have the ability to change the amendment and he was
tracking the progress of the various versions working their way
through the legislative process. He expected that further action
could take place within 30 days, but admitted it was quite possible
this timeline would be extended.

4. Compulsory Licenses: The Ambassador delivered USTR Susan
Schwab's letter regarding Thailand's breaking of three
pharmaceutical patents in recent months. He emphasized that the USG
completely understood the RTG's efforts to combat diseases such as
HIV/AIDS and did not contest their right to use CLs to achieve that
goal. However, he encouraged the RTG to consult with companies prior
to using CLs. The Ambassador made the case that advance notification
would go a long way to smooth ruffled feathers and give companies
the opportunity to react in a pragmatic way that would balance
commercial and public health goals. The Minister responded that as
he told our Secretary of Commerce, prior notification was important
and he would continue to encourage the Ministry of Public Health to
work with industry. (Comment: It appeared the Minister was placing
full blame on MOPH and believed he had done all he could do. End
Comment.)

5. Continuous Bond on shrimp exports: The Minister raised the
issue of U.S. Customs' requirement for Thai shrimp exporters to post
continuous bonds and asked what the Ambassador could do to help. The
Ambassador responded he would look into the situation when he was in
Washington but his feel was that U.S. Customs was not in a position
to change their policy. The Minister alluded to WTO action and
stated he hoped it could be resolved sooner rather than later.

6. Special 301 and IPR: The Minister raised rumors that Thailand
might be moved from Watch List to Priority Watch List in the current
Special 301 review, and asked what he could do to avert that
outcome. He stated that the RTG IP enforcement team was doing
everything they could do. The Ambassador stated that the finding
would be based on what happened last year and that our companies
have commented that IP enforcement had worsened despite the MOC's
claim that seizures have increased by 25 percent. The DG of the
Department of Intellectual Property was there and (incorrectly)
stated that only three U.S. companies had complained about
Thailand's enforcement regime. The Ambassador asked what would be
the reaction if Thailand was placed on the PWL; the Minister
deflected but said he hoped to avoid a tit for tat.

7. Comment: The Ambassador made the overall point that the
economic policies of the past six months have left a negative
impression with the foreign business community, and strongly
encouraged the MOC to consider consulting with the foreign business
community prior to enacting complex economic regulations. End
Comment.
BOYCE

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