American treaty - calls for change

[george]

Calls for change to US treaty

Fears of a flood of foreign firms

There are those who feel it is time to amend or cancel the Thai-US Treaty of Amity that has favoured American firms in Thailand more than those of other nations for 35 years. If not, they fear both countries will be in violation of the World Trade Organisation's most favoured nation (MFN) principle.

The private sector would prefer that the government cancel the treaty. It worries that if the treaty remains in its current form, Thailand would have to open all sectors reserved for Thai people _ like media, farming and land trading _ to all 134 WTO member nations, in keeping with the MFN principle that members treat other members equally.

The 1968 Thai-US Treaty of Amity grants Americans the same rights as Thai citizens to operate in many industries in Thailand and has caused some friction between Thailand and other countries that want the same rights.

As members of the WTO, Thailand and the United States are required to raise the treaty issue for discussions sometime this year before the 10-year grace period, requested by Thailand, for not following the MFN principle expires at the end of next year.

The treaty requires partnerships to notify each other one year before any negotiations regarding the treaty can begin.

Pornsilp Patcharin-natakul, secretary-general of the Joint WTO Committee, said that unlike American investors, Thai investors were not able to benefit in a similar fashion as they had not the capability to invest in the US.

American firms have used their right under the treaty by being eligible to operate preserved services under the 1999 Foreign Business Act the same as Thais do. Under that Act, other nations must ask for permission.

One of the prime beneficiaries of the treaty has been American International Assurance, the country's largest life insurer, which is 98% US-owned but qualifies as a ``Thai'' company. In all other cases the Insurance Act caps foreign shareholdings in local insurers at 25%.

``As Thai people do not have real benefit from such [a] treaty, so why [do] we have to keep it?'' Mr Pornsilp asks.

Still, there are several services that both countries preserve for their own people including transport, banking, property and agriculture.

Kiat Sittheamorn of the Thai Chamber of Commerce, said Thai governments, current and past, favoured American companies, causing the country troubles with other nations, in particular, Japan.

Japanese executives say that despite being the largest foreign investors in Thailand, they do not receive the same treatment as American firms.

Since the Foreign Business Act became effective in 1999, Japanese companies have obtained 250 approvals from the Commerce Ministry, while American firms have obtained five.

``Probably, this (Thai government favouring US firms) might be obstructive for [a] bilateral free trade area with Japan,'' said Mr Kiet, who is also head of the International Chamber of Commerce.

Nisa Srisuworanant of the Trade Negotiations Department said the Foreign Affairs Ministry dealing with the treaty directly had toned down their opposition to any amendments by helping the Commerce Ministry to work out the problem.

--Bangkok Post 2003-05-30

[mrvietnam2001]

``""As Thai people do not have real benefit from such [a] treaty, so why [do] we have to keep it?'' Mr Pornsilp asks.""

Frankly I have no problem with that nor do my counterparts in TL despite the USA is Thailand biggest trading bonanza.

I think we in America are going to be diversifying anyway and those who have an attitude can feel the heat for a few years while those who don't can have air conditioning.

Mr Vietnam

::

[CTM]

Americans can own a company in Thailand, but still not work legally. It might be an advantage over other foreigners, but it is hardly equal.

In America, you can work at any position in your company. No worries about arrest, huge fines, and deportation for work permit violations.

[Guest chingy]

I think we in America are going to be diversifying anyway and those who have an attitude can feel the heat for a few years while those who don't can have air conditioning.

what is that Bush use to say: you're with us or against us

[Sunbelt Asia]

Pornsilp Patcharin-natakul, secretary-general of the Joint WTO Committee, said that unlike Pornsilp Patcharin-natakul, secretary-general of the Joint WTO Committee, said that unlike American investors, Thai investors were not able to benefit in a similar fashion as they had not the capability to invest in the US.

Thank God this is old news and was before the APEC. Its now going to be in the Free Trade agreement.

http://www.usa.or.th/embassy/amb_rem/amb121703.htm

However with all due respect, Pornsilp Patcharin-natakul, should investigate more into the E-2 visa. More Thais have use this privilege than Americans applying under Amity. Americans get Amity and they get E-2. Not one year since 1966 has more Americans been approved than Thais for owning a business in the other country. The Thais have clearly benefited. The third largest Thai community in the World is not in Thailand, its in Los Angeles! If you put all the Americans in Thailand, it would be less than any city here... around 30,000.

The USA and Thailand has had a good relationship over the years. Its important we maintain our friendship for both countries.

[Khun ?]

I know of thai businesses that are owned and ran in the USA with no american partners. Some was even paid by their american husband and they kept it

in a divorce. Maybe build some schools hospitals and highways and then they may get the same benefits. Has Thailand done any of that in the USA. All is fair in love and war. I do not think there is a law in the USA that says if a company wants start a business in the U.S that it can only own 49%. They might as well do the same with property and houses while they make the change. Thailand becoming a first world country. Watch what you ask for.

[SoCal]

It's not like foreign companies hire local workers? It's not like local workers benefit from wages which they put back into the local economy? It's not like these local merchants benefit from these transactions, and in turn put more money into the local economy in wages, products, and purchases?

No fear as I see it of Thailand becomming an economic leader, except amongst it's neighbors (Myanmar, Laos, and Cambodia.)

[Indo-Siam]

In execution, at the Ministry of Commerce's Department of Foreign Business in Nonthaburi, the process for obtaining US Amity Treaty Certification is already virtually identical to the process for obtaining an Alien Business License - requiri8ng theeactsame application, and they apply identical standards, so there is literally no advantage for Americans.

Having just been through a dispute at Nothaburi, I can also verify first hand that they have no problem with a company being majority or even fully foreign-owned, without an Alien Business License, as long as it is not engaged in any of the activities listed in the three lists within the Foreign Business Act of 1999.

Meaning - they will not give you an Alien Business License - or approve a company for US Amity Treaty status - if such certification is not necessary. You can have seven foreign shareholders, and be a company that exports wooden furniture, or toys, or carved wooden frogs - and they will flat turn down a request for Amity status or Alien Business License - they will just tell you to get on with your business and stop bothering them.

So - no more 51% Thai owned, 49% foreign owned charades for most small businesses. Worst case, you have to get an Alien Business License - for which the application fee is about 20,000 baht (plus whatever fee is charged by the company who helps you preprare and process the application - we charge a bit under 10,000 baht).

Cheers!

Steve

Indo-Siam

steve@indo-siam

www.thaistartup.com

[Sunbelt Asia]

Steve,

Just so you know, the government fee for the Alien license on catagory 2 is 40,000 to 500,000 and catagory C is 20,000 to 250,000 Baht. Amity is just 22,000 Baht and $40.00 USA charge

The advantage also for Amity is for cases where domestic shipping must be at least 70% Thai. By regulation, insurance companies and insurance brokers must also be at least 75% Thai. In the case of a restricted business carried on by an alien, a minimum capital of Baht three million or greater is prescribed, to be specified in a ministerial regulation. In the case of businesses under Schedule 2, at least 2/5 of the directors must be Thai and a minimum of 40% of the shares must be owned by Thai persons (which may be reduced to 25% by Cabinet approval). Businesses under Schedules 2 or 3 may have conditions attached to alien licenses such as: minimum debt/equity ratio, number of alien directors resident in Thailand, amount and period of investment, technology and assets, etc.

Under Amity it can be 100% owned and no restriction on the minimum debt/equity ratio, etc and the minimum capital can be as low as one million. Amity still has clear advantages over applying for the more complex Alien license.

[SoCal]

Speaking as an American, I think the only shame is that it is not offered to other nations.

These Thai businessmen only want to increase their monopolistic hold on the Thai economy, by not offering to other WTO partners, and wanting to exclude the Americans to boot.

This does very little for the Thai economy, and absolutely nothing for the Thai people, but as long as their pockets are lined with gold, why should the give a hoot?

[PlanetMan]

These Thai businessmen only want to increase their monopolistic hold on the Thai economy, by not offering to other WTO partners, and wanting to exclude the Americans to boot.

This does very little for the Thai economy, and absolutely nothing for the Thai people, but as long as their pockets are lined with gold, why should the give a hoot? 

Free trade always benefits the consumers of the free trading nation. This is one of the few laws of economics that all economists agree upon. Free trade, and not the stage-managed, "pick and choose your favorites" trade of the bilateral Free trade Agreements, provides consumers with the greatest choice of products and serices at the most competitive prices. As SoCal says, it is only the Thai crony capitalists that oppose this. To their credit, entrenched, vested interests are the same everywhere.

American and other foreign companies are successful in Thailand not because they have some government-granted advantage over Thai businesses. They are successful because they offer Thai people more of what they want. Better selection, better quality, better service. Didn't we cover this in Econ 101 class?

Oh yeah, in the interest of full disclosure, I am an American. A frustrated American, seeing they way Thai people get treated by Thai businesses and the government. If I could export only one thing to Thailand from America, it would be the culture of empowered consumers and citizens.