Thai-German Trade War

[robblok]

Kerry,

Just look at the EU as a whole we are then at 85 percent lower then the 95%. Just shows that loaning and borrowing (among member states) inside the EU is widespread.

But still why do ad the private debt when we are all talking about governments and government problems. Would make more sense then to show government debts only. You often make no sense and this is one of those times.

Also this is external debt, does not have to reflect the true debt.

Edited July 30, 2011 by robblok

[gregb]

Total rubbish .Many of us have been arguing about the strength of the Thai Baht, not necessarily here. What most do not realize is that the Thai currency is NOT a free floating currency. It is a "managed float" It is SET every day by the Monetary Policy Committee of the Bank of Thailand. To achieve the short term aims of that group

Is that right? I have often wondered how the Baht could possibly not have had a run on it in some of the dire circumstances the country has found itself in recently.

I have even wondered whether the central bank intervenes in the market to buy the Baht to keep it so strong in times of crisis.

Not buy, no. Most businesses would throw a party if it declined slightly and the BOT would be hailed as heroes. Sell yes. They do that regularly as necessary.

It would be hard to take a run at the Baht right now. The central bank is actively intervening to push it down in most cases where they intervene. They also have accumulated billions of USD in the treasury to defend it the other way if they desired, and nearly all financial attacks have to be done in USD. The market actually wants THB priced even higher. Thailand has an extremely low debt to GDP ratio when compared with many other countries. The minor crisis in Thailand right now are still minor. It will take the death of a very important individual in this country before that stability is truly threatened.

The most a speculator could hope to do in Thailand right now is force high inflation domestically, and it is very hard for anyone to make easy money on that. Much better prospects going after a big kill in a country like Spain that is truly in trouble.

So I wouldn't expect to see the THB move too much in the immediate future. And I actually don't think Thailand needs any investment from Germany at the moment either. This is more about specifically citizens inside of each country benefiting than it is about either country in aggregate.

So I say bring on a trade war. Why not? I don't drive a BMW, and Japanese engineering is more than good enough for me. What does Germany have that any Thai really wants and can't get from the Japanese? Germany needs Thai grain more than Thais need Siemens.

[Cnxforever]

Germany's GDP in dollar terms is $2.94 trillion

They are a world leader in industrial machinery, luxury vehicles, and an integral part of the EU's economy.

Thailand's GDP in dollar terms is $586 billion

The country does not lead in anything in particular but has a fairly robust manufacturing sector.

Germany would eat Thailand's lunch any day of the week. Plus the risk of pissing off Germany is that other EU nations can/will follow suit as well as the U.S. getting involved if it gets serious enough to levy international sanctions.

you are right - and there are only so many foreign companies left who are willing to do business here - especially when it comes to government contracts.

But it is not only foreign companies who are taken to the cleaners here a Thai friend of mine is an engineer and runs his own company - he now and then takes government contracts and he tells me the horror stories - I wonder how he is still able to sleep at night!

But we don't have to go to government level to find that nobody sticks to contracts here.

One can only imagine the mess when it comes to contracts worth hundreds of millions - and the people involved here know that arbitration in Thailand not only takes forever - the way it ends can usually be "influenced" by the locals who at that level have the right connections to make it go their way!

I hope the new government will take a different approach to the problem - and pay what they owe - nobody takes Abhisit and Khasit seriously anymore in Germany anyway.

Germany is one of Thailand’s largest trading partners - Thailand would lose dearly in a "trade War".

Germany does not need anything Thailand sells – and they don’t have to worry a minute - Germany will always sell their products to those who want quality.

And yes - what cars would the Thai elite drive? And even if they should switch - every Chinese who makes enough money to afford it wants a BMW or Mercedes - the order books are full and German car makers for example having another record year.

So I think Khasit should shut up now - crawl back under his rock - and let people with some diplomatic skills take care of the problem/

Or maybe he should call Gordon Wu in Hong Kong and ask him what he thinks about government contracts in Thailand – but then again I don’t think Gordon Wu would take any calls from Thailand!

Thailand has been building on it’s reputation as an unreliable trading partner internationally for a while now – and it will be hard work to turn this around – endlessly blaming others for of their own shortcomings – will get them nowhere!

Edited July 30, 2011 by metisdead
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[kerryk]

Germany's GDP in dollar terms is $2.94 trillion

They are a world leader in industrial machinery, luxury vehicles, and an integral part of the EU's economy.

Thailand's GDP in dollar terms is $586 billion

The country does not lead in anything in particular but has a fairly robust manufacturing sector.

Germany would eat Thailand's lunch any day of the week. Plus the risk of pissing off Germany is that other EU nations can/will follow suit as well as the U.S. getting involved if it gets serious enough to levy international sanctions.

you are right - and there are only so many foreign companies left who are willing to do business here - especially when it comes to government contracts.

But it is not only foreign companies who are taken to the cleaners here a Thai friend of mine is an engineer and runs his own company - he now and then takes government contracts and he tells me the horror stories - I wonder how he is still able to sleep at night!

But we don't have to go to government level to find that nobody sticks to contracts here.

One can only imagine the mess when it comes to contracts worth hundreds of millions - and the people involved here know that arbitration in Thailand not only takes forever - the way it ends can usually be "influenced" by the locals who at that level have the right connections to make it go their way!

I hope the new government will take a different approach to the problem - and pay what they owe - nobody takes Abhisit and Khasit seriously anymore in Germany anyway.

Germany is one of Thailands largest trading partners - Thailand would lose dearly in a "trade War".

Germany does not need anything Thailand sells and they dont have to worry a minute - Germany will always sell their products to those who want quality.

And yes - what cars would the Thai elite drive? And even if they should switch - every Chinese who makes enough money to afford it wants a BMW or Mercedes - the order books are full and German car makers for example having another record year.

So I think Khasit should shut up now - crawl back under his rock - and let people with some diplomatic skills take care of the problem.

Or maybe he should call Gordon Wu in Hong Kong and ask him what he thinks about government contracts in Thailand but then again I dont think Gordon Wu would take any calls from Thailand!

Thailand has been building on its reputation as an unreliable trading partner internationally for a while now and it will be hard work to turn this around endlessly blaming others for of their own shortcomings will get them nowhere!

I don't think Thailand is that unreliable, after all they do make Mercedes here. Isn't Thailand the second largest exporter of light trucks in the world?

[kerryk]

Germany's GDP in dollar terms is $2.94 trillion

They are a world leader in industrial machinery, luxury vehicles, and an integral part of the EU's economy.

Thailand's GDP in dollar terms is $586 billion

The country does not lead in anything in particular but has a fairly robust manufacturing sector.

Germany would eat Thailand's lunch any day of the week. Plus the risk of pissing off Germany is that other EU nations can/will follow suit as well as the U.S. getting involved if it gets serious enough to levy international sanctions.

you are right - and there are only so many foreign companies left who are willing to do business here - especially when it comes to government contracts.

But it is not only foreign companies who are taken to the cleaners here a Thai friend of mine is an engineer and runs his own company - he now and then takes government contracts and he tells me the horror stories - I wonder how he is still able to sleep at night!

But we don't have to go to government level to find that nobody sticks to contracts here.

One can only imagine the mess when it comes to contracts worth hundreds of millions - and the people involved here know that arbitration in Thailand not only takes forever - the way it ends can usually be "influenced" by the locals who at that level have the right connections to make it go their way!

I hope the new government will take a different approach to the problem - and pay what they owe - nobody takes Abhisit and Khasit seriously anymore in Germany anyway.

Germany is one of Thailand’s largest trading partners - Thailand would lose dearly in a "trade War".

Germany does not need anything Thailand sells – and they don’t have to worry a minute - Germany will always sell their products to those who want quality.

And yes - what cars would the Thai elite drive? And even if they should switch - every Chinese who makes enough money to afford it wants a BMW or Mercedes - the order books are full and German car makers for example having another record year.

So I think Khasit should shut up now - crawl back under his rock - and let people with some diplomatic skills take care of the problem/

Or maybe he should call Gordon Wu in Hong Kong and ask him what he thinks about government contracts in Thailand – but then again I don’t think Gordon Wu would take any calls from Thailand!

Thailand has been building on it’s reputation as an unreliable trading partner internationally for a while now – and it will be hard work to turn this around – endlessly blaming others for of their own shortcomings – will get them nowhere!

Abner I heered tell that one out of every four cars made comes from Thailand.

Yup.

Ya mean if I want to buy a Chevy or a Ford it may come from Thailand?

Yup, them sneaky krauts are even making Mercedes Benz there. Honda that rice burner has even made over one million cars there!

Well Billy Bob was going to buy a BMW X3 2.5i, I bet that is still made by those quality conscience German good old boys.

You'd be wrong Abner, that BMW comes from those undependable Thais too.

Yall mean if those China boys want to buy the quality of Mercedes or BMW they might be buying it from Thailand!!!

That's right Abner.

[sharecropper]

The latest upside-down thinking writ large on a world stage (I can't provide the link as it discusses a banned subject-matter) but it's in The Nation, I have put relevant paragraphs below.

Office of the Attorney-General says Walter Bau must approach a Thai court if it wants to pursue compensation

......The Office of the Attorney-General (OAG) yesterday challenged the German construction firm Walter Bau to bring the investment conflict case over Don Muang Tollway to a Thai court to enforce the compensation awarded by an international arbitration tribunal.

NOTES:

Why does it need to bring a case to enforce payment at all? It has won at arbitration, to which most losing parties simply pay up.

..........On July 1, 2009, an international arbitration panel in Geneva made a final judgement in favour of Walter Bau. The Thai government was ordered to pay ¤36 million in damages to the company for breaching obligations set out in the tollway contract. The decision was final.

Note final decision, so no appeals, and the order was for the government to pay this money. This arbitration award was made under the arbitration provisions in the contract Thailand freely negotiated and signed.

Walter Bau brought the matter before the US District Court in New York on March 26 last year, seeking enforcement of the award in the United States. That court ruled in favour of Walter Bau, but the Thai government appealed on July 28 last year against the decision.

NOTES: What on earth is there to appeal against? Unless the government can appeal against having the arbitration award enforced in the US, which would be highly unlikely, as the court (and probably any court in any country in the world with a functioning legal system) accepts the verdict of the International Arbitration. It's just a waste of money, if in fact they even are serious and are appealing it.

The company also brought the case to a German court in Berlin asking for enforcement of the arbitration tribunal's decision. The case is now under consideration, Julasing said, adding that he would bring a key witness to the trial to prove that the international tribunal mishandled the case.

NOTES -

1. Note above - THERE ARE NO APPEALS, THE ARBITRATION JUDGMENT IS FINAL. Appealing enforcement judgments around the world is a pathetic, and embarrassing waste of money.

2. Does anyone recall the same dopey after-the-horse-has-bolted thinking in the Thai press a couple of years ago, about the International Court's Preah Vihear ruling. The argument ran something like this: "well, back in 1962 the Cambodians had an unfair advantage. They had better lawyers, and we didn't have our best legal team out and that's why we lost so we should be allowed to go back and re-argue our case, now with the proper evidence presented to support what we say are the true facts".

Thailand had a witness who was very familiar with the investment contract from the beginning, but the international arbitration tribunal refused to take this witness into account and made an unfair judgement against the Thai government, Julasing said.

NOTES -

1. Note the very Thai use of the word "unfair" ie "we lost, so it has to be unfair, - by our standards". That's OK domestically, but not in the real world.

2. The arbitration tribunal would follow the parameters set out for it in the original freely negotiated contract in reaching its decision. This cuts both ways, so anything not to be regarded in reaching the decision at arbitration, has to be disregarded, and anything the arbitrator is empowered by the contract to look at, he has to look at. If he disregarded a witness, and Thailand couldn't persuade him at the arbitration that the witness was relevant and should be heard, or had something relevant to say, then he almost certainly wasn't relevant.

It strikes me that Thailand could suffer very badly from its behaviour over this arbitration the more facts that come out about it.

Why not just pay up and stop digging an even deeper hole for itself? If the answer is loss of face, what does that say to potential partners looking to enter into contracts with the government.

Edited July 31, 2011 by sharecropper

[JurgenG]

Thailand is no longer the hub of cheap labour that it used to be. Watch where the clothing manufacturers go, they always jump first. At the moment they, including the Thai owned companies, are moving their manufacturing to Vietnam.

I know of two major importers of clothing to the UK who are currently relocating production from Southern India to Cambodia and setting up factories there - one of which is Chinese owned. One of them has been importing from Vietnam for the last 3 years already. Neither has felt it was economically viable to manufacture in Thailand for a number of years.

It has more to do with import duties than manufacturing cost.

I don't know about UK, but for Europe, garments made in Cambodia have much lower import duties than those made in neighboring countries, that's what makes the difference.

[metisdead]

An inflammatory post and a reply to that post have been removed.

[Livinginexile]

The latest upside-down thinking writ large on a world stage (I can't provide the link as it discusses a banned subject-matter) but it's in The Nation, I have put relevant paragraphs below.

Office of the Attorney-General says Walter Bau must approach a Thai court if it wants to pursue compensation

......The Office of the Attorney-General (OAG) yesterday challenged the German construction firm Walter Bau to bring the investment conflict case over Don Muang Tollway to a Thai court to enforce the compensation awarded by an international arbitration tribunal.

NOTES:

Why does it need to bring a case to enforce payment at all? It has won at arbitration, to which most losing parties simply pay up.

..........On July 1, 2009, an international arbitration panel in Geneva made a final judgement in favour of Walter Bau. The Thai government was ordered to pay ¤36 million in damages to the company for breaching obligations set out in the tollway contract. The decision was final.

Note final decision, so no appeals, and the order was for the government to pay this money. This arbitration award was made under the arbitration provisions in the contract Thailand freely negotiated and signed.

Walter Bau brought the matter before the US District Court in New York on March 26 last year, seeking enforcement of the award in the United States. That court ruled in favour of Walter Bau, but the Thai government appealed on July 28 last year against the decision.

NOTES: What on earth is there to appeal against? Unless the government can appeal against having the arbitration award enforced in the US, which would be highly unlikely, as the court (and probably any court in any country in the world with a functioning legal system) accepts the verdict of the International Arbitration. It's just a waste of money, if in fact they even are serious and are appealing it.

The company also brought the case to a German court in Berlin asking for enforcement of the arbitration tribunal's decision. The case is now under consideration, Julasing said, adding that he would bring a key witness to the trial to prove that the international tribunal mishandled the case.

NOTES -

1. Note above - THERE ARE NO APPEALS, THE ARBITRATION JUDGMENT IS FINAL. Appealing enforcement judgments around the world is a pathetic, and embarrassing waste of money.

2. Does anyone recall the same dopey after-the-horse-has-bolted thinking in the Thai press a couple of years ago, about the International Court's Preah Vihear ruling. The argument ran something like this: "well, back in 1962 the Cambodians had an unfair advantage. They had better lawyers, and we didn't have our best legal team out and that's why we lost so we should be allowed to go back and re-argue our case, now with the proper evidence presented to support what we say are the true facts".

Thailand had a witness who was very familiar with the investment contract from the beginning, but the international arbitration tribunal refused to take this witness into account and made an unfair judgement against the Thai government, Julasing said.

NOTES -

1. Note the very Thai use of the word "unfair" ie "we lost, so it has to be unfair, - by our standards". That's OK domestically, but not in the real world.

2. The arbitration tribunal would follow the parameters set out for it in the original freely negotiated contract in reaching its decision. This cuts both ways, so anything not to be regarded in reaching the decision at arbitration, has to be disregarded, and anything the arbitrator is empowered by the contract to look at, he has to look at. If he disregarded a witness, and Thailand couldn't persuade him at the arbitration that the witness was relevant and should be heard, or had something relevant to say, then he almost certainly wasn't relevant.

It strikes me that Thailand could suffer very badly from its behaviour over this arbitration the more facts that come out about it.

Why not just pay up and stop digging an even deeper hole for itself? If the answer is loss of face, what does that say to potential partners looking to enter into contracts with the government.

Good summary Sharecropper!

Thai's are breathtaking in their aragance and their absolute belief they can never be wrong.

They are blaming the German government when infact it was the international recognised independant legal system that arbitrated the decision!

The world is getting a glimpse of how corrupt Thailand is and they are now severely embarassing themselves on the world stage. The laughing stock of the international community one might say.

They think they can change the law at will to suite themselves. They are in for a nasty shock if they think they can take on Germany in a trade/legal war.

But then again...as Kerry implies...Thailand is in a much better financial state to weather any trade war with any the worlds economic power houses

Edited July 31, 2011 by Livinginexile
Edited to remove negative comments criticizing the legal proceedings or judgments of any Thai court of law.

[beano2274]

There will be no trade war, the Thais have to realise that they are not up against the Germans but a German company that is supported by the courts.

Before the plane incident I bet no-one realised such a huge debt was owed, but by seizing the plane the guy from Walter Bau has brought world attention onto this episode, a good bit of PR for him. I wonder if the Chinese are watching closely since they have been linked to build the HS railway links.

Are Siemens still dealing with the upgrades on the BTS?

Edited July 31, 2011 by beano2274

[Orac]

Thailand is no longer the hub of cheap labour that it used to be. Watch where the clothing manufacturers go, they always jump first. At the moment they, including the Thai owned companies, are moving their manufacturing to Vietnam.

I know of two major importers of clothing to the UK who are currently relocating production from Southern India to Cambodia and setting up factories there - one of which is Chinese owned. One of them has been importing from Vietnam for the last 3 years already. Neither has felt it was economically viable to manufacture in Thailand for a number of years.

It has more to do with import duties than manufacturing cost.

I don't know about UK, but for Europe, garments made in Cambodia have much lower import duties than those made in neighboring countries, that's what makes the difference.

This would apply to Cambodia under the EBA (everything but arms) rules, as would Laos, but Vietnam does not come under this agreement and appears to have the same preferential rates as Thailand and there are still substantial amounts of textiles/clothing coming from there so duty rates can only be part of the story.

With the competitive edge that Cambodia have now with access to EU markets free of duties and quotas, and as they develop the infrastructure needed for international trade, they will take more business away from Thailand.

[WinnieTheKhwai]

There will not be a trade war. The whole premise of the topic doesn't apply. Both nations have FAR too much stuff to sell to each other for that to happen. It then turned into a somewhat esoteric discussion on world economics. Yawn.

The crux of the matter is how Germany wandered head-first into this plane thing. Apparently this wasn't covered by diplomatic immunity, or 'common sense' not to needlessly offend a friendly government. This being Germany, it's probably correct to the letter of the law, but JESUS, someone should have had the common sense to apply diplomatic immunity to a case like this.

Then, the response from the Thai government has been extremely puzzling, but not surprising given how ineffective the government has really been. Absolutely no decisiveness, and no progress. They could have either made a lot more noise, expelling the German ambassador and confiscating something German as a very minor start, OR they could have gotten that plane out by posting a measly sum of money, to also defuse the situation. They did neither. They didn't do anything and achieved nothing. Surprise surprise, Abhisit. A fitting end.

Now, let's get the new government in place and clean up this mess, along with all the other messes, and start moving forward again.

Edited July 31, 2011 by WinnieTheKhwai

[Crushdepth]

Germany's GDP in dollar terms is $2.94 trillion

They are a world leader in industrial machinery, luxury vehicles, and an integral part of the EU's economy.

Thailand's GDP in dollar terms is $586 billion

The country does not lead in anything in particular but has a fairly robust manufacturing sector.

Germany would eat Thailand's lunch any day of the week. Plus the risk of pissing off Germany is that other EU nations can/will follow suit as well as the U.S. getting involved if it gets serious enough to levy international sanctions.

Debt as % of GDP

Germany 142%

UK 400%

Netherlands 471%

Ireland 1103%

Australia 200%

US 95%

Thailand 26%

You forgot to insert a decimal point in the Australian debt, it's actually about 22%. Some of the other figures look way off as well, Japan is the worst and its about 200%.

[DP25]

Thailand is no longer the hub of cheap labour that it used to be. Watch where the clothing manufacturers go, they always jump first. At the moment they, including the Thai owned companies, are moving their manufacturing to Vietnam.

I know of two major importers of clothing to the UK who are currently relocating production from Southern India to Cambodia and setting up factories there - one of which is Chinese owned. One of them has been importing from Vietnam for the last 3 years already. Neither has felt it was economically viable to manufacture in Thailand for a number of years.

Clothing manufacture is the first to go when a country moves up the food chain. If it wasn't for factories along the border employing Burmese they probably couldn't afford to make them at all anymore. South Korea and Taiwan used to be the centers for cheap clothing, then Thailand and Malaysia, now Vietnam and China. Factories making hard drives, computer parts, and cars are booming and are what is needed

[kerryk]

Thailand is no longer the hub of cheap labour that it used to be. Watch where the clothing manufacturers go, they always jump first. At the moment they, including the Thai owned companies, are moving their manufacturing to Vietnam.

I know of two major importers of clothing to the UK who are currently relocating production from Southern India to Cambodia and setting up factories there - one of which is Chinese owned. One of them has been importing from Vietnam for the last 3 years already. Neither has felt it was economically viable to manufacture in Thailand for a number of years.

It has more to do with import duties than manufacturing cost.

I don't know about UK, but for Europe, garments made in Cambodia have much lower import duties than those made in neighboring countries, that's what makes the difference.

This would apply to Cambodia under the EBA (everything but arms) rules, as would Laos, but Vietnam does not come under this agreement and appears to have the same preferential rates as Thailand and there are still substantial amounts of textiles/clothing coming from there so duty rates can only be part of the story.

With the competitive edge that Cambodia have now with access to EU markets free of duties and quotas, and as they develop the infrastructure needed for international trade, they will take more business away from Thailand.

Excuse this slight off topic question but what is it with the Cambodian European clothes connection? Thai merchants go to Cambodia or Cambodian border crossings and buy used European clothing by the pound or European seconds and take them to Thai flea markets to sell. How does the European clothing get to Cambodia?

[Richard4849]

The Salvation Army box...donations.

[kerryk]

Germany's GDP in dollar terms is $2.94 trillion

They are a world leader in industrial machinery, luxury vehicles, and an integral part of the EU's economy.

Thailand's GDP in dollar terms is $586 billion

The country does not lead in anything in particular but has a fairly robust manufacturing sector.

Germany would eat Thailand's lunch any day of the week. Plus the risk of pissing off Germany is that other EU nations can/will follow suit as well as the U.S. getting involved if it gets serious enough to levy international sanctions.

Debt as % of GDP

Germany 142%

UK 400%

Netherlands 471%

Ireland 1103%

Australia 200%

US 95%

Thailand 26%

You forgot to insert a decimal point in the Australian debt, it's actually about 22%. Some of the other figures look way off as well, Japan is the worst and its about 200%.

This is a list of countries by external debt, the total public and private debt owed to, or invested by, nonresidents repayable in foreign currency, goods, or services as of June 2010. Sorry about Australia. I was looking at Austria which is 200% of GDP. Australia was 95% 31 December 2010.

http://en.wikipedia.org/wiki/List_of_countries_by_external_debt

[beano2274]

When I was in the UK, I went to a famous sports shop to look at the England footie shirts, low and behold made in Cambodia.

[kerryk]

The Salvation Army box...donations.

Actually that's kind of what I thought for the used clothing that is sold by the pound. The Thais wash it and mark sizes on it and sell it at the flea market. Like, how many Cambodians are going to wear extra large shirts or waist 36 jeans?

But where do the brand name seconds come from? Do the Cambodians classify them seconds or do they go to Europe get rejected and come back to Cambodia?

Edited July 31, 2011 by kerryk

[beano2274]

The Salvation Army box...donations.

Actually that's kind of what I thought for the used clothing that is sold by the pound. The Thais wash it and mark sizes on it and sell it at the flea market. Like, how many Cambodians are going to wear extra large shirts or waist 36 jeans?

But where do the brand name seconds come from? Do the Cambodians classify them seconds or do they go to Europe get rejected and come back to Cambodia?

The seconds are sold in the "Export Shops in the Malls"

[Richard4849]

The Salvation Army box...donations.

Actually that's kind of what I thought for the used clothing that is sold by the pound. The Thais wash it and mark sizes on it and sell it at the flea market. Like, how many Cambodians are going to wear extra large shirts or waist 36 jeans?

But where do the brand name seconds come from? Do the Cambodians classify them seconds or do they go to Europe get rejected and come back to Cambodia?

They are rejected on-site in the Cambodian by QA. Technically, most of them are supposed to be destroyed...

[roamer]

Thailand is no longer the hub of cheap labour that it used to be. Watch where the clothing manufacturers go, they always jump first. At the moment they, including the Thai owned companies, are moving their manufacturing to Vietnam.

I know of two major importers of clothing to the UK who are currently relocating production from Southern India to Cambodia and setting up factories there - one of which is Chinese owned. One of them has been importing from Vietnam for the last 3 years already. Neither has felt it was economically viable to manufacture in Thailand for a number of years.

Clothing manufacture is the first to go when a country moves up the food chain. If it wasn't for factories along the border employing Burmese they probably couldn't afford to make them at all anymore. South Korea and Taiwan used to be the centers for cheap clothing, then Thailand and Malaysia, now Vietnam and China. Factories making hard drives, computer parts, and cars are booming and are what is needed

Not the whole story. Its easier to move sewing machines than it is auto or hard drive production facilities and that's another reason why the garment business is first to jump ship. If you look at the amount of money Taiwan & Singapore are putting into Vietnam for future hi tech developments you can see the future. Thailand benefited from being one of the first to open for business in the region, now it has to compete with the new kids on the block who are more competitive on cost grounds. Add to that a more stable political regime and a willingness to do business without miles of red tape its easy to see where the lions share of investment will be going and it ain't LOS.

[Richard4849]

Vietnam may be a more stable political regime (communist dictatorships tend to be fairly stable, until they start fraying around the edges), but the red tape factor is DEFINITELY more of a hassle in Vietnam than in Thailand. The level of corruption is even more in Vietnam than it is here, and the rule of law means even less. Laws change overnight at the capricious will of the communist party upper echelons, and you can forget any semblance of an independent judiciary.

Lots of people have gone into Vietnam...few have managed to get any money out.

Or so I'm told.

[jayjayjayjay]

Germany's GDP in dollar terms is $2.94 trillion

They are a world leader in industrial machinery, luxury vehicles, and an integral part of the EU's economy.

Thailand's GDP in dollar terms is $586 billion

The country does not lead in anything in particular but has a fairly robust manufacturing sector.

Germany would eat Thailand's lunch any day of the week. Plus the risk of pissing off Germany is that other EU nations can/will follow suit as well as the U.S. getting involved if it gets serious enough to levy international sanctions.

Debt as % of GDP

Germany 142%

UK 400%

Netherlands 471%

Ireland 1103%

Australia 200%

US 95%

Thailand 26%

You forgot to insert a decimal point in the Australian debt, it's actually about 22%. Some of the other figures look way off as well, Japan is the worst and its about 200%.

This is a list of countries by external debt, the total public and private debt owed to, or invested by, nonresidents repayable in foreign currency, goods, or services as of June 2010. Sorry about Australia. I was looking at Austria which is 200% of GDP. Australia was 95% 31 December 2010.

http://en.wikipedia....y_external_debt

"Or invested by non-residents". Not a clear indication of debt. Investment by non-residents who one day may return their investment to a foreign currency is so far from public/private borrowings that it is pointless to use this as a basis for your argument. This just indicates that Australia freely invites foreigners to invest on it's soil, at that the country is a stable place to do so. It does not indicate that it is a country in peril as you were trying to highlight!!!!!!!!

[kerryk]

Actually I should not have included Australia in that list at all because it has nothing to do with the Euro and a German trade war with Thailand.

I think it is probably Belgium that will be the straw that breaks the camels back and trashes the Euro and send the Germans into US dollars and saves us poor Yanks. The Thais of course have lots of US dollars in the bank and the future looks good for the Baht.

[nocturn]

Germany's GDP in dollar terms is $2.94 trillion

They are a world leader in industrial machinery, luxury vehicles, and an integral part of the EU's economy.

Thailand's GDP in dollar terms is $586 billion

The country does not lead in anything in particular but has a fairly robust manufacturing sector.

Germany would eat Thailand's lunch any day of the week. Plus the risk of pissing off Germany is that other EU nations can/will follow suit as well as the U.S. getting involved if it gets serious enough to levy international sanctions.

Debt as % of GDP

Germany 142%

UK 400%

Netherlands 471%

Ireland 1103%

Australia 200%

US 95%

Thailand 26%

that list differs radically to any current assessment i have read. where did you find it?

[kerryk]

Germany's GDP in dollar terms is $2.94 trillion

They are a world leader in industrial machinery, luxury vehicles, and an integral part of the EU's economy.

Thailand's GDP in dollar terms is $586 billion

The country does not lead in anything in particular but has a fairly robust manufacturing sector.

Germany would eat Thailand's lunch any day of the week. Plus the risk of pissing off Germany is that other EU nations can/will follow suit as well as the U.S. getting involved if it gets serious enough to levy international sanctions.

Debt as % of GDP

Germany 142%

UK 400%

Netherlands 471%

Ireland 1103%

Australia 200%

US 95%

Thailand 26%

that list differs radically to any current assessment i have read. where did you find it?

The link was posted above a number of times but Australia should read Austria. Post #77 and others.

Edited August 4, 2011 by kerryk

[lovelomsak]

I just read this on Spiegel online, what i understand from this is Germany now has no choice but to get involved as a government,in the despute.

But the German government may end up having to get involved, and may even have to pay compensation itself to Walter Bau. A recent report by an expert in insolvency law, Professor Christoph Paulus of Berlin's Humboldt University, concluded that the German government should be doing everything in its power to make Thailand pay its debt to the insolvent construction firm. That includes "curtailing trade relations" or the "freezing of foreign assets."

If the government takes no action, "a compensation claim is feasible," wrote

[lovelomsak]

I thought this might also be a good read on the issue at hand.

Thai Law & PolicyMaking the Connection Between Policy Issues and Business Decisions

Is Thailand Really Appealing Walter Bau's Arbitration Award in a US Court?

No. But reading some of the reports in the Thai press you might get that impression. "once the legal dispute was decided by the [uS] court, the Thai government would live up to its responsibility" "it was inappropriate for the German government to make such a demand when the legal dispute had not yet been settled [on appeal in the US]. "This is being appealed." So this appeal challenges the merits of the arbitration award, right?

That's is not what Thailand's own appellate brief says. In fact, it says the exact opposite. On page six: "The New York Convention affords the district court no power to vacate the Final Award [the arbitration award that is supposedly on appeal], and Thailand did not ask the district court to do so."

While quotes from Thai politicians in the Thai press seem to suggest otherwise (maybe something got lost in the translation?), Thailand's own appellate brief get's it right: Thailand cannot challenge the arbitration award and it is not trying to do so. U.S. law does not allow it do so and the New York Convention a treaty that governs the recognition and enforcement of international arbitration awards also does not permit a U.S. court to overturn the arbitral award in favor of Walter Bau and against the Thai government. This is about as basic as it gets.

So what is the appeal about?

Basically Thailand argues that the US district court applied the wrong standard of review in determining whether Walter Bau and Thailand agreed to arbitrate the dispute when it confirmed the arbitration award. It's about the "arbitrability" of the dispute. Thailand argues that the US district court was obliged under U.S. law to take a "fresh look" at whether there was an agreement to arbitrate. The US district disagreed, saying: "Thailand has already conceded, as it must, that it entered into two treaties that expressly provide for arbitration…" and this is a dispute about the scope of this undisputed arbitration obligation, something which the arbitral panel itself has the authority to decide.

The US District adds: "While the Court finds it unnecessary to review the Arbitrators' Award de novo [legal language for a "fresh look"], it is important to note that…there is serious doubt as whether, even on a de novo review, Thailand would be able to turn over the Arbitrators' well reasoned award."

I'd agree that this is worth noting. Thailand's appellate brief dismisses this comment as dicta (probably right), but it's nonetheless very important dicta.

What does Thailand want the US Appellate Court to do?

Thailand wants the appellate court to remand meaning, return the matter to the US District Court with instructions that the US District Court conduct a fresh review of the arbitrability of the dispute. Thailand also wants the order confirming the arbitration award in the US District Court to be vacated. To be fair, Thailand is also essentially arguing that if the correct standard of review is applied, the US District Court should decide that this dispute was not properly subject to arbitration under US law.

When Does a US Court Decide the Underlying Dispute Between Walter Bau and Thailand?

Never. The US doesn't have jurisdiction over the underlying dispute and it doesn't have authority to set aside the international arbitration award issued in Geneva, Switzerland.

So how is this Resolved?

By all accounts the arbitration award is final. Other than the somewhat confusing references to the pending appellate court proceedings in US, no one has suggested otherwise. This means that Walter Bau continues to pursue Thai assets until Thailand complies with the award and pays, Walter Bau seizes enough Thai assets to satisfy the award, Walter Bau gives up (that doesn't seem likely) or some sort of settlement is reached between Walter Bau and Thailand.

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By Douglas Mancill, on July 30, 2011 at 10:33 am, under Arbitration, Investment, Law, Thailand

Edited August 4, 2011 by lovelomsak

[StreetCowboy]

Its enough to put you off doing business with Johnny Foreigner, isn't it?

I suppose it highlights that at the end of the day, an honourable counter-party is worth a lot more than the law

If people who trade on thin margins lose trust in the Thai government, how much will that cost Thailand in the long run?

If we have to add on 10% for bribes, and 10% for risk of non-payment...

SC

PS We never had any payment or corruption problems with any companies with whom we dealt in Thailand, and we were never successful in any government bids, so cannot comment from experience on promptness of payment or "other payments"