The Reasons For Not Being A Free Trade Country

[maxme]

Can anyone with a deep or somewhat clear insight explain to me why Thailand is not a free trade country and perhaps provide pros and/or cons with it?

[metisdead]

Let's try this in the business section.

Topic moved.

[Pib]

Here's a couple of reasons (IMHO):

- Monopolies or near monopolies (Thailand has plenty) usually don't like free trade unless on their terms...causes more competition and forces them to lower prices.

- Mom & Pop business don't like free trade...causes more competition and forces them to lower prices.

- Govt gain BIG import tax dollars....monopolies support the approach of import taxes (protect homeland businesses) through contributions to politicians, and Mom & Pop businesses support via their vote.

Thailand is slowly opening their door to more free trade agreements (FTA) but sure seem to be dragging their feet/being pushed into it.

- Note: in the real world a FTA is not generally not an agreement that eliminates import taxes on all products (only some) but generally just lower import taxes on a variety of commodities/products with the goal of reaching zero import tax in the future...sometimes the future is clearly defined in the agreement; other times it's subject to future renegotiation. I expect Thailand is more into the future renegotiation part as that usually delays reduction in import taxes. IMHO.

[RussellBellagrego]

There is no such thing as FREE TRADE. Anywhere, anytime now or in the future. Instead it is about selling your products into other markets and stopping the sale of imports to compete with your home grown products. Every country does it, some more than others . I don't support it nor agree with it, but there is not stopping trade barriers. Without question Thailand protects it's industries from competition as it cannot compete on a worldwide not even regional basis.

Autos, Trucks and scooters at the top of the protected list. USA no different, same for Europe. Just different products and degrees.

[WarpSpeed]

Here's a couple of reasons (IMHO):

- Monopolies or near monopolies (Thailand has plenty) usually don't like free trade unless on their terms...causes more competition and forces them to lower prices.

- Mom & Pop business don't like free trade...causes more competition and forces them to lower prices.

- Govt gain BIG import tax dollars....monopolies support the approach of import taxes (protect homeland businesses) through contributions to politicians, and Mom & Pop businesses support via their vote.

Thailand is slowly opening their door to more free trade agreements (FTA) but sure seem to be dragging their feet/being pushed into it.

- Note: in the real world a FTA is not generally not an agreement that eliminates import taxes on all products (only some) but generally just lower import taxes on a variety of commodities/products with the goal of reaching zero import tax in the future...sometimes the future is clearly defined in the agreement; other times it's subject to future renegotiation. I expect Thailand is more into the future renegotiation part as that usually delays reduction in import taxes. IMHO.

Forces them to lower prices but the real sticking point they'll loose out to the competition on is raising product quality to compete.

[WilliaminBKK]

PM Harper from Canada was in Thailand just last week to start free trade discussions with Thailand.

[samran]

Eh?

It might not be a free trader, but then no country is. But it is a trading nation, and one which does fairly well out of it.

I'd like to see what the OP defines as 'free trade', but I'm guessing they don't even know themselves.

Edited April 2, 2012 by samran

[CaptHaddock]

The legitimate reason to support limits on free trade is to nurture infant industries that are not ready to compete in the global marketplace. So, for instance, Japan had restrictions on car imports in the postwar period. For 17 years Toyota Motors lost money and fail miserably with the first car it tried to sell in the US, the Toyopet. However, the policy succeeded in the long run and Toyota is now the No. 2 car company in the world. Korea did the same as it developed its heavy industry in the 80's. For that matter, the current champions of unrestricted trade, the US and the UK, were both protectionist when they were developing economies. During the Tudor period England developed its textile industry against the competition of the Netherlands by restricting the importation of finished woolen goods as much as possible. The US, beginning shortly after the founding of the republic under the leadership of Alexander Hamilton took a protectionist stance toward manufacturing. The high tariffs on manufactured goods was one of the sources of conflict between the agrarian South which was an importer of British manufactures and the industrial North which led to the Civil War.

However, in the economies of S.E. Asia, including Thailand, protectionism is instead directed toward preserving local monopolies whose economic activity is more properly considered as "rent-seeking," which is the exaction of a monopoly benefit without long-term development goals. The model in the SE Asian countries is for "godfathers" to seek monopolies from the government which become cash-cows whose cashflow then goes to fund expansion into other rent-seeking activities. The result is, unlike the north east Asian countries, that there are no global companies that have originated in SE Asia with internationall recognized brand franchises. There is no new technology development, not even the transfer of technology. China hired Siemens to build their first bullet train in Shanghai and now is in the bullet-train business itself, having recently offered the low-bid to build California's bullet train. That kind of technology transfer occurred in Korea (cars, pianos, etc.), but not in Thailand, Malaysia, or Indonesia.

The call for free trade by highly developed economies like the US and the UK is a call for competition on an unlevel playing field. At the same time the US protects some workers (doctors, lawyers) for global labor competition while exposing manufacturing workers to relentless wage pressure from cheap labor countries. The result is the extreme increase in income disparity that we see now in the US, which has a higher Gini coefficient than Thailand.