Thailand poised to cash in on historic WTO deal: KRsearch

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Thailand poised to cash in on historic WTO deal: KRsearch
ERICH PARPART,
PETCHANET PRATRUANGKRAI
THE NATION

BANGKOK: -- A HISTORIC World Trade Organisation deal that will abolish developed countries’ subsidies on agricultural exports for developing countries by 2018 could benefit Thailand’s economy because of a consequent increase in fair trade, said the Kasikorn Research Centre.

The agreement will not affect Thailand's policymaking at the moment as it will not come into effect until the end of 2018 and the Kingdom currently has no export-subsidy policy for agriculture products and prices.

Pimonwan Mahujchariyawong, deputy managing director of KResearch, said the developing countries receiving subsidies would be affected but the deal would open up more competition, and Thailand was well placed to compete for greater market shares.

"These export-subsidy measures involve the distortion of agricultural prices by selling the products for less than the market price, and Thailand does not have such a measure in place," she said.

WTO member countries agreed to abolish agricultural export subsidies after five days of talks in Nairobi, but failed to make progress on the long-stalled Doha Round of negotiations aimed at lowering global trade barriers.

The 162-member body, meeting in Africa for the first time, reached the agreement on Saturday, with developed nations committing to removing their subsidies immediately.

In a statement, WTO director-general Roberto Azevedo hailed the agreement as the "most significant outcome on agriculture" in the organisation's 20-year history.

Pimonwan said current government measures to support Thai farmers hit by the global drop in agricultural prices and drought, such as various loans and cash handouts, did not affect export prices and thus the Nairobi deal would not affect on measures to support farmers.

She said the effect on the world's trade of agricultural products would depend on the conditions that came with the deal, including whether it would be a complete abolition of subsidies or whether they could be allowed under certain conditions.

"We will have to wait and see if the Thai sugar industry's grading of the sugar into three grades will be affected by the new WTO deal, as this will depend on the conditions and the details of the deal," she said.

Commerce Minister Apiradi Tantraporn said Thailand, as the world's leading rice exporter, should benefit from the agreement in the long run.

Source: http://www.nationmultimedia.com/business/Thailand-poised-to-cash-in-on-historic-WTO-deal-KR-30275410.html


-- The Nation 2015-12-22

[docshock13]

Abolishment of agricultural subsidies is a good thing. It levels the playing field. I suspect this should hit the U.S. (who have had ag subsidies in place for nearly 80 years) the hardest.

[trogers]

Export subsidies - meaning prices are cheaper halfway around the globe then at the local farmers' market.

It means artifically jacking up local prices at the expense of citizens...

[chainarong]

Abolishment of agricultural subsidies is a good thing. It levels the playing field. I suspect this should hit the U.S. (who have had ag subsidies in place for nearly 80 years) the hardest.

The OZ ag industry hasn't had subsidies since the late 1970'/80's this will make or break a lot but you will come out wiser and much more better farmers for it.

[chainarong]

The devil is in the detail and did anyone read the fine print , you may have till 2018 as a developing country but you do realize all those import duties against manufactured products made in Thailand will go and I refer to the clothing industry with a 145% import duty paid on tee shirts or swim wear to enter Thailand, I rest my case.........................................

[Srikcir]

"the distortion of agricultural prices by selling the products for less than the market price, and Thailand does not have such a measure in place,"

Thailand doesn't subsidize prices for exporting agricultural products per se.

But the current Thai government does subsidize production costs with soft loans, loan forgiveness and direct payments that has the same effect as creating a phantom profit margin. The government also sells agricultural products for more than market price in G2G deals (ie., China) and in direct purchases for government holding stockpiles intended for export (ie., rubber) - strategies intended to artificially push market prices up.

On a level marketing field Thailand farmers will generally continue to be at a disadvantage given that their profit margins are typically the lowest in the ASEAN-5. This means for Thai farmers less available working capital for unanticipated costs, weather interruption and growth/diversification. In the long run WTO's abolishment means little benefit to the Thai farmers.

[Ulic]

We shall see won't we.