US Cuts to Thailand's Free-Trade Benefits Take Effect


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KUALA LUMPUR, MALAYSIA - Thailand is set to lose duty-free access for $1.3 billion in exports to the U.S. market today, six months after Washington warned it would pull back on trade privileges unless the country committed to more labor rights reforms.

Analysts expect the new duties to do little damage directly, however.

The Office of the U.S. Trade Representative said Oct. 25 Thailand had "yet to take steps to provide internationally recognized worker rights in a number of important areas," six years after U.S. unions raised the issue. It said the U.S. would restore duties on just under one-third of the $4.4 billion worth of Thai imports eligible for duty-free treatment under the U.S. Generalized System of Preferences after six months.

The U.S. Embassy in Bangkok told VOA last week the cuts to Thailand's trade privileges would go ahead as planned.

Rights groups have long accused Thailand of profiting off rampant human trafficking and debt bondage among the millions of migrant workers who help drive the country's economy, especially those in its multibillion-dollar seafood industry.

In a report on the industry last month, the International Labor Organization said working conditions in Thailand were improving but not by much.

"Serious abuses persist for a significant number of workers surveyed," it said, noting that injuries are still common, employers still use debt to control employees, and migrants are still barred by law from forming their own unions.

Phil Robertson, deputy Asia director for Human Rights Watch, said Thailand's government had done virtually nothing to address the USTR's outstanding concern in the past six months and welcomed Washington's decision to follow through on the trade benefit cuts.

"These are trade benefits that were voluntarily extended to Thailand based on certain conditions. Those conditions are that Thailand respects labor rights, including freedom of association and right to collectively bargain, and there is plenty of evidence to show Bangkok has not reformed its highly deficient labor law or improved implementation of various laws to protect labor rights," he said.

"So Thailand is losing a benefit they had because they have failed to live up to their side of the bargain," he added.

Thai government spokeswoman Ratchada Thanadirek said labor law reforms were still in the works but conceded that the results might not satisfy the USTR.

"It's not that we cannot do it ... but there are things that we cannot do at the moment. And when we [are] going to draft a new law, we have to listen to all of the stakeholders," she said.

Some Thai labor groups oppose letting migrant workers form their own unions, claiming it might give them an advantage over locals.

Ratchada said giving migrant workers their own unions was no panacea, and not the only way to help them.

"Having the migrant labor union ... doesn't mean that you can guarantee the labor rights. But we are guaranteeing and protecting migrant workers' rights, so I think that is more important than having a union itself," she said.

As for the lost trade privileges, Ratchada said the volume of Thai exports losing U.S. duty-free treatment was relatively modest and would not trouble the economy much.

Analysts and economists agree.

"It's very negligible," Wisarn Pupphavesa, an economist and adviser to the Bangkok-based Thailand Development Research Institute said of the trade privileges the country was losing.

According to U.S. Census Bureau data, the $1.3 billion worth of goods losing duty-free access amounts to less than 4% of the value of U.S. goods imported from Thailand last year, and a fraction of a percent of all of Thailand's global exports that year.

Harrison Cheng, an associate director for the consulting firm Control Risks who follows Thailand, said he too was expecting the GSP cuts to have "a rather small impact on the economy."

But he said that impact, however modest, would be amplified by the heavy damage the coronavirus pandemic was doing to the economy already and will make Thailand less attractive to investors, including manufacturers looking to relocate from China.

U.S. Commerce Secretary Wilbur Ross himself downplayed the coming cuts as "trivial" after a meeting with Thai Prime Minister Prayut Chan-ocha in Bangkok in November.

"The GSP issue has been blown way out of proportion," he said at the time. "It's no big deal."