Thai rice farmers fret about free trade

3/7/2010
Agence France-Presse

For many farmers in Thailand's rice belt, agreements between Asian countries to reduce trade barriers have not brought all the benefits that national leaders promised.

"We are afraid of the free trade area," says Chatree Radomlek, a 37-year-old farmer in Pathum Thani, about an hour's drive north of Bangkok but a world away from the capital's glitzy hotels and restaurants.

A rural community where local people boast of the nutritional benefits of eating field mice, its green paddies help make Thailand the world's biggest rice exporter.

But where humid weather and new farming technologies used to dominate local farmers' conversations, free trade is now the hot topic.

A free trade area between the Association of Southeast Asian Nations (ASEAN), of which Thailand is a member, and China took full effect on January 1, liberalising billions of dollars in trade and investments in a market of 1.7 billion consumers.

It is the world's largest free trade area by population, eliminating barriers to investment and tariffs on 90 percent of products.

"If cheap rice comes to Thailand from other countries, it might make our prices go down. I think the government should set up measures to protect us," says Chatree, looking out from under a wide-brimmed hat.

He says that rice from neighbouring Cambodia and Laos is "inferior" but that it could flood the Thai market, possibly leading Thai consumers to buy imported rice instead and lowering domestic prices for his grains.

Another fear is that middlemen could mix Thai rice with lesser varieties of the imported grain, hurting the quality of Thailand's product.

Bangon Radomlek, 57, says she has worked the rice fields since she was ten and adds, with a grin, that although the work is tough, "it's a life with freedom."

"But I don't like free trade," she says. "We only want to export. We don't want to import. We want to be the sole producer."

Rice is big business in Thailand. The country's Foreign Trade Department says that the nation exported 8.57 million tons of rice in 2009, worth five billion dollars.

It expects that the country will ship more than nine million tons in 2010.

The importance of rice to the economy led to a spat in recent months with fellow ASEAN member the Philippines, one of the world's biggest rice importers.

Bangkok wanted Manila to lower import tariffs on Thai rice to comply with the ASEAN free trade area but the Philippines said it could not afford to, fearing that freer trade would undercut its own rice industry.

Thailand's Commerce Ministry said the two countries had now struck a deal for the Philippines to buy 376,000 tons of Thai rice until 2014 without applying any of the usual 40 percent tariff.

The Philippines has the option, however, of not buying the rice if it produces enough for domestic consumption or finds a better price elsewhere. Manila will lower its tariff to 35 percent in 2015.

Chookiat Ophaswongse, president of the Thai Rice Exporters Association, said the issue of rice underlines the sensitive nature of agricultural products and international trade.

He said "there are pros and cons" to free trade, meaning that while lower trade barriers could open more markets for Thailand, it also raises the prospect of cheaper rice entering the market from its neighbours.

Japan signs trade deal with SE Asian nations

Sunday, 26 August, 2007
Reuters

MANILA: A 10-nation Southeast Asian bloc agreed with Japan yesterday to reduce barriers to trade and said it would consider sanctions against any of its own members who do not comply with free trade agreements on time.

The Association of South East Asian Nations (Asean), which has adopted free-trade as the vehicle to faster economic growth, aims to form a European Union-style economic community by 2015 and is forging free-trade deals with regional giants.

Asean’s agreement with Japan is expected to significantly boost two-trade trade, currently worth more than $160bn per year, officials said. Japan is the region’s biggest trade partner after the US.

“All the parties were able to finalise their lists for regional exchange of concessions for trade in goods,” Japanese Trade Minister Akira Amari said after a meeting with Asean trade ministers in Manila, the capital of the Philippines.

“This will be one step toward furthering economic integration in the East Asian region,” he told reporters.

Asean already has free-trade agreements for goods in place with China and South Korea. It is negotiating similar deals with India, Australia and New Zealand. Asean Secretary-General Ong Keng Yong said in a report to the trade ministers that Asean needed to ensure that its own members adhered to free-trade agreements.

“The general perception is that Asean is prone to agree fast, act slow,” he said in the report, a copy of which was seen by Reuters.

He said the group should set up a scorecard to track compliance by members and “institute compensatory measures or denial of benefits for delay in implementation”.

Japan’s Amari said the trade deal would particularly boost Japan’s investment in Southeast Asia’s electronics industries, which dominate the region’s exports.

“It will help the movement of these (electronics) parts in the region and will promote even further the electronics industry in the Asean region through its liberalisation measures.”

The agreement will be signed at a summit in Singapore in November after officials complete work on the details.

Asean — comprising the six richer members of Indonesia, Thailand, Malaysia, Singapore, Philippines and Brunei — and four poorer recent members — Vietnam, Myanmar, Cambodia and Laos — is one of the world’s most dynamic economic regions, with a regional gross domestic product of $1.1tn.

But the bloc of 570mn people has made only slow progress towards its own economic integration.

Although a free-trade area is in place, eliminating most tariffs on trade within the region, the members have much work to do in areas such as transport infrastructure, food, tourism and free movement of labour to reach their goal of an Asean Economic Community.

Japan is already the second biggest source of foreign direct investment in Asean members, after the European Union, with an 18% share of the $171bn that the region attracted between 2002 and 2006.

Under the deal, which applies to trade in goods, not services, Japan will eliminate tariffs on 93% of products imported from Southeast Asia over 10 years, and the six richer Asean countries will cut tariffs to zero on at least 90% of goods they import from Japan.

The four poorer Asean members are offering to cut tariffs on about 88-90% of Japanese imports, a Filipino official said.

The imports exempted from the deal are sensitive products, such as rice in the case of Japan, and automobile parts or textiles in the case of some of the Asean countries.