Clases del fuego

It is useful to first explore the changes in macroeconomic indicators of Thailand before moving to examine the openness and trade in Thailand. These indicators are presented in Table 2.1.

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TABLE 2.1 THAILAND’S KEY MACROECONOMIC INDICATORS BETWEEN 1995 AND 2005

Notes: 1 is in billions of bahts, 2 is in percentage change of consumer price index (2002 = 100), 3, 4, 5 and 6 are in billions of US dollar, 7 is in millions of US dollars, 8 is in baht: US dollar, 9 is in percentage changes.

Sources: www.bot.or.th, www.nso.go.th, www.worldbank.org, www.imf.org and www.adb.org

According to Table 2.1, Thailand’s GDP increased gradually from 2,941.74 billion baht in 1995 to 3,072.61 billion baht in 1997. However, this GDP decreased significantly to 2,871.98 billion baht in 1999 due to the Asia economic crisis. On the other hand, the GDP increased remarkably from 3,073.60 billion baht to 3,842.53 billion baht in 2005. The international reserve decreased sharply from US$46.5 billion in 1995 to US$23.1 billion in 1997 because of the intensive currency attack that precipitated the Asian financial crisis. Nevertheless, the international reserve increased from US$34.8 billion to US$52.1 billion due to the increased balance of payment and the recovery of the economy between 1999 and 2005. However, there was a huge decrease between 1999 and 2001. A huge slowdown in exports resulted in a current account deficit of about US$13.2 billion in 1995. The current account balance decreased to about US$3.1 billion in 1997 and then significantly increased to a more surplus of US$11.3 billion in 1999. On the contrary, there was a current account deficit of US$3.7 billion again in 2005. The balance of trade deficit was US$7.6 billion in 1995. There was a gradual decrease of this deficit to US$4.1 billion in 1997. The balance of trade reversed between 1999 and 2005 from a surplus of US$8.9 billion to a deficit of US$8.6 billion. The balance of payment was in surplus at US$7.2 billion in

Indicators 1995 1997 1999 2001 2003 2005 GDP1 2941.74 3,072.61 2,871.98 3,073.6 3,464.70 3,842.53 Inflation2 5.8 5.6 0.3 0.3 0.2 1.6 Trade Balance3 -7.6 -4.1 8.9 8.9 3.8 -8.6 Current Account4 -13.2 -3.1 11.3 11.3 8.0 -3.7 Balance of Payment5 7.2 -10.6 4.6 4.6 0.1 5.4 International Reserve6 46.5 23.1 34.8 34.8 42.1 52.1 Total Debt Outstanding7 100,309 109,207 95,237 67,181 51,793 52,040 Exchange Rate8 24.9 31.2 45 44.5 41.5 40.3 Unemployment Rate9 3.8 5.0 4.2 3.2 2.0 1.9

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1995. There was a considerable reverse in the balance of payment deficit of US$10.6 billion in 1997. The balance of payment reversed again and then fluctuated from a surplus of US$4.6 billion in 1999 to a surplus of US$5.4 billion in 2005.

Thailand’s inflation rate decreased slightly from 5.8 per cent in 1995 to 5.65 per cent in 1997. It then fluctuated between 0.2 per cent and 1.6 per cent from 1999 and 2005. In contrast, total debt outstanding increased significantly from US$100,039 million in 1995 to US$109,276 million in 1997 due to the Asian financial crisis and bath devaluation. However, the total debt continually decreased to US$52,040 million in 2005 because of the payment of the IMF loan. The average exchange rate was 24.9 baht per US dollar in 1995 and depreciated to 31.2 baht per US dollar in 1997 due to the Asian financial crisis and the introduction of the managed float system. There was peak depreciation to 45 baht per US dollar in 1999. In 2005, the baht was appreciated to 40.3 baht per US dollar. In response to this crisis was an unemployment rate 3.8 per cent in 1995 that increased considerably to 5 per cent in 1997. There was a gradual decrease to 4.2 per cent and 3.2 per cent in 1999 and 2001 respectively. The rate further decreased to 2 per cent and 1.9 per cent in 2003 and 2005 respectively.

In terms of the trend of Thailand’s tariffs, these were downwards. Furthermore, the tariff rates have fluctuated less since December 1994 due to its membership in the WTO. In response Thailand has to confer the most favoured nation (MFN) status to all WTO members. There are good reasons for Thailand to become a member of the WTO such as improving and harmonising the tariff system, and improving and expanding market access in the potential member countries (WTO, 2000). As a result, since 1995 the Thai government has fulfilled several obligations of the WTO to reduce and eliminate market access barriers. However, a few quantitative restrictions exist in the agriculture, textile and clothing sectors. It can be claimed that the trade policy of the Thai government has altered significantly after WTO membership was granted. Thailand has been successful in trade policy reform to promote trade and the economic cooperation required by WTO membership, such as negotiating the elimination of tariff and non-tariff barriers negotiation, regional trade liberalisation and harmonisation in the issues of standards and regulations

In September 1999, Thailand applied its MFN tariffs averaging 18 per cent compared with 23 per cent in 1995. The simple average of bound tariff lines was 26 per

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cent for industrial products and 34 per cent for agriculture products, once the Uruguay Round of tariff reduction was fully implemented in 1995. However, 31 per cent of national tariff lines covering industrial tariffs are unbound. Tariffs have increased during the period under review in several cases because the applied MFN tariff rates exceed WTO bound rates, but the authorities noted that in such cases MFN bound rates apply to the WTO members, on condition that a certificate of origin is provided to customs.

The financial crisis created the concern that bank failure would deprive producers of access to export finance. The authorities, therefore, have greatly expanded the numbers and funding of export financing schemes, some of which involve preferential terms. The authorities have also taken advantage of transitional provisions contained in the WTO agreement on subsidy and countervailing measures to introduce additional tax incentives in favor of exports. However, Thailand competes on world agriculture food and other markets without any significant export subsidies. Also, substantial progress has been made to expedite the customs clearance process for exports, as part of an overall strategy. With quantitative restrictions maintained by trading partners, export quotas are in place on textiles and clothing products destined for Canada, the EU, Norway and the US, and on car exports to Taiwan (WTO, 2000).

In 2000, the AFTA tariff slightly exceeded seven per cent, less than half of the applied MFN rate. High tariffs were applied in the domestic meat and dairy, fruit and vegetables, sugar, beverage and tobacco manufacturing industries. Thailand did not apply quantitative restrictions on agriculture food imports. Many of the tariff quotas established under the Uruguay Round were not used in practice to restrict imports; instead, lower or zero duties were frequently applied when imports of the products concerned were needed for domestic processing industries. For the few products whose importation was impeded by high tariffs, partners to the AFTA had unlimited access to the Thai market of as of 2000 at rates not exceeding 20 per cent, thereby generating substantial pressure on certain domestic agriculture food sectors. The textiles and clothing industry provided an example of the recent tariff instability in the manufacturing sector, causing unpredictability for importers. Thailand did not protect its textile and clothing industry with import quotas; however, quantitative restrictions and safeguards in export markets substantially restricted its exports (Nagai, 2004).

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2.3 RECENT DEVELOPMENTS IN THE WTO, AFTA AND THAI ECONOMY