*EPF413 04/04/2002
Transcript: USTR Sees Increased Investment Potential for Thailand
(USTR Zoellick at U.S.-Thai press conference April 4) (4380)

U.S. Trade Representative Robert Zoellick sees "great potential" for increased foreign investment in Thailand.

At an April 4 press conference in Bangkok with Thai Commerce Minister Adisai, Zoellick said current trade talks might create greater interest in the U.S. business community as well as in business communities in Thailand.

"That investment is particularly important given ... China's accession to the WTO," he said, "in that if you look at a lot of the investment patterns over the past couple of years, there have been large capital flows into China, less in the ASEAN (Association of Southeast Asian Nations) region."

The USTR said the United States believes that "a strong, cohesive, economically dynamic ASEAN region is very important for Southeast Asia and for the U.S. partnership with Southeast Asia. So, what we're trying to do is work towards freer trade and better economic relationships and Thailand is a cornerstone of that development, as is Singapore," he said.

Zoellick said he is in Thailand to consult with Thai officials about the World Trade Organization (WTO) negotiations launched in Doha and to discuss some regional trade issues. Zoellick's visit to Thailand is the first by a U.S. trade representative in 10 years.

The United States, he said, has a "strong interest in trying to strengthen our trade and investment ties with Thailand, and to build a deeper economic partnership."

"We have made some proposals about developing a framework agreement in terms of trade and investment that we will consult over coming months to try to create an institutional network for this," the USTR said.

The United States is Thailand's largest export market and second largest foreign investor, he noted. Under the U.S. generalized system of preferences (GSP), Thailand is the largest beneficiary by volume and the second largest beneficiary by dollar amount, Zoellick said. "There are about $2 billion ($2,000 million) of goods that come into the United States duty free under GSP from Thailand, and a total of about $4 billion ($4,000 million) that have an advantage through this," he said.

Following is a transcript of the press conference:

(begin transcript)

U.S.-Thai Press Conference
Following Bilateral Consultations
Ambassador Robert Zoellick, USTR, and Thai Commerce Minister Adisai
Le Royal Meridian Hotel, Bangkok, Thailand
April 4, 2002


Thai Commerce Minister Adisai: [In Thai] Thank you very much. I have to tell you that at this press conference that we're having today I would like to give a few introductory remarks and then the majority of the conference will be with Ambassador Zoellick. As you know, today's occasion is a bilateral conference between the United States and Thailand for the first time ever. We can say that Thailand and the US have had relations for 150 years and this kind of discussion has never before happened.

So today's conference is a very good starting point. Although today's meeting has been brief, it has been an effective one, because we have the chance to discuss a lot of issues. The issues we discussed we can group into two groups, mainly. The first point is the relations between the US and Thailand, the second is the group meeting we ASEAN Ministers will have tomorrow with the US. This is a very good forum, which shows us that the United States has put importance on Thailand, has seen the importance of Thailand and the ASEAN countries.

So today's and tomorrow's meetings are a continuous event. They will reflect the relationship and cooperation between the US and the whole region. For our part, we emphasize two points. First is trade issues. The Ambassador and myself have been discussing these issues in depth. We have been following these issues for approximately one year. This is our fifth meeting today. There have been some continuous issues for us to follow: the Jasmine rice issue, or the steel industry issue, anti-dumping issue; six or seven issues altogether. I view all these as normal trade issues, which may be problematic. Sometimes issues have taken long to solve in the past, but from now on things will improve tremendously. We will find ways of preventing these problems from ever happening again. We will set up a council that will cooperate together in trying to solve these problems.

The second issue that we covered was the liberalization of trade between the US and Thailand. This will be a liberalization of both trade and investment. We will talk about free trade and also investment. So we have a consensus that we will reach, but it will take time, it will take effort. Because Thailand and the United States, there are a lot of differences between us in the potential of both countries in all aspects. However, the Thai government is sincere in wanting to move, to keep pace with the happenings of the world and to liberalize sooner than the WTO has stipulated. It will be a bilateral discussion between both our countries and I have discussed this with the Ambassador. We have agreed that within ASEAN there is only Thailand that has the potential to do so.

In the near future, or maybe the distant future, in all aspects, we will move toward free trade, whether it will be regional free trade or bilateral free trade. The US has entered into agreements with many other countries, so it is a good thing that the US is considering doing this agreement with Thailand. We will also issue a joint press statement, which will be given to you presently. It will cover the points that I touched upon just now.

Also, for the details on the various trade issues, which I will not go into right now, if you still have questions you may ask them during the question period. I would like to invite the Ambassador to speak before questions, because there may be other topics he would like to touch upon or other remarks about Thailand. Mr. Ambassador, please.

Ambassador Zoellick: First, I want to thank the Minister and his colleagues who have been extremely gracious hosts in helping us to arrange what I believe will be a very productive and useful visit. There are five main messages that I conveyed to the Minister and wanted to convey to others in our sessions here.

First is one of thanks to the Government of Thailand, but equally important, to the people of Thailand for the support that they have given to my country in fighting terrorism after the tragic events of September 11th. I want in particular to mention the strong appreciation people have in the United States for the support of His Majesty the King on these events.

As we all saw, the bombing on the World Trade Center, while it was on the territory of the United States, took the lives of people from some 80 countries. And so, sad to say, while we have made progress, the struggle against terrorism will be one that is ongoing. We know that Thailand, as a country that has had a long alliance to the United States, is a good friend to the United States, has been trying to help us -- for which we are most appreciative.

Second, I came to consult with the Minister and his colleagues about the WTO negotiations that we were able to launch in Doha. I'm delighted to see that Thailand's current Ambassador to the WTO and the forthcoming Ambassador are both here for the discussions that we will have today and tomorrow. We worked very closely with the ASEAN countries and with Minister Adisai in the run-up to Doha. And indeed, I had the pleasure of meeting with the Ministers on the day before the negotiations began so we had some final consultations. And it was at Doha that the Minister kindly invited me to come to Thailand, and said if I could come, he thought he would be able to try and to invite his colleagues from ASEAN to come as well, because our countries share many interests in the global negotiations. First and foremost being agriculture, but we work closely with the ASEAN countries, and since we have the goal of completing these global negotiations by 2005, we have to keep on the track to make sure we complete this.

Third, we will have a discussion of some regional trade issues. I was very pleased that the Minister was able to arrange a meeting with our ASEAN colleagues. The two-way trade between the United States and ASEAN countries has nearly tripled over the past decade, to $120 billion. And we have about $50 billion in foreign direct investment in the ASEAN countries. The United States market is obviously very important to the ASEAN countries, and the Minister and I talked a little bit about the prospects for an economic recovery in the United States, which we know will be very important for the economy of Thailand and others. I was appreciative of having this opportunity to meet with my ASEAN colleagues because, with the successful completion of the accession of China and Taiwan to the WTO, I think it is particularly important that the United States work closely with the ASEAN countries to emphasize the growth and investment potential here. As part of those ASEAN discussions we will also talk about our common work in APEC, where the United States and ASEAN have been able over the past ten years to promote closer integration across the Asia-Pacific.

Fourth, and this is the topic we spent most of our time on today, was our strong interest in trying to strengthen our trade and investment ties with Thailand, and to build a deeper economic partnership. We have made some proposals about developing a framework agreement in terms of trade and investment that we will consult over coming months to try to create an institutional network for this. The United States is proud to be Thailand's largest export market. We are the second largest foreign investor with about $7 billion of investment in Thailand. We have some $21 billion of trade. And we have some catching up to do, because our trade deficit with Thailand is about $9 billion.

Through some special preferential programs, for example, the generalized system of preferences (GSP), Thailand is the largest beneficiary by volume and the second largest beneficiary by dollar amount, and it would be the largest if you take out the oil exporting countries. There are about $2 billion of goods that come into the United States duty free under GSP from Thailand, and a total of about $4 billion that have an advantage through this.

Fifth and finally, I wanted to come to Thailand to listen and to learn. A US Trade Representative has not come to Thailand for some ten years. I know from my past experience and my experience when I was outside the government the difficulty that the people of Thailand encountered with the financial crisis in the late 90's. I know that there are continuing challenges ahead. But I am very confident about the ability of the people of Thailand and the business community of Thailand to resume growth and make Thailand a key player in the global economy.

But I wanted to be able to hear what the people of Thailand have to say about that. So in addition to the meetings I've had with the Minister and some of the other Ministers in the Cabinet, I was delighted this morning that I had an opportunity to go by the Royal Palace projects, and see some of the work that His Majesty has initiated in terms of agricultural innovation, some economic empowerment of women in Thailand, particularly in rural villages through handicrafts, and to see more generally how the leadership of Thailand is pointing the country in a direction to help all the people of Thailand, whether school children or women in rural communities or larger agri-businesses, to be able to benefit from the global economy.

I also have arranged with Ambassador Johnson's help, a meeting later today to meet with some non-government officials. I am going to meet with some people who have been leaders in the HIV-AIDS effort, where Thailand has really helped set a model for the rest of the world in being able to combat this scourge. Some of the members of that meeting will include some private economic experts, business people, and some people in the biotech industry.

And my final and last point is that, as I mentioned to the Minister, the United States as a major agricultural country has tried to talk with others around the world about the potential of biotech, to try to help countries to deal with malnutrition, to help increase nutrition, to help deal with environmental issues. So I mentioned to the Minister my interest in broadening our dialogue with both the private and public sectors on those topics.

So finally, I would just like to thank the Minister. I know this is a busy time for him. We had a wide-ranging discussion at lunch about regional issues, economic and political. But I think this is what I hope to be good and constructive step in a deepening in our relationship. And as the Minister mentioned, think that this is our fifth meeting and we have both been in office only a little over a year. So we've have had a chance, I hope, to deepen the relationship. So with that, I would be pleased to take any of your questions.

Question: Harish Metha from the Singapore Business Times. The question is to Mr. Zoellick. Both of you just mentioned a great deal about the framework agreement for liberalizing trade and industry. Would this include a free trade agreement or is this another phrase to describe a free trade agreement, which I believe Thailand has formally requested the Americans for? And what is the American position on that?

Ambassador Zoellick: We're at a preliminary stage of discussing that issue. We have not had a trade and investment facilitation agreement with Thailand. We have such an agreement with other countries in the region and as you know we're in the process of -- are well along our way -- with a free trade agreement with Singapore. So, at this stage what we proposed is to have a trade and investment facilitation agreement that would create the building blocks for a deeper economic partnership. As the Minister mentioned, this is in part a way to deal with the regular trade questions that arise whether they deal intellectual property from the United States or Thai jasmine rice for Thailand, or steel; so that we can try to work through problems more productively together and, as the Minister suggested, be able to anticipate some of these - to be able to deal with them. We, as a country, are obviously trying to promote free trade globally and at this point, what we suggested to our Thai counterparts is that we consult about the steps that we can take to move towards a possible free trade agreement. So this is what I would consider to be a preliminary discussion stage with that as a possibility for the future.

But the key message should be, I think, over the course of the past year the Minister and I -- with the help of our staffs -- have been able, first to work through some of the issues that have been challenges in the U.S-Thai economic relationship. But now we're trying to look beyond the challenges. We're trying to work with each other in the WTO, we're trying to work with each other in the ASEAN and APEC context and we want to try and see if we can deepen the bilateral relationship.

Here, let me tell you specifically what I'm most interested in. I think that Thailand has great potential to increase investment from overseas and we think that some of the points that we can discuss might help create a greater interest in the U.S. business community and other business communities in Thailand. That investment is particularly important given what I mentioned about China's accession to the WTO in that if you look at a lot of the investment patterns over the past couple of years, there have been large capital flows into China, less in the ASEAN region. We believe that a strong, cohesive, economically dynamic ASEAN region is very important for Southeast Asia and for the U.S. partnership with Southeast Asia. So, what we're trying to do is work towards freer trade and better economic relationships and Thailand is a cornerstone of that development, as is Singapore.

Question: I'd like to ask Mr. Zoellick. ASEAN countries are going to start negotiations of FTA with Korea, China and Japan -- ASEAN+3 network of FTA area. What do you think of this program? Is the US concerned about that? Is the US very reluctant for ASEAN countries to make EAEC or to have some ASEAN monetary fund? How do US authorities or business authorities react to the ASEAN countries creating a single market?

Ambassador Zoellick: We have no problem with that at all and we think the more countries that seek to expand free trade in the world -- as long as it's not diverting of trade - that's a good thing. Let me give a good example from our own hemisphere. Mexico was not even a member of the GATT until 1986. We negotiated a free trade agreement with Mexico as well as Canada. Mexico has gone on to negotiate nine free trade agreements with some 27 other countries. I praise my Mexican colleagues for having done that. Frankly, I wish the United States would have moved more quickly on its own free trade agreements. One of the reasons that we are seeking our trade promotion authority from the Congress is so that we can, frankly, catch up.

But we're not mercantilists. We would like to have a stronger trade relationship with the ASEAN countries. We'll complete our free trade agreement with Singapore this year. We look towards the possibility of freer trade with others in the region. We want to have a deeper relationship with Thailand. But if, at the same time, ASEAN can improve its free trade relations with others that's all to the better. In fact, in our lunch one of the things that I was asking the Minister about -- and what I hope to learn more about tomorrow -- is the progress within the ASEAN free trade agreement. Because, as I mentioned in my answer to your colleague from Singapore, I think that it will be very important to further integrate the ASEAN market to give incentives to investors to see the possibility of not just investing in Thailand or Singapore, but to do the same in an ASEAN region.

Indeed, just to give you a slight anticipation -- later this week I'm going to visit Singapore and then Indonesia because we're exploring ways in which we can connect some of our free trade agreement negotiation with Singapore in a way to help Indonesia. We have an interest in a dynamic, strong ASEAN region and if it's promoting free trade for itself and others, we think that's a positive thing. If we don't catch up that's our problem -- not anybody else's.

Question: Ron Corben, Australian Associated Press. Mr. Zoellick, what's essentially you're key message that you've come to Southeast Asia with in this visit?

Ambassador Zoellick: Well, they're really a combination in that, as you know, the President has stressed that we want to try to promote trade liberalization in open markets globally, regionally and bilaterally. So, globally I want to have discussions with my ASEAN colleagues about how we can move forward the global negotiations we launched in Doha, where the partnership between the United States and ASEAN was very important. Regionally, I came to talk about closer economic ties with ASEAN and APEC. Bilaterally, obviously we want to try to strengthen ties with individual countries of the region. So, I think those are the three main messages, plus the one I began on terrorism because obviously we've seen how terrorism can undermine confidence -- economic and political. And we believe that the partnerships that we form politically and in security terms are very important for the countries of the region as well as for the United States.

Question: Laurent Malspine from Dow Jones Newswire. On one point you mentioned earlier -- the regional free trade agreements -- earlier many U.S. companies have expressed concern, especially in the automotive sector about the problems faced by AFTA. So far the problems within Thailand and Indonesia on that have not been resolved. Did you address this issue today or do you plan to address it today at the broader ASEAN level?

Ambassador Zoellick: Speaking for myself, one of the other key reasons I wanted to come out here, as I mentioned, was to listen and to learn from people about developments. And so, I do have an interest in the AFTA development across all sectors. Like you, I've read and learned about some of the difficulties in the automotive sector. That's not surprising. My own sense is that the AFTA process has actually gone on quite successfully, particularly given the difficulty that this region encountered after the financial crisis in '97 and '98. But I guess the key point I would make is, I was in Latin America about two weeks ago, I was in Africa about four or five weeks ago. I find it very valuable to come and to talk to people face to face in governments, in the private sector and, frankly, to spend my time listening as much as talking so I can learn what they think about some of these developments.

Moderator: I'm afraid we're going to have to take one last question, because we're on a schedule today.

Question: Sorry, I'm from the Financial Times.

Ambassador Zoellick: You don't have to be sorry for being from the Financial Times. I read it [laughter].

Question: Thanks. Europe has asked for compensation of up to $2 billion for the U.S. decision on steel. I wonder whether the U.S. is planning any discussions with its European trading partners on this issue. Secondly, how do you view the future of U.S.-E.U. trade relations in light of the steel row and also the E.U.'s threats to impose four billion dollars in sanctions over the U.S. Foreign Sales Corporation scheme.

Ambassador Zoellick: That's an incredibly parochial question to be asking out here in Asia, but I'll be pleased to try and answer it. First, since you asked about steel. What we have emphasized from the start is that we have acted in accordance with the WTO rules and procedures. The WTO rules and procedures include consultations. We have gone forward with consultations with all countries that have sought them and we will engage in all the activities that are either required or that people believe are appropriate so that we can explain the nature of this temporary safeguard. That obviously is included with the European Union. In addition to that, I talk to my colleague, Commissioner Lamy. A week or two ago we had a long conversation about this and whole set of other issues.

Second, as for the nature of retaliation, I thought the Financial Times had an excellent editorial on this subject where it pointed out the dangers of retaliation and in particular, the danger of the EU considering unilateral action - which is shocking for Europeans. To interpret the WTO rules on their own, to not go through the WTO decision process and then to even unilaterally determine the amount by which they would retaliate -- and I can point to no better guidance than the Financial Times to say that such a unilateral action would not only conflict with what Europeans have said in the past and at present, but would strike me as a negative course for the trading system.

And what was your last one? Oh, you asked about Foreign Sales Corporation. Look, Pascal Lamy and I have both said that we obviously have our differences on steel, but we will seek to keep them separate from other topics which I think is in a sense, a reflection of both the strength and the seriousness of the U.S.-E.U. economic relationship. We both know that we're significant economic players in the world economy. I respect his professionalism in taking that action. He knows that the Foreign Sales Corporation issue is one that is very complex because it involves changing domestic tax law. And as I have said to him and have said publicly, the United States is in the process of trying to determine how it can come into compliance with WTO rules. We are willing to follow the WTO rules whether it be in safeguards or whether it be in other areas and we appreciate the E.U.'s working with us on the Foreign Sales Corporation issue. As you probably know, the next step is to have a panel come down with the determination -- an arbitrated panel of the amount that would be due, I think, in late April. Commissioner Lamy has said to me again recently that his goal is compliance, not retaliation. I take him at his word. And so, we're working both within the Administration and with the Congress to see if we can come on a path towards compliance. I think that's a, actually, a good way to emphasize the fact that we know, while the steel issue is controversial, that it's also one that -- like other topics -- we hope we can deal with professionally and rationally. I noted that the co-chairman of the largest steel company in Europe said this is not an issue that Europe should start retaliating on. I noticed that one of the second largest companies, Corrus, has managed to increase their own steel prices. We hope that cooler heads will prevail in Europe and we're certainly doing what we can to make sure that there's a fair dialogue and discussion to enable that to happen.

Moderator: Thank you very much Minister Adisai, Ambassador Zoellick and thank you ladies and gentlemen.

(end transcript)

(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

Return to Public File Main Page

Return to Public Table of Contents