U.S.-Thailand FTA

     
Status: Negotitations DEAD

 

Timetable Milestones

  • Negotiations ended: DEAD
  • Negotiations began: June 28, 2004. On hold pending stabilization of the Thai government.
  • Congressional notification of intent to negotiate: February 12, 2004

Thailand Sugar Facts

  • Production (Avg. 2005-2007): 5,399,000 mt
  • Consumption (Avg. 2005-2007): 2,156,667 mt
  • Imports (Avg. 2005-2007): None
  • Exports: (Avg. 2005-2007): 3,305,000 mt

Thailand is a major producer of sugar and the world’s third largest exporter, ranking behind Brazil and the European Union (EU).

Thailand employs a variety of policies and programs to protect its sugar producers, and its domestic market, from the low prices prevailing in the world “dump” market for sugar. Until 1995, Thailand imposed a ban on imported sugar. Since then, a small TRQ (13,700 metric tons) was established to which a tariff of 65 percent was applied; above that, a tariff rate of 94 percent is in place. The government controls import licenses for sugar; however, NO imported sugar has entered the country (average 2005-2007).

Domestic sugar sales are controlled through a system of mill-by-mill quota allocations. Sales under this “A quota” receive a fixed domestic price; the remaining production must be exported. Historically, the fixed domestic price was maintained at levels substantially above the world price, permitting substantial cross-subsidization of sugar exports. However, the sharp devaluation of the Thai baht that has occurred since the Asian financial crisis in 1997 has greatly eroded the dollar value of the domestic price, reducing the premium for domestically sold sugar to modest levels.

In addition to this domestic support price system, the Thai government, in the aftermath of the currency crisis, supervised the postponement and rescheduling of approximately $1.1 billion in debt held by the sugar industry. The government also funds several programs to assist Thai sugar farmers. These include a $250 million credit line for pre-financing the cane crop and a supplementary payments program for Thai farmers, estimated to total over $400 million as of 2002/03. While the latter program is said to be a short-term loan program, aimed at bridging the gap between the cost of growing cane and a “provisional price” paid by mills, it appears that the great majority of the debt is still outstanding.

The government has also stepped in to provide payments to millers when the price finally received turned out lower than the provisional price. Such payments amounted to $70 million in 2001/02.

Additionally:

  • Thai environmental laws and implementation are very weak.
  • Thailand is embarking on an ethanol program, which may in the future offer significant cross-subsidy opportunities to Thai sugar producers.
  • The sharp devaluation of the Thai baht in recent years has, to a considerable extent, buffered the sugar industry from depressed world market prices. In real terms, the baht depreciated by 22 percent from 1995 to mid-2002.

Historical Access to U.S. Market

Under the minimum WTO tariff-rate quote requirement, the U.S. currently imports a minimum of 14,743 tons from Thailand—1.32% of the total TRQ for 41 countries.

Additional Access Granted to U.S. Market

Pending

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