The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is the world’s third-largest free-trade bloc after NAFTA and the European Single Market. It is the reincarnation of the Trans-Pacific Partnership (TPP) which was due to be signed by member nations in 2016 but was suspended as US President Donald Trump withdrew the US from the agreement.
Through the hashtag #NoCPTPP, social media has been critical of the government for trying to push for Thailand’s membership in the CPTPP.
But as an export-led nation that consistently enjoys a trade surplus with its trading partners, why should Thailand fear membership to a trade bloc?
Why countries strike free trade deals
Countries sign free trade agreements (FTAs), because the win-win situation is real, at least according to the neoclassical economic theory.
Free trade benefits consumers in the member nations. It reduces tariffs and prices, increases choices and competition and encourages foreign investments and innovation.
Free trade also reduces corruption and cronyism due to countries having to abide by the same rules. Politicians and business people won’t so easily exploit regulatory red-tape and loopholes.
Well, only if you are ready to compete.
The Spoils of CPTPP
Business groups such as the Thai National Shippers’ Council (TNSC) and the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) openly pushed for the government to speed up negotiations.
The TNSC cites the loss of the Generalized System of Preferences (GSP) benefits from both the US and the EU, which is responsible for declining export figures. GSP previously gave goods from Thailand preferential tariff rates.
It also cites the fact that Vietnam, a member of CPTPP, is experiencing a surge in outputs and exports. Currently, Vietnam has FTAs with up to 53 countries, while Thailand only has 19.
Director-General of the Department of Trade Negotiations (DTN), Auramon Subthaweetham said Thailand already has FTAs with nine out of 11 CPTPP member countries and so far, has been enjoying a trade surplus with all nine.
Based on the study undertaken by the DTN, if Thailand joins CPTPP, it would add 0.12% GDP growth and 5.14% investment growth. If it chooses not to, the country’s GDP will decrease by 0.25% and investment will reduce by 0.49% due to lost opportunities to competing nations.
Industries that would be winners if Thailand joins are processed chicken, processed pork, processed seafood, rubber, motorcycles, sugar, refrigerants and automobiles.
Thailand’s Health Security at Risk
The issue for the #NoCPTPP campaign is intellectual property (IP).
Thailand’s health sector benefits from Compulsory Licensing (CL) of certain medicines such as those for HIV/AIDs and cancer patients. Thailand spent years fighting big pharmaceutical companies and the US government to ensure Thais have access to affordable drugs.
Oxfam, the humanitarian movement to end poverty, lauded Thailand’s success in issuing CLs. Former US President Bill Clinton and former UN Secretary-General Ban Ki-Moon also commended Thailand.
“No company will live or die because of high price premiums for AIDs drugs in middle-income countries, but patients may,” said Clinton.
But of course, for patent owners, this may be deemed as state-sponsored robbery.
The article 18.41 and 18.6 of the CPTPP agreement may limit the Thai people’s access to affordable medicines, as it allows member nations to link registrations of intellectual property and also override existing CLs.
No Protection for Farmers
As part of the CPTPP, Thailand must be a signatory of the International Union for the Protection of New Varieties of Plants (UPOV1991). Its goal is to encourage plant breeders to develop new varieties.
The problem is Thai farmers will not be able to harvest or grow varieties of plants that were registered overseas for protection under the pact. Unless they pay royalties, many farmers will face arrests and fines, for what they have been doing for decades will be illegal under CPTPP.
Currently, the Thai government allocates only 1.2% of the GDP to R&D. Meanwhile, Vietnam is already a signatory to UPOV1991 and earmarks 4% of its GDP to R&D.
Those who oppose the CPTPP say it will feed predatory capitalism, and the poor will suffer most.
What’s the right move?
Business groups recommended that the government should go ahead and negotiate, but walk away if the deal imposes disadvantages for Thailand.
The opposition suggested talks on a separate bilateral trade agreement with Canada and Mexico, the two remaining CPTPP members that Thailand currently doesn’t have trade agreements with.
The argument boils down to this: Join the CPTPP and enjoy economic opportunities and growth, but the poor will be left behind. Don’t join the CPTPP and lose opportunities, but we can still enjoy affordable medicines and farmers may continue to grow varieties of plants.
But the most pertinent question may be: It’s 2020, why isn’t Thailand ready for the CPTPP? The answer is obvious; successive Thai governments have failed to develop the country’s economy to be competitive and innovative.
That’s why we are not ready.