Term Paper: Japan Thailand Economic Partnership Agreement the Challenges and Promises of Bilateral Trade Policy

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Japan and Thailand have made serious efforts for the conclusion of their Economic Partnership Agreements (EPA). The prominent features of the EPA include Free Trade Agreement. In the past both the countries have been involved in wide range of economic and investment opportunities. According to 2002 trade statistics, the trade between both the countries stood at JPY 2.85 trillion, Thailand is the eight largest trade partners for Japan, and Japan is the largest trade partner for Thailand.

According to 2001 statistics, more than 99% of the trade between Thailand and Japan is of industrial goods, followed by agricultural, forestry and fishery items (0.87%), the major export of Thailand to Japan include industrials goods i.e. 74%, the remaining 26% of the trade is based on the exports of agricultural, forestry and fishery items.

EXPRESSION of INTEREST

Japan has expressed great interest in the development of strong economic relations with the Thailand; the economic report of Thailand has mentioned that Japanese are among the largest number of investors who have financially invested more than any other country.

According to the Thailand Board of Investment Report of 2002, Japanese accounted for more than 45% of the total investors in the country, and have invested more than 38 billion baht which accounts for 39% of the total Japanese investment in the country. On the other hand, the Thailand's investment in Japan has been insignificant, however the investment flow is expected is surge in future years. Beside investment the Japan's Official Development Assistance, in 2001, to Thailand stood at more than USD 200 million (Brain, 2004).

Thailand and Japan reached consensus in September, 2005 and signed EPA, the major focus of the agreement was to further strengthen the economic relationship between both the countries, and increase the trade level. Officially, the major objective of the economic agreement is, 'to be a broad-ranging comprehensive economic cooperation beyond the conventional FTA, the objective of which is to liberalize the trade in goods and services, and encompass comprehensive economic partnership, including investment, movement of natural persons, intellectual property rights, competition policy, government procurement, and other various sectors'. Japan is much committed towards the promotion of Association of South East Asian Nations (ASEAN), and in this context it is important to plan and support the development of Mekong region. Japan has been major source of assistance for Thailand to conduct economic and social programs in the country; the Japanese government is involved in many agreements with the country related to the transference of technology, development and training of human resources, establishment of infrastructure i.e. civil, finance, education, health care and agriculture.

PRINCIPLES

Japanese and Thai authorities have agreed in principle over the implementation of relevant provisions which contribute towards, transparency of rules and regulations including the court proceeding;

principle of national treatment and most favored nation treatment;

access to the Court of Justice;

prohibitions on performance requirements;

expropriation and compensation;

protection from strife;

transfers;

subrogation; and dispute settlement between a state and an investor' (JECP for Thailand, 2006)

THE AGREEMENT and SIGNIFICANCE

Thailand has been considered as a strong strategic partner by Japan, the Japanese government has appreciated the measures undertaken by the Thailand government to resolve the issues of developing country by the implementation of Millennium Development Goals. It is expected that the economic activity between both the countries is expected to minimize as Thailand achieves its economic growth and stability (Milner, 2003). The EPA is applicable beyond the threshold level of the economic growth, it has been agreed by both the countries that during the span of serious and critical situations i.e. economic crisis, spread of diseases including SARS and HIV / AIDS, and natural calamity; both the countries will provide and assist each other through technological means on the bases of experience.

The EPA has insisted over the sustained coordination between Japan and Thailand, and has stressed over the efficient and effective adoption and implementation of ODA. ODA-based EPA has termed technical cooperation between both the countries vital and significant. It has been planned that the nature of cooperation will be based on the Thailand's development stage. The agreement has support the growth and development of competitive element for sustainable growth. 'For Thailand, which has reached a certain development stage, it is considered that the continuation of its growth hinges on sustainable growth led by private sector.' (JECP for Thailand, 2006)

The EPA has insisted over the Japan's support towards development of competitive forces in Thailand. Japan has already agreed to provide assistance to Thailand for international standardization, efficient physical distribution, development of information communication technology, and human resources development to improve the level of industrial competitiveness. The discussed ODA charter aims at the development of Thailand and Japan relationship, and is renewal of their commitment towards peace development of international community. In particular,

Strengthening and intensifying the Japan-Thailand exchange, and sharing social values of the two countries

Stability and development in the Asian region as well as peace-building

Development of the trade and investment environment and enhancement of economic partnership

Transfer of Japan's high-quality knowledge, technologies and experiences

Enhancement of the presence of Japan and Thailand in the international community' (JTEPA TF Report, 2003)

It has been stressed EPA is likely to execute certain procedures through which tariff reduction and elimination can be ensured. The EPA is expected to encourage the research and growth of agricultural products in Thailand, sponsored by Japanese government. According to reports, in 2002 Japanese government purchased more than USD 3 billion worth agricultural products from Thailand. Both the countries have developed an understanding for the resolution of tariff issues. Japanese government is criticized for the imposition of high tariffs on leather, leather products and footwear, petrochemicals and textiles. Thailand is committed towards tariff liberalization. The implementation of the EPA is likely to increase the level of self-sufficiency of the agricultural product for Japan, Japan intend to increase its level of self-sufficiency to 45% in 2010.

The EPA has agreed over the development in the service sector. In 2000, the trade services accounted for more than 45% towards Thai economy and more than 67% to the Japanese GDP (Peter, 2006). The agreement has highlighted that there is potential for development of services through commercial presence and migration of local national. It is therefore believed that the highlighted trade liberalization is the important component of EPA. The Thai government has already expressed its interest in the exploration of service industry, and has offered Japanese government of the possible assistance in this regard. The natures of services include professional services, physical service and beauty services. Thailand has already a trained and developed service people, who are already offering possible assistance to the government through their association with 'medical and hospital services, services related to physical treatment and relaxation, elderly care services, child care services, spa services, home helper services, cooks of Thai cuisine, business services, construction services, Thai cooking schools, tourism services, sporting services, automotive repair services, hairdressing and barbers' services, beauty treatment services and tailoring services'. (JTEPA TF Report, 2003)

ISSUES and RESOLUTION

Thailand has expressed its concern towards Japan's strict regulation which have created hurdle for the Thailand businessmen to access and explore the Japanese market, in particular agricultural and fishery product. More than 230 categories of Thai product's export have been restricted by strict rules of origin.

However both the countries have developed an understanding for the elimination of tariff on certain food products including apples, pears, and peaches. The elimination of tariff on sea-food products will take place in next 5 years. According to the recent agreement, out of 2300 products, 1400 products have been declared tariff free. Shrimps account for more than 14% of Thailand's sea-food production, and Japan has immediately abolished the tariff barriers on the product. Japan is also expected to levy tariff charges on Thai's boneless and cooked chicken, and tropical fruits.

Both the countries have developed differences over the tariff imposed on the certain important products by the Japanese authorities, the Japanese authorities are of the opinion that imposition of the high tariff can be justified, 'because agriculture, forestry and fisheries products are important and well transparent border measures to fill the differences of natural and economic conditions between various countries and fully consistent with WTO rules' (Huang, 2006), Thailand government contradict the claim, and have termed it a violation of EPA which has called for the implementation of free trade. Japanese government has placed food security, the multifunctional purpose of agricultural products as justification for the imposition of high tariffs. The Japanese authorities have explained that there is a need to adopt a balance approach towards liberalization and co-operation in economic partnership with reference to the trade in the field of agriculture, forestry and fisheries. The Japanese authorities are of the opinion that 'not only FTA consistent with WTO regulations but also various components, such as co-operation, should be included in the partnership to deepen the mutual understandings, and discussion between two countries should be carried on the basis of a general package'.… [END OF PREVIEW]

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Japan Thailand Economic Partnership Agreement the Challenges and Promises of Bilateral Trade Policy.  (2007, March 27).  Retrieved October 21, 2019, from https://www.essaytown.com/subjects/paper/japan-thailand-economic-partnership/6809720

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"Japan Thailand Economic Partnership Agreement the Challenges and Promises of Bilateral Trade Policy."  Essaytown.com.  March 27, 2007.  Accessed October 21, 2019.
https://www.essaytown.com/subjects/paper/japan-thailand-economic-partnership/6809720.