U'S'THAILAND ECONOMIC RELATIONS

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U.S.-THAILAND ECONOMIC RELATIONS
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175TH ANNIVERSARY

• Celebrated in March of this year.
• Longest U.S. bilateral relationship with any
  country in Asia.

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BILATERAL TREATIES

• Both reflect and contribute to scale, scope and
  significance of bilateral relationship
• 1833 Amity and Cooperation.
• 1856 - Establishment of full diplomatic
  relations
• 1920 - Friendship, Commerce and Navigation end
  extraterritoriality
• 1968 Amity and Economic Relations national
  treatment
• 2004 Negotiations for Free Trade Agreement
  suspended in 2006

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SECURITY COOPERATION

• First 100 years cordial, if distant relations
• After WWII much closer, complex combination of
  security and economic interests
• Front line state
• 1954 Manila Pact
• Korean, Vietnam, 1st Persian Gulf wars
• After 9/11/01 support in Afghanistan, Iraq
• Key country in War on Terrorism
• 2003 Major non-NATO ally
• Sales of military equipment, training of over
  18,000 Thai military officers, intelligence
  cooperation,

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SECURITY-RELATED ECNOMOIC ASSISANCE

• Shared security economic objectives closely
  linked US military and economic aid programs
• Fulbright and 1st Technical Assistance agreements
  -1950
• Road construction meeting dual objectives
• Military infrastructure immediate additions to
  economic infrastructure or later reverted to
  general use.

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OTHER ECONOMIC ASSISTANCE PUBLIC AND PRIVATE

• 1946-86 1.7 b. total
• 1 b.ODA wide range of development projects
• 405 m. other USG or USG-related
  (non-military) programs Peace Corps, Food for
  Peace, drug enforcement Ex-Im Bank other loans
• 37 m. - Ford, Rockefeller, other foundations
• 2003-07 range from 14.3 m. (2006)to 8.8 m
  (2007)
• (including military programs)
• Peace Corps largest non military (2.2 m. 2007)

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TRADE

• 1.4 b 1985 to 31 b. 2007
• Largest component , asymmetrical, year-to year
  fluctuations
• Asian Financial Crisis US Exports 7.3 b. 1997
  7.3 b in 2005
• 2007 US 16th largest trading partner 7th in
  Asia 24th largest export market
• Changing composition of trade primary products
  to diversified agriculture, manufacturing,
  tourism
• Services - 1.1 b. exported, .739 b. imported
  (2003)

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U.S. TRADE IN GOODS
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U.S. INVESMENT

• U.S. one of top 3 (Japan, China)
• Aggregate 23 b. (2007) vs. 7.4 b. (2003)
• Petroleum chemicals, finance, consumer goods,
  automobile production
• 600 American companies employing over 250 m.
  Thais.
• Investment climate

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FUTURE 4 FACTORS 1. U.S Financial Crisis

• Recession?
• Foreigners stop financing U.S. deficit ? (Rogoff
  quote)
• Japan-style deflation?
• Happy Ending?
• Key questions not whether but in what ways
  how much

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2. POLITICAL INSTABILITY IN THAILAND

• Prospects for needed reforms
• Competiveness re China and India, others
• Value chain
• Global supply chains
• Foreign tourism, trade investment

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3. U.S.-THAILAND FTA

• Most comprehensive for Thailand
• Challenging issues IPR, environment, labor
  rights, textiles, etc.
• Thorniest - sugar, rice and trucks
• Public political opposition

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4. Outcome of U.S. Elections

• November - Presidential and Congressional
• Protectionist sentiment
• Prospects for Doha Round, FTA, other
• De-emphasis of security relationship

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CONCLUSION

• Tough times ahead
• Not first time
• Challenge