ASEAN- ECONOMIC COOPERATION UNDER THE ASEAN-CHINA FREE TRADE AGREEMENT (ACFTA): THE CASE STUDY OF

BY

MISS KANSINEE SOMJAI

A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS IN INTERNATIONAL RELATIONS FACULTY OF POLITICAL SCIENCE ACADEMIC YEAR 2016 COPYRIGHT OF THAMMASAT UNIVERSITY

Ref. code: 25595403040131WTU ASEAN-CHINA ECONOMIC COOPERATION UNDER THE ASEAN-CHINA FREE TRADE AGREEMENT (ACFTA): THE CASE STUDY OF THAILAND

BY

MISS KANSINEE SOMJAI

A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS IN INTERNATIONAL RELATIONS FACULTY OF POLITICAL SCIENCE THAMMASAT UNIVERSITY ACADEMIC YEAR 2016 COPYRIGHT OF THAMMASAT UNIVERSITY

Ref. code: 25595403040131WTU THAMMASAT UNIVERSITY FACULTY OF POLITICAL SCIENCE

THESIS

BY

MISS KANSINEE SOMJAI

ENTITLED

ASEAN-CHINA ECONOMIC COOPERATION UNDER THE ASEAN-CHINA FREE TRADE AGREEMENT (ACFTA): THE CASE STUDY OF THAI-LAND

was approved as partial fulfillment of the requirements for the degree of Master of Arts in International Relations

August 19, 2017 on ......

Chairman (Asst. Prof. M.L. Pinitbhand Paribatra, Ph.D.)

Member and Advisor (Assoc. Prof. Attakrit Patchimnun, Ph.D.)

Member

(Asst. Prof. Pichit Ratchatapibhunphob, Ph.D.)

Dean

(Assoc. Prof. Supasawad Chardchawam, Ph.D.) (1)

Thesis Title ASEAN-CHINA ECONOMIC COOPERATION UNDER THE ASEAN-CHINA FREE TRADE AGREEMENT: THE CASE STUDY OF THAILAND Author Miss Kansinee Somjai Degree Master of Arts Major Field/Faculty/University International Relations Faculty of Political Science Thammasat University Thesis Advisor Assoc. Prof. Attakrit Patchimnan, Ph.D. Academic Years 2016

ABSTRACT

Since the Asian Financial Crisis in the year 1997, there has been increasing cooperation within the region. At the same time, a rising China has been spreading its influence to Southeast Asia, especially towards member countries of the Association of Southeast Asian Nations (ASEAN), in various aspects including political, economic and socio-cultural. Economic cooperation between ASEAN and China has rapidly developed since the year 2001, when a free trade area known as the ASEAN-China Free Trade Agreement (ACFTA) was established. After the full implementation of ACFTA in all ten ASEAN member countries in January 2010, the volume of trade has been growing rapidly compared to past levels. China has become a very important trade partner to ASEAN nations, and for example has replaced to become the largest export partner of Thailand. This research explores the driving forces behind ACFTA, from its beginning in 2001 to the year 2015. In addition, the research informs elaboration on the key causes of China and Thailand’s economic cooperation under ACFTA and examines opportunities and challenges under this free trade agreement.

Keywords: Regionalism, Free trade agreement, ASEAN, China, Thailand

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ACKNOWLEDGEMENTS

Firstly, I would like take this opportunity to express my heartfelt gratitude to my mother for her continuous financial support and encouragement from the beginning of my application to the MIR Program. Next, I would like to express my sincere appreciation to Associate Professor Dr. Attakrit Patchimnan, for his kind acceptance of being my thesis advisor; Assistant Professor De. M.L.Pinitbhand Paribatra, chairman of the thesis committee, and Assistant Professor Dr. Pichit Ratchatapibhunphob, member of the thesis committee for their kind support. I also would like to further share my appreciation to Assistant Professor Dr. Attasit Pankaew for his useful guidance and Dr. Somphob Manarangsan for his insightful discussion and comments regarding my research. In addition, I would like to thank Mr. Ridronachai Warungkarasami for his continuous encouragement, Mr. Jeremy Wellard for his patience on proofreading, and all member staff of the MIR program, Thammasart University for their guidance and facilitation throughout the completion of my thesis. Lastly, I wish to thank myself for making the graduation of MIR program possible and happen.

Miss Kansinee Somjai

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TABLE OF CONTENTS Page ABSTRACT (1)

ACKNOWLEDGEMENTS (2)

LIST OF TABLES (5)

LIST OF FIGURES (6)

LIST OF ABBREVIATIONS (7)

CHAPTER 1 INTRODUCTION 1

1.1 The background of Thailand’s political economy 1 1.1.1 Politics 1 1.1.2 Economy 3 1.1.2.1 Asian Financial Crisis 5 1.2 The Background of China 6 1.3 The Background of Association of Southeast Asian Nations (ASEAN) 8 1.3.1 ASEAN-China Relations 13 1.4 Significant of the issue 16 1.5 Research Objectives 19

CHAPTER 2 REVIEW OF LITERATURE 20

2.1 China and its economic influence 20 2.2 ASEAN-China Economic Relations 21 2.3 The China – Thailand Relationship 27 2.3.1 Early Harvest Program 30

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CHAPTER 3 RESEARCH METHODOLOGY 32

3.1 Research questions 32 3.2 Research hypothesis 32 3.3 Theoretical reviews 32 3.3.1 Neoliberalism 33 3.3.2 Regionalism 34 3.4 Scope 36 3.5 Qualitative Analysis 37

CHAPTER 4 RESULTS AND DISCUSSION 38

CHAPTER 5 CONCLUSIONS AND RECOMMENDATIONS 59

REFERENCES 63

APPENDICES

APPENDIX A List of Prime Minister of Thailand 72 APPENDIX B List of President of China 75 APPENDIX C Early Harvest Program 76

BIOGRAPHY 91

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LIST OF TABLES

Tables Page 1.1 Timeline of ASEAN China Free Trade Agreement 16 4.1 Thailand’s Gross Domestic Product (GDP) and its annual growth 41 4.2 Thailand’s Import Value to Selected Trade Partners between 1995 -2015 47 4.3 Thailand’s Exports to Selected Trade Partners in 1995 -2015 49 4.4 Thailand’s Foreign Direct Investment 52

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LIST OF FIGURES

Figures Page 1.1 Thailand’s Gross Domestic Product (1995 -2015) 4 1.2 China's Gross Domestic Product (1960-2015) 7 1.3 Map of Southeast Asia and China 9 4.1 Thailand’s Import – Export Statistics, 1995-2015 42 4.2 Thailand’s trade with China during the years 1995-2015 44

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LIST OF ABBREVIATIONS

Symbols/Abbreviations Terms AFTA ASEAN Free Trade Agreement ACFTA ASEAN China Free Trade Agreement ASEAN Association of Southeast Asian Nations EHP Early Harvest Program FTA Free Trade Agreement GDP Gross Domestic Product IMF International Monetary Fund NESDB National Economic and Social Development Board PAD People's Alliance for UDD United Front of Democracy Against

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CHAPTER 1 INTRODUCTION

This first chapter aims to introduce and provide background to the various actors related to this research. This chapter will provide background to Thailand’s political economy, discuss the importance of the regional economic incident known as the Asian Financial Crisis, provide background to China’s regional role and give an overview of the Association of Southeast Asian Nations (ASEAN). This chapter will also cover the significant of key issues, in order to elaborate on the importance of this research and its objectives.

1.1 Background to Thailand’s Political Economy

Thailand is located on the mainland of Southeast Asia and covers an area of 514,000 square kilometers. Thailand’s borders connect to Myanmar, , and Malaysia and the Southern part of Thailand has its coastline on the Gulf of Thailand and the Andaman Sea. Thailand’s geography is categorized into four sub- regions: the northern region, the northeast region, the central region and the southern region. Historically, Thailand is the only country in Southeast Asia which has never been colonized by a Western power. Thailand’s Head of State is its King and its Head of Government is the Prime Minister. According to the World Bank (2016a), Thailand’s current population is over 67 million people. Overall, Thailand has good diplomatic relationship with the world’s most powerful countries, including both China and the .

1.1.1 Politics The Thai political system changed from an to a in the year 1932. The first Thai Prime Minister was Phraya Manopakorn Nititada, who established the first official constitution on 10th December 1932. However, Phraya Manopakorn Nititada was deposed by Phraya Phahonphonphayuhasena in the first of many military coups in June 1933. He later became the second Thailand’s prime minister in 1933.

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From the beginning of the constitutional monarchy in 1932 until 2015, Thailand had 29 Prime Ministers. Thailand has had a total of nineteen charters and constitutions, which makes it one of the countries with the most constitutional changes in the world. Moreover, Thailand had a total of thirteen military coups between the first coup in 1933 and the year 2015, making it the country with the most coups d’état in the world. It has been said that the monarchy and the military both have important role to play in shaping Thai politics. Most Thai Prime Ministers were previously from the military, particularly those who had long terms in government, such as the 3rd prime minister, , the 10th prime minister, , and the 16th prime minister, . In 2001, was elected to be the 23rd Prime Minister of Thailand. He changed Thai traditional policies to more populist approaches, known as Thaksinomics. Thaksinomics were economic policies aimed at supporting rural people and the lower income populations which make up the majority of the Thai population. Examples of popular policy are the 30 Baht universal healthcare program, the One Tambon One Product (OTOP) program, and the four-year debt moratorium for farmers. Thaksin Shinawatra’s government developed Thailand’s security cooperation with the United States, while at the same time he also developed trade relations with China. In 2005, there was a huge public protest against Prime Minister Thaksin, named the People's Alliance for Democracy (PAD). It was the beginning of Thailand’s current political turmoil. The PAD was led by Chamlong Srimuang and Sondhi Limthongkul and the yellow shirt was used to represent supporters of the PAD. In September 2016, the Thai military deposed Thaksin Shinawatra’s government during an official visit to the United Stated. Opposing the PAD was a group supporting Thaksin, named the United Front of Democracy Against Dictatorship (UDD). The UDD was represented by their red shirts and led by Jatuporn Prompan, Nattawut Saikua, Veera Musikapong, Charan Ditthapichai, and Weng Tojirakarn. The clashes between the yellow shirts and the red shirts caused political turmoil in Thailand for years. In 2008, the PAD gathered again to pressure the new Prime Minister, , to resign by blocking the airport, major roads and highways. The demonstrations continued into his replacement ’s government, as both of these Prime Ministers were accused of being proxies for Thaksin. When became Thailand’s 27th prime

Ref. code: 25595403040131WTU 3 minister in December 2008, the UDD protested and called on him to resign. In 2009, a UDD demonstration caused the fourth East Asia Summit in Pattaya to be cancelled. In 2010, 27 buildings were set ablaze in areas of central and a military crackdown on the UDD leaders began. In 2011, , former Prime Minister Thaksin’s younger sister, was elected to be the 28th prime minister of Thailand. In 2014, another demonstration was led by Suthep Thaugsuban with the aim to pressure for the resignation of Prime Minister Yingluck Shinnawatra. This demonstration led to the military coup that deposeded Yingluck Shinawatra’s government, installing Prayut Chan-o-cha as the 29th Prime Minister of Thailand.

1.1.2 Economy 47 percent of Thailand’s total population is aged between 25-54 years old and one third of the Thai population lives in the northeast region. Thailand’s labor force is around 38.70 million people. The United Nations in Thailand (2016) showed that Thailand has reduced the percentage of the population living in poverty from 27 percent in 1990 to 9.8 percent in 2002. Information from Department of International Economic Affairs, Ministry of Foreign Affairs of Thailand (2016) shows that Thailand has an unemployment rate of less than one percent. The sources of Thailand’s gross domestic product (GDP) are mainly from agriculture, manufacturing, wholesale and retail trade, and services. In the past the Thai economy was based mainly on agriculture and it was known as “rice economy”, because rice was the main output. In 1960, agriculture made up 32 percent of Thailand’s GDP, while manufacturing comprised only 14 percent. Thailand changed its industrial policy in the mid-1980s, from import-substitution industrialization to export-oriented industrialization and the Thai economy developed into an industrial economy. According to the Office of the National Economic and Social Development Board’s (NESDB) statistics, manufacturing’s share of Thailand’s GDP has increased since 1981. In 1981, manufacturing contributed 172,143 million Baht, whereas agriculture added 162,390 million Baht to Thailand’s GDP. In later years, the Thai economy became more trade oriented and Thailand is currently highly dependent on trade. Trade in goods and services now makes up about 74 percent of Thailand’s total GDP, with the services sector being about 45 percent.

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The service sector refers to tourism, which forms the largest part of this sector, retail, transportation, and banking or financial services. Although it has been over half a century since Thailand transformed its economy from an agricultural base to an industrial base, the agricultural sector remains important for Thai household income and livelihoods, with more households involved even as the overall proportion has decreased (Pupphavesa, 2008). Currently, total Thai production is mainly from the manufacturing and industrial sector which share 42 percent and the agricultural sector, which shares about 58 percent. The average annual growth rate of Thailand’s GDP was 8.2 percent and 4.7 percent during the periods 1960 – 2000 and 2000 – 2015 respectively.

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Figure 1.1 Thailand’s Gross Domestic Product (1995 -2015). Adapted from World development indicators (n.d.). Retrieved from World Bank Group website: http://data.worldbank.org/ indicator/NY.GDP. MKTP.CD

Figure 1.1 shows that although Thailand has had a good average annual growth rate, Thailand’s GDP decreased in 1997, 1998 and 2009. This was because Thailand experienced both domestic political instability and the effects of international economic crises, such as Asian Financial Crisis in mid-1997 and the Global Financial Crisis in 2008.

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1.1.2.1 The Asian Financial Crisis In the early 1990s, Asia experienced high economic growth, especially Indonesia, Malaysia, South Korea, the and Thailand. In mid-1997 however, an important economic incident called the Tom Yum Goong Crisis or East Asian Financial crisis occurred. The crisis originated in Thailand and three countries were heavily affected; Indonesia, South Korea and Thailand. According to Radelet S., and Sachs J. (1998) insider dealing, corruption, and weak corporate governance caused inefficient investment spending and instability in banking systems. Before the crisis occurred, there were signs such as the overvaluation of the Thai Baht and the high inflows of foreign investment to the region. Annual capital inflow to Thailand average over 10 percent of GDP in the early 1990s and reached 13 percent of GDP in 1995. Domestic bank lending in Thailand expanded rapidly after the launch of Bangkok International Banking Facilities (BIBF) and reached over 28 percent by 1995. Some analysts consider that the high economic growth in the early 1990s caused an imbalance between macroeconomic and microeconomic systems. This economic crisis affected the stability of East Asian capitalism and financial markets. However, there were several international responses to this financial crisis. The international response was officially led by the International Monetary Fund (IMF). The IMF and Thailand signed an emergency lending agreement in August 1997, Indonesia signed an emergency lending agreement in November 1997 and Korea signed in December 1997. There was also a regional response to the crisis. Countries in East Asia developed a regional economic cooperation approach under the ASEAN Plus Three (ASEAN+3) Finance Ministers’ framework. The first meeting of this group took place in 1999 in Manila, Philippines, with participation from the ten ASEAN countries plus China, Japan, and South Korea. It was decided that stronger financial institutions were needed and in 2000, the Chiang Mai Initiative was established as a regional financing arrangement and bilateral swap arrangement (BSA). Economic growth in Thailand has been a key driver of poverty reduction, and Thailand’s poverty rate has declined from 67% in 1986 to 11% in 2014

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(World Bank, 2016b). Thailand has a strong relationship with many of the world’s most powerful countries such as China, Japan and the United States, who are important strategic partners of Thailand. In addition, Thailand has actively engaged in regional and sub-regional cooperation such as Association of South-East Asian Nations (ASEAN), Asia-Pacific Economic Cooperation (APEC), Greater Mekong Sub-region (GMS) and the Mekong-Ganga Cooperation (MGC). In 2011, Thailand was classified by the World Bank as an upper-middle-income country and it is ranked 26th out of 189 countries on the comfortable business environment.

1.2 Background to The People’s Republic of China

The People’s Republic of China (hereinafter refer as “China”) is located in the eastern part of Asia, as shown in Figure 1.3. Its geography covers an area of 9.6 million square kilometers, making it the third largest country in the world, after Canada and Russia. China has coast lines on The Yellow Sea, East China Sea, and South China Sea, which connects directly with the Pacific Ocean. According to World Bank Statistic (World Bank, 2015), China’s population has reached over 1.3 billion people, making it the most populous country in the world. China is a centralized unitary state which is completely managed by the Chinese Communist Party. China’s national administration is authoritative in its structure and ideology. The Chinese Communist Party (CCP) is the only in China and there are eight other registered smaller parties, all under the control of the CCP. Mao Zedong was the first to hold the office of State Chairman, in 1955. Liu Shaoqi became the second Chairman in 1959, followed by the third chairman named Li Xiannian in 1983. The title of the office changed to President, with the fourth President named Yang Shangkun, the fifth President named Jiang Zem, and the sixth President named Hu Jintaoin in 1988, 1993, and 2003 respectively. The current Chinese President is Xi Jinping who became the seventh President in 2013. In 1978, China started reforming its economy and applied an open door policy in 1986, aimed to attract foreign investment in order to develop a market economy and private sector. In doing so it transformed from a centrally-planned to a market-based economy. Since this time, China’s economy and society has been developing rapidly and this has caused the phenomenon of “rising China”, as seen in

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Figure 1.2 on China’s Gross Domestic Product (1960-2015). China’s GDP growth has averaged nearly 10 percent a year over the period 1996-present. China’s GDP grew 9.3 percent in 2011, 7.8 percent in 2012, 7.7 percent in 2013, 7.3 percent in 2014 and 6.9 percent in 2015.

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1970 2002 2009 1965 1975 1980 1985 1990 1995 1996 1997 1998 1999 2000 2001 2003 2004 2005 2006 2007 2008 2010 2012 2013 2014 2015 1960 Figure 1.2 China's Gross Domestic Product (1960-2015). Adapted from World development Indicators. (n.d.). Retrieved from World Bank Group website: http://data.worldbank.org/ indicator/NY.GDP. MKTP.CD

China is currently a developing country and in 2001 joined the World Trade Organization. China played an important role during the Asian financial crisis in mid- 1997 by contributing money to the IMF. During the financial crisis of 2008, China survived its economic recession by pledging 4 trillion yuan, about USD 580 billion, to stimulate its economy. China has also been the largest contributor to global economic growth since the global financial crisis of 2008. China's agricultural sector contributes only 9 percent towards China’s GDP. The main source of GDP is from manufacturing low-cost exports of machinery and equipment. China also has state-owned companies that control its fuel exports, Petro China, Sinopec and China National Offshore Oil Corporation. One-fourth of China's economy is based in real estate-related companies, especially railways, construction

Ref. code: 25595403040131WTU 8 and other infrastructure. China has also developed its exports in electrical equipment and other types of machinery, including computers, data processing equipment, optical and medical equipment, apparel, fabric and textiles. Moreover, from 2013 to 2015 China has become the world's largest exporter of steel and it exported $2 trillion of its production in 2016. At the same time, China is the world's third largest importer. China imports raw commodities, aluminum and copper from important trade partners including the United Stated, Hong Kong, Japan and South Korea. In addition, China has increased its economic cooperation with Southeast Asian nations, many Latin American countries as well as African nations. Currently, China is the world’s second largest economy and is increasing its role in the global economy. In 2015, China achieved all its Millennium Development Goals (MDGs), including raising more than 800 million people out of poverty. There are currently 55 million people who remain facing poverty in rural areas.

1.3 Background to the Association of Southeast Asian Nations (ASEAN)

The Association of Southeast Asia Nations (hereafter refers as “ASEAN”) is one of the most successful inter-governmental organizations in the developing world today. ASEAN has brought together countries in the region under its motto of “One Vision, One Community”. ASEAN is the gathering of ten countries in Southeast Asia; Brunei Darussalam, the Kingdom of Cambodia, the Republic of Indonesia, the Lao People’s Democratic Republic, Malaysia, the Union of Myanmar, the Republic of the Philippines, the Republic of , the Kingdom of Thailand and the Socialist Republic of Viet Nam (hereafter refers as Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and respectively). These ten member countries of ASEAN cover both mainland and island zones totaling approximately 4,480,000 square kilometers (see Figure 1.1). During the period, before the establishment of ASEAN, countries in Southeast Asia faced political instability and the threat of domestic insurgency from local and communist groups. ASEAN was established when Ministers of its five founding countries, Indonesia, Malaysia, the Philippines, Singapore, and Thailand, agreed to sign the Bangkok Declaration on 8 August 1967 at Saranrom Palace in

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Bangkok, Thailand. Originally, the driving force behind ASEAN’s establishment was mainly political co-operation, although the written purpose of the ASEAN declaration - or Bangkok declaration - stressed economic growth, social progress and cultural development in the region and promoting regional peace and stability together. According to Thanat Khoman, former Foreign Minister of Thailand (1992), the most important reason for ASEAN’s conception was for these countries to join together to strengthen their positions and protect themselves from the political influence of powerful outsiders.

Figure 1.3 Map of Southeast Asia and China. Retrieved from ASEAN Up website: http://aseanup.com/asean-association-of-south-east-asian-nations/

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In November 1971, five Ministers of ASEAN’s founding member countries signed the declaration named the Zone of Peace, Freedom and Neutrality (ZOPFAN) in Kuala Lumpur, Malaysia. This was also known as the Kuala Lumpur Declaration and its purpose was for political gains through building national and regional resilience. In February 1976, the first ASEAN summit was held in Bali and the participating leaders together agreed to sign a set of fundamental principles called the Treaty of Amity and Cooperation (TAC). This treaty includes the important and unique principle of non-interference, through which member countries would be free from external interference in their domestic affairs by other member countries. The TAC also ensures mutual respect for the independence, sovereignty, equality, territorial integrity, and national identity of all ASEAN members. In addition, it also includes mechanisms for the settlement of differences or disputes through peaceful means and effective cooperation among member countries. In 1984, Brunei Darussalam joined ASEAN. In 1987, at the third ASEAN summit in Manila, ASEAN leaders signed a protocol amending the TAC in order to enable non-member countries to consent to this treaty. In the 1992 summit in Singapore, leaders agreed to move forward their political and economic cooperation and promote external dialogues. The ASEAN Regional Forum (ARF) was adopted in 1994. This forum focuses on multilateral security and includes not only member countries, but also the major countries from East Asia. In 1995, Vietnam officially joined ASEAN. And in December of the same year, at the ASEAN summit in Bangkok, leaders together signed the Treaty on the Southeast Asia Nuclear Weapon-Free Zone (SEANWFZ) which came into force in March 1997. Both Lao PDR and Myanmar officially joined ASEAN in 1997 and the final ASEAN member country to join was Cambodia, in 1999. ASEAN proclaimed itself as representing “the collective will of the nations of Southeast Asia to bind themselves together in friendship and cooperation and, through joint efforts and sacrifices, secure for their peoples and for posterity the blessings of peace, freedom and prosperity”. At the 9th ASEAN Summit in 2003, the ASEAN community was discussed and initiated. At the 12th ASEAN Summit in January 2007, ASEAN leaders strongly committed to establishing the community by 2015. The ASEAN community includes three main pillars: ASEAN Political-Security Community (APSC), ASEAN Economic Community (AEC), and ASEAN Socio-

Ref. code: 25595403040131WTU 11 cultural Community (ASC). In the following year, the ASEAN Charter was declared. This charter provides legal status and an institutional framework which aims to organize ASEAN norms, rules and values; sets clear targets for ASEAN; and presents accountability and compliance. ASEAN became the official ASEAN Community by the end of 2015, a demonstrable success in transforming regional rivals into neighbors, highlighting ASEAN’s important role in peace, security and stability in the region. In economic terms, ASEAN represents diverse markets and varying economic developments and together represents the third largest economy in Asia, after Japan and China. Among the three pillars, economic aspects seems to be the dominant driver and the ASEAN Economic Community (AEC) is the most widely promoted of the three communities of ASEAN. The largest economy in ASEAN is Indonesia and Thailand’s economy ranks as the second largest. The lowest GDP growth rate seen in ASEAN is Brunei, while Thailand has recorded the second lowest GDP grow rate of the region. In terms of ASEAN’s economic history, after the failure of the preferential trade agreement in 1977, ASEAN strengthened its internal economic cooperation through the ASEAN Free Trade Area (AFTA), founded in 1992. In addition to AFTA, ASEAN has also signed many free trade agreements with other external partners. Surin Pitsuwan, former ASEAN Secretary General (2011), stated that ASEAN is driven and guided by the principles of open market economy, and adherence to multilateral rules and a rules-based system, thus creating an integrated regional economy that gives rise to more trade and an investment friendly environment. AFTA was also motivated by the external pressure of IMF and the World Bank in order to speed up trade liberalization and the formation of several trade blocs. AFTA aimed to reduce tariffs, non-tariff barriers, quantitative restrictions and other cross-border measures among ASEAN countries. It was the first significant progress of economic cooperation and it was the foundation of AEC. By 2015, the ASEAN Community aimed to create four important components: a single market and production base, a highly competitive economic region, a region of equitable economic development, and a region fully integrated into the global economy. Importantly, the process of the ASEAN community not only strengthens its own relationships, but also provides an opportunity for ASEAN to attract FDI inflow and internal direct investment flows into ASEAN. ASEAN has therefore become a prime investment destination (Minh, 2015). The largest foreign

Ref. code: 25595403040131WTU 12 direct investors, excluding ASEAN and the EU, are Japan, the United States and China. In 2015, Japan’s share was 14.5 percent of total net inflow of foreign direct investment (FDI), while the United States and China shared 10.2 and 6.8 percent of total net inflow of FDI respectively and South Korea contributed 4.7 percent. In socio-cultural terms, the ASEAN region is very diverse in its customs, traditions, religions and beliefs. Depending on the history of each member country of ASEAN, their cultures have seen influences from Indian, Chinese, Portuguese, Spanish, American, and indigenous Malay groups. In terms of religions in ASEAN, Islam and are widely practiced in the mainland of Southeast Asia, while Roman Catholicism is largely practiced, especially in the Philippines. Each ASEAN country has its own official languages and a wide-ranging list of dialects. Bahasa language is the most commonly spoken in ASEAN, as it is used in Indonesia and Malaysia. However, English is the official business language among ASEAN member countries. In terms of population, ASEAN’s population reached over 360 million people in 2015, making it larger than the European Union (EU). From a global perspective, ASEAN accounted for 8.5 percent of the world’s total population in 2015. Indonesia has the largest population in ASEAN with over 200 million and the second is the Philippines with its population over 90 million. Thailand, with 67,959,359 people, accounts for 10.7 percent of the region’s total population. Over the years, ASEAN has expanded its relationships with external partners, including countries such as , Canada, China, , Japan, , Russia, South Korea, the United States, other regional institutions, and international organizations. Cooperation areas include trade, investment, human resource development, science and technology, education, drug trafficking and anti- terrorism. Currently, China, Japan, the United States, South Korea, and the European Union (EU) are the five largest partners of ASEAN. ASEAN has established a number of dialogue relations with other countries and partners. In 1974, the ASEAN-Australia Dialogue Relations was established, the first dialogue with an external partner outside of the region. In 1975, ASEAN-New Zealand Dialogue Relations was established. In 1977, several dialogue relations were established, including ASEAN-Canada Dialogue Relations, ASEAN-EU Dialogue Relations, ASEAN-Japan Dialogue Relations, ASEAN-UNDP Dialogue relations, and ASEAN-US Dialogue Relations. In 1991,

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ASEAN-Republic of Korea Dialogue Relations were established. In 1995, ASEAN- India Dialogue Relations, and in 1996, ASEAN-China Dialogue Relations and ASEAN-Russia Dialogue Relations were established. In 2003, China, Japan, India and South Korea agreed to sign formally onto the TAC and in 2005, Australia and New Zealand also signed. In addition, there is an important cooperation agreement between ASEAN and its powerful neighbors in Northeast Asia called ASEAN Plus Three (ASEAN+3 or APT). This cooperation, which was proposed at the ASEAN summit in Kuala Lumpur, Malaysia in 1997, is recognized as the leading regional cooperation in East Asia region and includes the ten ASEAN member countries, plus China, Japan and South Korea. It aims to ensure regional cooperation in various areas, most notably economic, security, culture and development strategy.

1.3.1 ASEAN-China Relations China is one of the most important external partners of ASEAN and is a member of the APT. Since China began its economic transformation in 1979, its rapid economic development has had enormous implications, both positive and negative, for the rest of the world, especially its neighbors in ASEAN. Each ASEAN member state has different point of views regarding China, because of its own different historical background and its diplomatic relations with China. China first officially met with ASEAN in 1991, with the delegation led by H.E. Qian Qichen, the Chinese Foreign Minister at the time. He attended the 24th ASEAN Ministerial Meeting in July 1991 as a guest of the Malaysian government. Formal dialogue relations were established between ASEAN and China in July 1996, after those with Japan in March 1977 and South Korea in July 1991. The relationship between ASEAN and China is notably different to others, as economic issues figure far more prominently in relations. However, at the same time, security issues like the South China Sea can be overshadowing. In the past, relations between ASEAN and China were strained due to politics and . Malaysia and Indonesia were the most wary and sensitive about Chinese influence in regional and domestic politics, while Thailand and Singapore were most concerned about Vietnam (Ba, 2012). Malaysia was the first of these countries to normalize its relations with China in 1974, followed by Thailand in

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1975. During the 1990s ASEAN had increasing concerns related to China’s increased budget expenditure on national defense and its activities in the South China Sea. This was especially true for those countries who were involved in the disputes in the South China Sea. However, China signed the Treaty of Amity and Cooperation in 2003 although the United States had not. China also committed itself to the code of conduct for South China Sea disputes. The policy of China towards the Southeast Asia has been influenced by the policy of the United States towards South East Asia. According to the ASEAN Secretariat (2004), the ASEAN-China Senior Officials Meeting on the Implementation of the Declaration on the Conduct of Parties in the South China Sea states that both parties have taken another important step to ensuring peace in the disputed areas by setting up a joint working group for broad cooperation activities. The objective of this working group is to help put into place concrete cooperation activities, in order to provide an effective system based on the Declaration on the Conduct of Parties in the South China Sea for the 10 members of ASEAN and China. There are many areas for cooperation, including marine environmental protection, marine scientific research, safety of navigation and communication at sea, search and rescue operation, and combating transnational crime. Moreover, Marty Natalegawa, the Indonesian Foreign Minister, said at the ASEAN Informal Meeting on the sidelines of the UN General Assembly in New York that “We’re creating a momentum for progress regarding the South China Sea issue. This is the first time that the ASEAN ministers have received the draft of code of conduct” (Ririhena, 2012). According to Cossa (1998), “a China/ASEAN confrontation in the South China Sea will provide additional ammunition for those in the U.S. already so inclined to argue more convincingly for a U.S. containment strategy against China”. You Ji notes that it would also make it easy for a "`China threat' mentality to permeate into the minds of ASEAN leaders. The ASEAN states could feel compelled to institute a China ‘containment policy’ or sign up to one being instituted by the U.S. and others in the wake of PRC aggression.” In this sense, China’s proactive efforts to deepen its relations with ASEAN are aimed at buffering and mitigating U.S. influence in the region, underscoring again that such links have strategic, as well as economic, and value. For ASEAN–China economic relations, China’s foreign policy of “look south” emphasizes the economic cooperation between ASEAN and China. During the

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Asian financial crisis in 1997, which effected ASEAN on multiple levels, China did not devalue its currency and contributed US$1 billion to the IMF rescue plan. This financial crisis also offered China important opportunities to demonstrate regional leadership and its commitment to Southeast Asia and President Jiang Zemin (“Pro-active policies,” 1997) stated that “China will forever be a good neighbor, a good partner and good friend with ASEAN countries.” In the early 2000s, China proposed a free trade agreement to ASEAN called the ASEAN-China Free Trade Agreement (ACFTA). Actually, China was not the only country to propose an external partnership to ASEAN, Japan also did similarly and China, Japan and South Korea also started discussions about an ASEAN+3 free trade agreement (ASEAN+3 FTA). With slow progress on the ASEAN+3 FTA, China individually decided to negotiate bilateral free trade agreement with ASEAN. At a 2001 meeting in Brunei, China and ASEAN formally announced their intention to start talks on establishing a free-trade zone within the next ten years. The China-ASEAN Framework Agreement of Comprehensive Economic Cooperation was signed in November 2002. A trade in goods agreement was signed in November 2004 at the 10th China-ASEAN Summit, a trade in Service agreement was signed in January 2007 and an investment agreement was signed in August 2009. Full implementation of the ACFTA started on 1 January 2010 for six ASEAN countries, Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore and Thailand. The CLMV countries, Cambodia, Laos, Myanmar and Vietnam, fully implemented the ACFTA on 1 January 2015. The ACFTA is recognized as the third largest free trade area in the world, after the European Union (EU) and the Northern American Free Trade Agreement (NAFTA). China continues to be ASEAN’s largest trading partner as of 2009, while ASEAN has been China’s third largest trading partner since 2010.

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Table 1.1 Timeline of ASEAN China Free Trade Agreement

Year Activities

Proposal for a free trade agreement made by the leader of China in 2000 December

2001 ASEAN and China discuss a bilateral free trade agreement

ASEAN-China Framework Agreement of Comprehensive Economic 2002 Cooperation was signed in November.

2003 The early harvest program was initiated and came into effect

2004 Trade in goods agreement was signed in November

2007 Trade in service agreement was signed in January

The full implementation of ACFTA started for six ASEAN member 2010 countries; Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore, and Thailand

The full implementation of ACFTA started for Cambodia, Laos, 2015 Myanmar, and Vietnam Note: Adapted from ASEAN-China Free Trade Area. (2016, May 30). Retrieved from ASEAN-China Free Trade Area official website: http://www.asean-cn.org/index.php?m= content&c=index&a=show&catid=267&id=84

1.4 Significance of the Issue

The international strategic landscape has changed significantly since the early 1970s. Globalization has led countries to become more competitive, especially in economic areas which have become more dominant elements shaping the world compared to politics. Many countries in East Asia have experienced developments and successes at the individual level and in regional integration. Some have said that this century would be the returning Asian century and Asian economies would become increasingly dominant in the future world. Asia becomes more important to the world

Ref. code: 25595403040131WTU 17 and global economic stability. According to Nair (2012), Asia nowadays has become one of the most talked-about issues among Western people, because they fear that Asia will become the engine of global economic growth and that its two largest countries, China and India, will come to dominate the world in more ways than one. East Asia region includes two sub-regions, Northeast Asia and Southeast Asia. The key features of Northeast Asia’s growth are the rise of China, the economic development of Japan and the economic growth of South Korea. Importantly, these three countries are recognized as the most powerful countries for intra-trade and sources of investment for Southeast Asia and other developing countries. At the same time, the highlight in Southeast Asia is the development of the ASEAN community and the individually developments of its member countries. Therefore, this research will draw attention to the rise of China and Southeast Asian regional integration as ASEAN. In July 1997, the Thai government declared it would begin to devalue the Thai Baht, which started a financial crisis called the Tomyumkung Crisis, also as known as the Asian financial crisis. This financial crisis caused the slowdown of Thailand’s exports and economic growth. This crisis did not impact economic growth only in Thailand, but also in other countries, especially in Asia. Japan also felt the effects of this crisis. At that time, China was expected to devalue its currency, but it did not. It maintained exchange rate and this made China become a stabilizing force in the Asian financial system. By providing Southeast Asian countries with the financial support to survive this crisis, China gradually attained a prominent position and influence in the regional economy, and as a driver of social stability facilitated further development of its relationships with Southeast Asian countries (Shiau, 2001). For almost two decades, from the end of the crisis in late 1998 until now, successful economic recoveries and developments have occurred throughout the East Asia region. Thailand, Malaysia and Indonesia have been supported in the development of their capitalist economics model by the International Monetary Fund (IMF) and the World Bank. Each country has recovered and developed their economies. This crisis became a great lesson for Asia and it also shows the close economic bond between these countries and the East Asia region. Thailand in particular has learnt a great lesson from the crisis and has taken a long step towards its own economic recovery and development.

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Thailand was a founding member of ASEAN and is located in the strategic heart of the region. The Thai economy is the second largest economy among ASEAN member countries, behind the largest which is Indonesia. Thailand’s GDP in 2015 ranked twenty-seventh in the world – for comparison the United States ranks as the world’s largest GDP, followed by China and Japan as the second and third respectively. These three countries are all Thailand’s important trade partners. In order to achieve an industrialized economy and long term sustainable future growth, investment in technology is necessary. Thailand still needs to solve this crucial point otherwise it will not be able to get out of the middle income trap. Within the region, Thailand and some other ASEAN member countries have had close economic ties with Japan for decades, because Japan is the largest foreign direct investor to Southeast Asia. However, China has been a competing economic influence in Southeast Asia since the year 2000 and China continues to increase its influence on ASEAN member countries including Thailand. The economic relationship between China and Thailand has developed greatly since the year 2001 and their trade volumes have increased dramatically since the AEAN-China Framework Agreement of Comprehensive Economic Cooperation was signed in 2002. The top three overall Thai exports are cassava, rubber and fruit (Kasikorn Bank, 2015). Furthermore, the financial sector has become a key mechanism for China to support Thailand and other countries in ASEAN in the past few years. The Asian Infrastructure Investment Bank was established at China’s initiative, encouraging Thailand and others to support China in this role. The official visits of Chinese leader, President Wen Jiaboa, and US leader, President Barack Obama, to Thailand in 2012 shows the interest of both powerful countries in Thailand. Thailand would be a potential base for China to expand its relationships with other countries in Southeast Asia. It is an important challenge for Thailand for rebalance its relationships with these two countries. To sum up the significance of this issue, the phenomenon of the rising China increases its influence on Southeast Asian region in various aspects. Chinese influence has become comparable to that of Japan in term of trade and it has become only the largest trade partner to ASEAN, but also the largest trade partner to Thailand, replacing Japan. Moreover, China nowadays has becomes comparable to the United

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States in term of political influence and overall, more policies from the powerful countries focus on Southeast Asia.

1.5 Research Objectives

In order to achieve the research outcomes, the author would like to set three objectives as follows: (1) To understand the development of ASEAN-China economic relations and its importance as an external partnership, through the framework of economic cooperation called the ASEAN-China Free Trade Agreement. (2) To study the driving forces behind Thai – Chinese economic cooperation under the ASEAN China Free Trade Agreement, as seen through the lens of political economy. (3) To examine the advantages and disadvantages for Thailand under the ASEAN China Free Trade Agreement.

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CHAPTER 2 REVIEW OF LITERATURE

This chapter reviews the related articles and research by separating these into three main parts; (2.1) China and its economic influence; (2.2) ASEAN-China Economic Relations; and (2.3) The China – Thailand Relationship.

2.1 China and Its Economic Influence

According to Mary Amiti and Caroline Freund (2008) in “The Anatomy of China’s Export Growth”, China’s exports have grown over 500 percent since 1992. Their analysis shows that China’s export structure transformed from agriculture and soft manufacturing to hard manufacturing and that machinery has been the largest area of export growth, including telecoms, electrical machinery and office machines. They highlighted that processing trade is very important to China’s rapid income growth. By excluding processing trade, the skill content of China’s manufacturing exports remain unchanged. In trade export, China has become more specialized rather than diversified and China’s 500 largest share of export account for nearly 80 percent of its total exports. The Chinese research paper named “Assessing Regional Reactions to China’s Peaceful Development: A Chinese View” written by Shulong Chu (2009) expresses the view that China’s economy is basically at the same level as smaller countries in Asia. However China’s development, even if peaceful, will regardless include an element of competition for foreign investment and market share. The author analyzed that the rise of China presents both opportunities and challenges for the country’s neighbors, and organizes the perceived threats into three dimensions: economic competition, security concerns, and historical grievances. The author agrees that China should have good relations with neighboring countries, such as those of Southeast Asia. Although the disputes in the South China Sea do exist, these outstanding disputes have been managed peacefully and have been limited in scope, providing evidence of China’s desire to cooperate with its neighbors instead of dictating to them. This sentiment is a logical outcome of China’s peaceful development strategy. The most significant factor shaping China’s peaceful development is the United States

Ref. code: 25595403040131WTU 21 and its relationship with countries in Southeast Asia. China’s development offers these countries many benefits through greater cooperation and economic and social integration. Nowadays, many from Southeast Asia see China’s peaceful development as successful and acceptable. In this research, the author suggest that China must develop more trusting relations with these countries and continue to manage sovereignty disputes in the South China Sea in a peaceful manner. According to Michael Schuman in “Why do we fear a rising China?”, China uses its economy to put political pressure on its partners. China has created the competition due to its competing economic model called “State Capitalism”. He gives the example of Australia, which benefits from the export of raw materials to the Chinese market. This became a key factor in helping Australia to feel less effects of the global financial crisis in 2008, as there was an inflow of Chinese investment and job creation to Australia. This in turn meant that the Australian economy became more dependent on China. With the growing Chinese economy, it has increased its economic influence in the Asia region and it has come to be considered as a strategic threat. In addition, a rising China is unlike a rising Japan in the past. Rising Japan in the past presented challenges mostly for the world’s leading economies, whereas a rising China also covers the expansion of its political power through the economic sphere, which can be compared to the U.S.-led political and economic system. This can create a nervous situation from many countries who have historical conflicts with China, such as Japan, South Korea, Taiwan and Vietnam. From Schuman’s point of view, this is the reason why political leaders of South Korea and Taiwan try very hard to maintain their relationship with the US to counter the influence of the growing Chinese economy.

2.2 ASEAN-China Economic Relations

The cooperation between ASEAN and China has developed in various aspects since the changes in the international landscape in the 1970s. Regional cooperation has increased, especially in economic areas through trade and financial cooperation. There are a number of papers and research that related to developmental relation between ASEAN and China, especially the economic cooperation between ASEAN and China under ACFTA.

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The analysis conducted for McKinsey Global Institute by Oliver Tonby, Jonathan Ng and Matteo Mancini in the paper named “Understanding ASEAN: The Manufacturing Opportunity” (2014) reported that while China remains the big market for the world, at the same time Southeast Asia can be recognized as the world’s fastest growing market. Most of ASEAN’s GDP comes from Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. These six member countries account for more than 95 percent of the regional GDP of ASEAN. Apart from promoting the ASEAN Economic Community (AEC), intra-trade of ASEAN continues to increase and remains attractive for multinational investors. Therefore, ASEAN can become a global hub of manufacturing. Analysis shows that the manufacturing sectors’ scale can rise from 5 to 15 percent of the total cross base. On the other hand, China has changed its pattern from export-oriented to self-consumer, as it has a huge domestic market. A survey by the American Chamber of Commerce Singapore and U.S. Chamber of Commerce (2014) found that 19 percent of ASEAN businesses plan to move from China back to ASEAN and this investment’s destination would mainly be Indonesia. Other attractive countries for new business expansion are Vietnam, Thailand, and Myanmar respectively. One of the competitive advantages for investment in ASEAN is the availability of low-cost labor in countries such as Cambodia, Indonesia, Laos, Myanmar, and Vietnam, the cost of which is now lower than the labor cost in China. However, although low-cost labor is a competitive advantage, the productive output is also low. This paper analyzed that these countries will have to focus on boosting productivity to lift the wages of factory workers while remaining competitive. Therefore the level of skilled labor should also be increased. The study named AEC Blueprint Implementation Performance and Challenges: Investment Liberalization by Ponciano S. Intal Jr. (2015) analyzed that one of major driving forces behind the formation of the AEC was the concern regarding FDI redirection from ASEAN to China. Inflow FDI to China during 2002-2003 averaged 8.7 percent of global FDI, whereas at the same time, inflow of FDI to ASEAN averaged 2.3 percent. After the establishment of the ASEAN Community in 2003, inflow of FDI to ASEAN increased to 5.2 percent of global FDI. Moreover, since the release of the ASEAN community roadmap in 2009, inflow of FDI to ASEAN as increasingly grown and since 2013, inflow of FDI to ASEAN and China has been the

Ref. code: 25595403040131WTU 23 same at 8.6 percent. This study shows that the AEC has influenced investor’s decision- making. Alice D. Ba wrote “China and ASEAN: Renavigating Relations for a 21st Century Asia” in 2003. The author found that relations between ASEAN and China are complex. Their relationships include economic interdependence, political and security interests, and a mix of bilateral and multilateral activities. The author argued that the United States plays an important role in the evolution of ASEAN and China’s relationship. The United States’ foreign policy indirectly influences China’s efforts to cultivate relations with Southeast Asia. ASEAN can also be seen as part of China’s “good neighbor” policy. The author also wrote that China would become ASEAN’s potential economic investors and political allies, even though there are some contentious territorial and security issues. The important evidence given for this study is the effect of the Asian financial crisis on multiple levels. Economically, the crisis destabilized economies and undermined investor confidence in the region. Politically, it unseated governments and helped fragment states. Institutionally, the credibility of ASEAN as a regional organization was damaged because of its ineffective response to the crisis. The author viewed that this financial crisis strengthened relations between ASEAN and China, as ASEAN was disappointed with the response of the International Monetary Fund (IMF) to the economic crisis. ASEAN found that IMF’s conditions were intrusive, inappropriate, and insensitive to specific economic and political conditions in affected countries. They also expressed unhappiness with the U.S. for pressing affected ASEAN member countries to open their capital markets. This was not only associated with the problematic IMF conditions but also was viewed as the U.S. benefiting from Southeast Asia’s financial problems. Therefore, China at that time took that opportunity to demonstrate its political and economic value as a partner and as a regional leader. A further analytical study by Kesarin Phanarangsan in 2006 was titled “China’s Reach: Subregional Economic Cooperation in Southeast Asia” The author stated that greater regional economic integration both strengthens China’s position in the region and helps allay concerns over the impact of China’s economic growth on neighboring states. This study elaborates the economic integration between China and five ASEAN countries: Cambodia, Laos, Myanmar, Thailand and Vietnam.

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This subregional cooperation fulfills the scheme of ACFTA through trade, investment and tourism. It also deepens their relations through trade, investment and tourism. Overall, cooperation along the border not only involves positive economic cooperation, but also concerning geopolitical and security issues. China’s Western Development Strategy is used to promote this subregional cooperation. The author explains that the cooperation was inspired by three main factors: Chinese politics and economy, ASEAN interests, and the socio-cultural conditions. This agreement not only decreased ASEAN concern about China’s rising power but also increased economic ties among the counties. Furthermore, this agreement allows ASEAN access to Chinese market. The author added that trade and investment can lead to the success of China’s Western Development Program. China and these five ASEAN countries have already cooperated in many areas such as hydropower, irrigation, transportation, tourism and natural resources. She also argued that socio-cultural factors can facilitate deeper economic cooperation. The top priority of this subregional cooperation is transportation infrastructure development, which has resulted the successful Kumming-Bangkok Highway and the Lancang-Mekong River subregion. In addition, the author suggests three features for deepening economic cooperation: operation as an extension of ACFTA should be complementary rather than conflicting, border economic cooperation should act as grounds for ACFTA, and the private sector should be more active in spurring the development of border economic cooperation. Still, political- security concerns about China’s rising influence remain important, even if less prominent; there is little doubt that the economic crisis has underscored historical and material asymmetries. While China’s post-Tiananmen policy has gone a long way toward reassuring ASEAN states, it has not completely eliminated concerns about China’s long-term intentions. Thus, ASEAN will continue to encourage multilateralism in an effort to mitigate Chinese influence and to ensure that there will still be a “role for the small and medium size states of Southeast Asia.” Nargiza Salidjanova and Iacob Koch-Weser (2015) wrote in “China’s Economic Ties with ASEAN: a country-by-country Analysis” that ASEAN and China have formed a closer relationship since the Asian financial crisis in 1997. ASEAN and China launched a currency swap through the Chiangmai Initiative and subsequently began free trade negotiations. The authors analyzed that each ASEAN

Ref. code: 25595403040131WTU 25 country has its own unique relationship with China and there is both cooperation and tension between ASEAN and China. In this research report, they categorized ASEAN member countries into three levels: high income, middle income and low income. Brunei and Singapore are categorized as high income countries. Indonesia, Malaysia, Thailand and the Philippines are categorized as middle income countries. Cambodia, Laos, Myanmar, and Vietnam are categorized as low income country. Using these categories, they showed that the structure of ASEAN economies is very diverse and that development is at different levels in each. In terms of cooperation, Salidjanova and Koch-Weser pointed out that China invested 2.3 percent of its total FDI to ASEAN in 2013, which counted as 6.7 percent of China’s global outbound investment stock. On the other hand are the territorial disputes and tension between China and five ASEAN member countries; Brunei, Indonesia, Malaysia, the Philippines, and Vietnam. They highlighted that three ASEAN member countries who were involved in territorial disputes with China were also a members of the Trans-Pacific Partnership (TPP) which was a trade agreement led by the United States and including 11 countries; Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, , Singapore and Vietnam. For Thailand, Salidjanova and Koch-Weser viewed that it is a very open economy and unique in the export of services, especially in tourism. By this reasoning, they explained why Thailand is in deficit in trade of goods. However, they argued that Thailand could recover from the 1997-1998 Asian financial crisis through strong exports and a prudent monetary policy. New urban Chinese consumers prefer eat to higher quality fruit and vegetables from abroad. Therefore, Thailand signed the Early Harvest program to eliminate tariffs on fruit and vegetables with China in 2003. This program is under ACFTA. Thailand’s export was cut by global financial crisis and decrease Thailand’s double digit drop. Moreover, Thailand faced flooding in industrial area in 2011. According to Yang Mu and Heng Siam-Heng (2010), in “Promoting China-ASEAN Economic Cooperation under CAFTA Framework”, the free trade agreement between ASEAN and China is important milestone in their relationship. It resulted from the Asian financial crisis in 1997. At that time, China did not suffer the effects of the crisis and it could continuously do business with those countries in Southeast Asia which were affected by the crisis. Importantly, China did not devalue

Ref. code: 25595403040131WTU 26 its currency, which compared favorably to the bullying IMF response to the crisis. Moreover, the global financial crisis in 2008 also heled forge the draft agreement. The authors agreed that this free trade agreement can increase the areas of investment and infrastructure development and lead to further monetary and fiscal policies and industrial policies. They believe that CAFTA can continue to strengthen economic ties between ASEAN and China. According to Shandre Thangavelu (2010) in “Will ASEAN benefit from the ASEAN-China FTA?” ASEAN has a key motivation to access the growing market of China in manufacturing and services, as China is the fastest growing market in the world. China has provided developmental aid to ASEAN member countries, especially Cambodia, Laos, Myanmar, and Vietnam, through special provisions under ACFTA. Through ACFTA, ASEAN consumers and producers would benefit from the cheap import of intermediate inputs from China and this would increase the important linkages among the ASEAN-China production chain. Thangavelu agreed that ACFTA liberalization would benefit ASEAN, especially in service sector and gave examples of how Malaysia, the Philippines, Singapore and Thailand would benefit mostly in service sectors such as aviation, logistics, and tourism. However, Thangavelu argues that it remained unclear whether ASEAN would gain the benefit from ACFTA, because China is the import source of inflow investment with its large unskilled worker. ASEAN should try to realize the medium to long-term benefits, rather than the short run adjustment costs via complementary effects of ACFTA. China’s machinery and equipment exports are beneficial to small and medium enterprises (SME) in ASEAN especially Malaysia, Singapore and Thailand. Thangavelu also points out that ACFTA could perhaps decrease the importance of AFTA and the focus of AEC formation for ASEAN region could be reduced. To counter this, ASEAN should focus more on a united ASEAN and the ASEAN economic community. ASEAN should focus on developing stronger infrastructure and human capital. These developments can be take advantage of China’s growing market and further the evolution of ACFTA into a larger free trade region such as the East Asian Free Trade Agreement (EAFTA), which includes all ASEAN member countries and three important partners, China, Japan and South Korea.

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2.3 The China – Thailand Relationship

China and Thailand officially established diplomatic relations in November 1975 and 2015 marked the 40th anniversary of diplomatic relations. In fact, China and Thailand have had relations for a long time, from the Sukhothai Kingdom and the Ayudhya dynasty until the present. There are various aspects involved in the relationship between two countries, including politics, economy, and socio-culture. Thailand and China have several areas of strategic cooperation. Besides ACFTA, economic relations between China and Thailand have been promoted and developed. According to Chen Yanwu’s (2012) analyzed in his research paper “Sino-Thailand Trade and Economic Relations: Analysis and Prospect”, intra-industry trade makes up the majority of trade between Thailand and China. He explained that products of China and Thailand are similar because of their similar geographical proximity and climate. Thailand has an advantage in cultivating tropical agricultural products. The ASEAN-China Free Trade Agreement (ACFTA) reduced trade barriers and the more advanced technology and favored treatments. This agreement affected the traditional Chinese manufacturing industry, hastening its transfer into a higher-grade manufacturing and service industry in order to enhance China’s competitive ability. During the years 2009 to 2011, Thailand and China succeeded in bilateral investments, contract projects and labor service cooperation. Thailand is a leading exporter of cassava and rubber products, with the volume of 2010 exports being ten times those of 2001. Thailand is the largest exporter of natural rubber, while at the same times China is the largest consumer. For other agricultural products, rice and fruit, the export volume and growth rate are lower. Thailand’s 7.8 percent of growth in gross domestic product (GDP) in 2010 made Thailand one of the fastest growing economies in both Southeast Asia and Asia. Most Thai investments are related to the agro-industry, banking service and real estate. Besides ACFTA, a five year plan was agreed and three agreements signed by Thai and Chinese leaders in April, 2012. These three agreements cover trade and manufacture of farm products, basic infrastructure development, tourism promotion and the establishment of a center for trade laws and rules exchange. This agreement shows the intention between the two governments and their people to increase their bilateral ties. In this research paper, Yan

Ref. code: 25595403040131WTU 28 suggested that Thailand can use its natural endowments in order to enhance its effective exports, improve export scale and increase its competitive ability. He also added that these two countries can strengthen their cooperation through a majority of vertical intra- industry trade and promotion of the formation of division of labor at different stages of the industry chain. The article by Suwatchai Songwanich on “Thai-Chinese economic relations enter new phase” (2013) reported that Thailand and China's relationship is shifting to a new phase in the run-up to the ASEAN Economic Community (AEC), with growing Chinese interest in using Thailand as an alternative production base. The two- way investment between Thailand and China has led to major structural changes in their bilateral trade. On the other hand, the study by John Lee on China’s Economic Influence in Thailand: Perception or Reality? (2013) stated that China uses economic tools such as trade and investment to influence the strategic and political decisions of decision-makers in strategic ‘swing states’ in Southeast Asia. When it comes to Thailand, Beijing’s actual or material capacity to use these economic tools to significantly alter decision-making in Bangkok is limited and frequently overstated. Although its economic relationship with China will grow in importance, the relatively open and diverse nature of the Thai economy offers the country significant trade and investment alternatives. The author stressed that the perception of Thai reliance on China now and into the foreseeable future differs from reality. In overestimating the importance of the Chinese economy relative to other major economic players in Asia, Bangkok shows an overriding fear of displeasing Beijing and damaging its political relationship with China. Such a mindset could also lead to strain in Thailand’s security relationship with its American treaty ally, and could inhibit Bangkok’s capacity to play a more pro-active role in ASEAN and other multilateral institutions, especially when it comes to regional approaches to addressing awkward but important disagreements vis- à-vis China. The author explained that reality based on objective numbers is one thing, whereas perception based on the inevitability of China’s rise to a position of economic and possibly strategic dominance in Asia is another. China, however, is a dominant economic partner and strategic player in Asia, as is commonly made out, and the persistent underlying assumption in conversations with Thai elites including

Ref. code: 25595403040131WTU 29 government and bureaucratic officials, business leaders, think-tanks and academics is that China, and not the US or Japan, will be the more important economic player in the future. This perception gives China the capacity to both intimidate and seduce Thai decision-makers. To be sure, Thailand’s drift towards China is immensely aided by the lack, in recent history, of enmity between the two countries, the absence of major territorial disputes, and the powerful presence and role of ethnic-Chinese Thai political, business and social elites who largely see China’s rise as an opportunity and much less a threat. The approximately 20% of Thais who have an ethnic-Chinese background have been well-integrated into all levels of Thai society for hundreds of years. 17 of the 28 Thai prime ministers since 1884 are of partial or full ethnic-Chinese background. This adds to the fact that Thailand’s historical and contemporary record of deft diplomacy vis-à-vis great powers is admirable and impressive. The study, named China’s growth in Transition: Implications for the Thai Economy, by Nasha Ananchotikul, Pornpinun Chantapacdepong and Chotima Sitthichaiviset (2011) found that there have been changes in China’s economic structure due to a shift of labor out of agricultural work into more productive jobs in industry and service sectors. Also, urbanization is a related change as Chinese workers moved from rural area to urban areas around 200 million people as the Chinese government had set a target to reach 51.5 percent urbanization by the end of 2015. The researchers expressed the view that Thailand has benefited from China’s growth through various trade channels, including exporting agricultural products to feed China’s growing demand for commodities, providing high-quality or differentiated consumer products and services to serve China’s rising middle class, and supplying upstream materials as part of China’s production chain. In addition, Thailand should learn from China’s success in productivity and industrial upgrading and technological advancement, as serious efforts in this direction are much needed for Thailand to escape the middle income trap. Ivan Tchakarov wrote in “Public Investment In Thailand: Macroeconomic Effects And Implementation” (2007) that investment in Thailand collapsed in the aftermath of the Asian crisis. While the sharp fall in private investment was the main driver of the decline in overall investment, reduced public investment also contributed to the slowness of the post-crisis investment recovery. In November 2005

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Thailand’s authorities announced plans for THB1.8 trillion in new infrastructure spending over 2006–09, which was revised down to THB1.3 trillion in June 2006. The megaprojects were concentrated mostly in transportation, including mass transit, and water irrigation projects and these sectors comprise about 48 percent of overall spending. Tchakarov wrote that infrastructure development in Thailand still lags behind that in more advanced regional competitors, which could prove to be a drag on competitiveness and growth prospects. The need for upgrading infrastructure seems particularly acute in the area of transportation, where Thailand lags appreciably behind the newly-industrialized countries in Asia.

2.3.1 Early Harvest Program The agricultural sector remains important to Thai households, despite the fact that its shared value to Thailand’s total trade has decreased. Thailand’s exports in the agricultural sector provide opportunities for Chinese consumers of the increasing middle income class to be able to consume higher quality fruit and vegetables from overseas. For this reason, China urged Thailand to sign a special agreement named the Early Harvest Program (EHP). This program gave the opportunity to Thailand to start free trade ahead of other ASEAN member countries (Pupphavesa, 2008). Before the full implementation of the EHP in 2004, Thailand and China agreed on accelerated tariff elimination under the EHP (AEHP) in June 2003. This agreement was made effective on 1 October 2003, eliminating tariffs on all vegetable and fruit products subject to HS 07-08, including potatoes, tomatoes, onions, shallots, garlic, cabbages, cauliflowers, broccoli, lettuce, carrots, salad beetroot, celeriac, cucumbers, peas, beans, asparagus, sweet corn, olives, coconuts, Brazil nuts, cashew nuts, almonds, hazelnuts, chestnuts, pistachios, bananas, figs, pineapples, avocados, guavas, mangoes, mangosteens, oranges, grape, lemons, limes, melons, watermelons, papayas, apples, pears, cherries, plums, strawberries, mulberries, kiwi, , longans, jackfruit, lychees, rambutan, and others. When the full implementation of the EHP became effective on 1 January 2004, the program eliminated tariffs on agriculture products under HS01-08. Products with code HS 01-06 refer to live animals, meats, edible offal of animals, fisheries, milk and cream, eggs, human hair, feathers, ivory, deer horns, coral, mother-of-pearl, orchids, roses, and so on. After AEHP implementation in 2003,

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Thai farmers, especially garlic and onion farmers complained of the very low price of huge amounts of imported garlic and onion from China. Therefore, China seems to be not only a potential customer, but also seems to be Thailand’s potential trade competitor in these agricultural products. For example, Thailand’s fruit imports from China increased by 214 percent in the fourth quarter of 2013, on the other hands, Thailand’s fruit exports to China increased less than 42 percent (Ratananarumitsorn & Tangkitvanich, 2005). However, this AEHP provided a temporary advantage in terms of allowing Thailand’s manioc exports to access China market and compete with Vietnam’s manioc exports to China. Beside manioc exports, Thailand’s major exports under AEHP are , longan, mangosteen, lychee, banana, and orange. Fresh durians became the largest fruit export to China under AEHP in 2003 and frozen durians were exported most to Chinese market in 2006. On the other hand, Thailand’s major imports under AEHP are apples, pears, quinces, grapes, mandarins, carrots, turnips, dried mushrooms, cauliflowers, broccoli, garlic, dried wood ears, onion and so on. Furthermore, Thailand’s imports from other countries, such as Myanmar, Vietnam, Australia and the United States slowly increased. It can be implied that AEHP indirectly caused bias towards imports from China. For this reason, China became an important importer and exporter of Thailand’s agricultural products. Entering the EHP implementation, fisheries were added as another of Thailand’s major exports to China. Although AEHP and EHP provide great opportunities for Thailand’s exports to access the Chinese market, these programs have also created suffering to local Thai farmers due to the lower price and enormous volume of fruit and vegetable imports from China.

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CHAPTER 3 RESEARCH METHODOLOGY

This chapter aims to address the research question and its hypothesis. Also, this chapter explains about the research methodology which is employed in this research; in order to achieve the research objective, answer the research question and prove the research hypothesis.

3.1 Research Questions

In order to study Thailand and China’s economic cooperation under the ASEAN-China Free Trade Agreement (ACFTA), the key research question to be raised is - What are the key causes for cooperation between Thailand and China under the ASEAN-China Free Trade Agreement framework?

3.2 Research Hypothesis

In order to answer the research question, the author would like to assume that, as more than half of the Thai economy is dependent on exports, this free trade agreement provides the opportunity for Thailand to access to Chinese market more easily than in the past. Furthermore, Thailand has an advantage in the export of agricultural products which are famous in the Chinese market and in global markets. This free trade agreement should help in increasing the trade volume of Thailand’s exports, because trade barriers are decreased.

3.3 Theoretical Reviews

There are two theories which the researcher uses them to apply to this research: Neoliberalism and Regionalism. These theories will be applied to answer the research questions and also explain economic relations between Thailand and China under the ASEAN-China Free Trade Agreement (ACFTA).

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3.3.1 Neoliberalism The neoliberal approach developed from liberalism or classic liberalism, which was founded in the 18th century. There has been debated and differentiated opinions regarding the definition of neoliberalism. Famous thinkers on the topic of neoliberalism, for example, refer to Friedrich Von Hayek, LudwigVon Mises, Karl Popper and Milton Friedman. Neoliberalism refers to the combination of economic theory and a policy stance. It is the model imposed by the International Monetary Fund (IMF) and the World Bank on the world nowadays. At its core is the view that society should be shaped by the free market. This approach was believed to be a tool for peaceful relations between states in the 19th century. Proponents of neoliberalism believe that globalization is a positive force and that global markets can be expanded through promoting free markets. In addition, it is believed that free trade is necessary in the pursuit national economic growth. According to Daniel Stedman Jones (2012), neoliberalism refers to a free market ideology, based on individual liberty and limited government, that connects human freedom to the actions of the rational, self-interested actor in the competitive market place. This is the case in a free trade agreement, which has the purpose to promote cooperation between two states in order to decrease trade barriers and facilitate business sector trade and investment. Kotz (2002) explained that neoliberalism has come to dominate economic policymaking in both the United States and the United Kingdom. Furthermore, the United States tries to impose this neoliberalism onto third world countries through the International Monetary Fund (IMF) and World Bank. The ASEAN free trade agreement was promoted to ASEAN member countries in 1993. This agreement helped ASEAN become a single market with a larger number of consumers in term of population. However, the effect of the Asian crisis in 1997 forced ASEAN to expand its economic cooperation outside the region and since then ASEAN has been negotiating many free trade agreements with its external partners. Rungnapa Lakkanapornwisit (2008) stated that these free trade agreements will be beneficial for Thailand in terms of greater market access for goods and services due to the reduction in trade barriers, increased investment opportunities in overseas markets and reduction of business costs arising from the dismantling of tariff and non- tariff barriers. The ASEAN-China Free Trade Agreement is one of these free trade

Ref. code: 25595403040131WTU 34 agreements, which was signed and become fully implemented in 2010. Thailand, as a member country of ASEAN, is under this free trade agreement. This agreement aims to reduce trade barriers between ASEAN countries, including Thailand, and China. It was believed that this free trade cooperation would be an important shift in Thailand’s economic development, as China is an increasing potential market in the present world. After full implementation of the ACFTA, trade volume between Thailand and China increased rapidly and China surpassed Japan to become the largest trade partner of Thailand. However, the gap in the trade deficit of Thailand to China also increased. Aksornsri Phanishsarn (2015) expressed the view that Thailand has become a good choice for China to use as a base for the Chinese economy in ASEAN. At present, China is involved a lot in trade and investment, especially in the tourism and service sector.

3.3.2 Regionalism Regionalism has been a significant phenomenon in international relations since post-Second World War. The old approach to regionalism was influenced by the political drive resulting in government to government cooperation. Political factors can have a heavy influence on regionalism (Mansfield & Milner, 1999). In the 20th century, the novel form of regionalism was signified by the prefix word “Pan”, for example, Pan Asia, Pan America, and Pan . In the past regionalism was shaped by the powerful countries in the region. For example, in Western Europe, the regional integration of both the European Economic Community (EEC) and the European Union (EU) were dominated and driven by and . In another example, the North American Free Trade Agreement (NAFTA) was dominated by the United States. For Asia, regionalization began when ASEAN was established in the cold war period of the year 1967. It originally was driven by political cooperation for regional security and anti- communism. In today’s world, a new regionalism has influences from science and technology and these factors are making economic regionalism grow rapidly. Geographical proximity is often a major consideration for countries within regional economic cooperation, however economic cooperation can occur between countries in different regions, or so-called trans-regionalism. Rajaratham (1992) stated that if regionalism collapsed, ASEAN would go the same way as previous organizations

Ref. code: 25595403040131WTU 35 including the Southeast Asian Treaty Organization (SEATO), The Association of Southeast Asia (ASA), and Malaya-Philippines-Indonesia (MAPHILINDO). ASEAN extended its cooperation through the ASEAN free trade agreement in 1993. Later, ASEAN become the central organization for East Asian regionalism through ASEAN+3, including other powerful countries: China, Japan and South Korea. Therefore, ASEAN has, along with the EU, become one of only two functioning and highly respected regional organizations. Moreover, these two well-functioning organizations cooperate through the Asia-Europe Meeting (ASEM), of which their first meeting was held in Bangkok in March 1996. New regionalism began in the year 1997. It covers a security-economic nexus, regional management, regional convergence and eventually financial integration (Low, 2004). ASEAN can be seen as good example of both old regionalism and new regionalism. ASEAN+3 is different from EU in that it does not seek to form a single currency as the EU has done. ASEAN regionalism also responds to changing geoeconomics and geopolitics. It can be argued that ASEAN appears marginalized by ASEAN plus three (Webber, 2001), which covers a larger economic space and has greater potential. In the study on East Asian Ideas of Regionalism: A Normative Critique, which was written by Baogang He in 2004, the author compared normative regionalism elements between East Asia and Europe and found these to be different. Normative regionalism elements in East Asia are based on nationalist doctrines and cultural values. On the other hand, normative regionalism elements in Europe are based on democracy, human rights, the reduction of national sovereignty and the rise of regional organizations which override national governments. As Asian regionalism stresses and cultural value, it is obstructed itself by historical relations, geo-politics, and economic factors. For example, there are several conflicts between neighboring countries, such as China and Japan, Thailand and Cambodia, and Singapore and Malaysia. The study explained that the idea of Pan-Asianism was the initial regionalism of Asia in the twentieth century. This idea was implied by various intellectuals in Asian countries. Later, this idea was rejected because of the imbalance in relationship between regionalism and nationalism. The author viewed that Pan-Asianism did not provide for how to manage this imbalance in relations and how to separate regional and national,

Ref. code: 25595403040131WTU 36 but the idea of Pan-Asianism still influenced regionalism in Asia, especially to Prime Minister Mahathir Mohamad of Malaysia, with his regionalism concept of anti-US superior power. Mahathir proposed to establish the East Asian Economic Group (EAEG), later changed to the East Asian Economic Caucus (EAEC), in the 1990s, limited to Asian membership only. EAEC was unsuccessful in its establishment because there was disagreement by many countries, including China and Japan. Also, the EAEC disrupted the linkages of APEC. Later, EAEC re-emerged as ASEAN Plus Three which supports the concept of Asian regionalism. The author analyzed two main obstacles to East Asian regionalism: sovereignty and culture. As East Asian national status seemed to be abnormal and complex, there were not only domestic problems in several countries but also distrust among several neighboring countries. Thus, sovereignty was seen to be the most important element for countries in East Asia. Moreover, the author analyzed that East Asian regionalism lacked systematic thinking from the governmental level and a region-centric framework or commitment to a union. From the Japanese perspective, Masahiro Kawai, wrote “East Asian economic regionalism: progress and challenges” in 2005. The author’s perspective was that the Asian financial crisis in 1997-1998 was the most fundamental driving force behind the closer economic regionalism in the region and was the beginning of the process of ASEAN Plus Three. Dissatisfaction with the IMF’s management of the crisis caused affected countries to establish self-help mechanisms in order to prevent and manage the effects of the crisis and increase the Asian voice in global finance. Kawai analyzed that closer regionalism was needed to develop mutual trust and a shared mutual vision of the political and economic future of East Asia.

3.4 Scope

This research will start with the relations between ASEAN and its important external partner, China. Following this, it will explain about the development of the ASEAN-China Free Trade Agreement (ACFTA). This research mainly focuses on Thailand and China’s relationship under the free trade agreement in order to achieve the research objectives and answer the research question.

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3.5 Qualitative Analysis

The methodology for the research is a qualitative analysis methodology. This research will be mainly based on documentary research. The material sources for this research are both primary sources and secondary sources. The primary sources include speeches from related countries’ leaders and interviews given by related high ranking officers in member countries or international organization or sophisticated academics. Also, relevant statistics from ASEAN and international organization are analyzed in order to assess the effects on trade volume and investment under the pre-implementation and post-implementation of ACFTA. The secondary sources include articles and news from academic journals, newspapers or websites. It also includes related research or academic discussion papers.

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CHAPTER 4 RESULTS AND DISCUSSION

It has been over a decade since the beginning of the ACFTA negotiations and over half a decade since the full implementation of the agreement by six ASEAN member countries: Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand. In this time, the relationships between ASEAN member countries and China have been developing dramatically and, although there is still a long way to go, this development can be seen in the relationship between Thailand and China. In this chapter, the author aims to analyze the causes of development in the relationship between Thailand and China, through their economic cooperation under ACFTA from the its beginning until 2015. The official diplomatic relationship between Thailand and China was influenced by the changes in the international strategic landscape in the early 1970s. It is fortunate that in the past Thailand typically has had good political relations with China and there has not been serious conflict between these two countries, even though their political systems are different. Historically, in the 1950s, the relationship between Thailand and China was expected to be shaped by official relations established during the Sino-Thai dialogue at the Afro-Asian Conference in Bandung, Indonesia, between Prince Wan, Minister of Foreign Affairs of Thailand and Chou En Lai, Prime Minister of China. After this dialogue, the trade volume between the two countries increased and restrictions on Chinese nationals in Thailand were eased. The outlook seemed positive, but only lasted a short time, due to Thailand’s political instability and a military coup, led by , that caused the termination of the relationship between the two countries. Adding to this were the tensions caused by communist expansion, which the United States recognized it as a threat to the Southeast Asia region. According to Harbin (1990), China’s role in communist expansion in Southeast Asia seriously affected Thai-China relations. Hence, the focus of diplomatic relations changed and these increased between Thailand and United States, especially in terms of military support. Thailand and U.S. agreed to increase their military cooperation by strengthening Thailand's military capability. This further exacerbated the strained

Ref. code: 25595403040131WTU 39 relationship between Thailand and China, continuing until the late 1960s. During Sarit’s Government, the dissolution of the National Assembly and the suspension of the Thai Constitution led the silencing of public opposition as well as reaffirmation of the Thai commitment to SEATO. Sino-Thai relations were discontinued and trade between the two countries banned. Moreover, China’s military support to Communist Vietnam, the encroachment of China on Tibet, as well as anti-Thai were all elements of China’s international policy that were launched aggressively in late 1957. In response to this, Sarit’s government continued to support SEATO intensively from early 1958. Official diplomatic relations between Thailand and China were reestablished on 1 July 1975 under the government of M.R. and their 40th anniversary occurred in July 2015. After the establishment of formal diplomatic relations, the two countries signed many agreements on mutual benefit and cooperation in economic matters, trade, science and technology, tourism, civil aviation, sea transportation, and judicial, consular and other affairs. With the signing of these agreements and protocols, broader prospects opened for the development of Thai- Chinese economic relations. Although there were several official visits between Thai and Chinese leaders, the relations between Thailand and China were not only limited to the governmental level and also included the people-to-people level. In particular, this relationship has been strengthened by the Thai Royal Family, especially HRH Princess Maha Chakri Sirindhron. From her first official trip until 2012, she made 34 visits to China and her visits seem likely to continue in the future. The Princess also obtained an honorary degree from Peking University, something rarely granted because it requires authorization by the Chinese government. This can be seen as a sign of the good relationship between the Thai Royal Family and China. Since 1981, as the Thai economy developed into an industrial economy there have been changes in the structure of both production and demand. Private consumption expenditure has become the main driving force of the economy and private consumer demand shares almost 73 percent of Thailand’s total GDP. Because exports contributed a large share to Thailand’s trade, the Asian financial crisis highly affected to Thailand’s economic growth in 1997 – 1998. Thailand was the country which originated the Asian financial crisis by floating its currency,

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Thai baht on 2 July 1997. This caused the bankruptcy of large companies and Thailand’s economic growth was -2.7 and -7.6 percent in 1997 and 1998 respectively (see figure 1.1 and table 4.1). IMF was the leader in providing bailouts to the crisis and Thailand signed an emergency lending agreement in August 1997. The Thai government restored economic growth by reducing interest rates, which reached their lowest levels in September 1999. The key policy of Thailand at that time focused on restructuring the financial sector by recapitalizing the banking system. This crisis also caused economic slowdown to neighboring countries and instability in East Asian capitalism and financial markets. Japan and Korea also devalued their currencies and their stock markets were affected and this crisis caused fluctuations on the world’s currency market exchange. In contrast to other Asian nations, China played an important stabilizing role during this crisis. China made pro-active policy decisions, including by actively participating in IMF-organized aid projects. China did not devalue its own currency and contributed over 4 billion US dollars to the IMF for its rescue plan in 1999. China’s active policy towards the crisis helped decrease the pressure on regional economies in East Asia and led to their faster recovery. ASEAN and its Northeast Asia neighbors including China, Japan and South Korea became aware of the importance of economic cooperation within the East Asia region. The Chiang Mai Initiative was established to provide a regional financing arrangement and this led to the bilateral swap arrangement (BSA) in 2000 under the ASEAN plus three (ASEAN+3) financial minister framework.

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Table 4.1 Thailand’s Gross Domestic Product (GDP) and Its Annual Growth

(Unit: US Dollars) Year GDP GDP Growth (annual %) 1990 85,343,189,320 11.1 1995 169,278,552,851 8.1 1996 183,035,154,107 5.6 1997 150,180,268,649 -2.7 1998 113,675,706,127 -7.6 1999 126,668,932,159 4.5 2000 126,392,308,497 4.4 2001 120,296,746,256 3.4 2002 134,300,851,255 6.1 2003 152,280,653,543 7.1 2004 172,895,476,152 6.2 2005 189,318,499,954 4.1 2006 221,758,486,880 4.9 2007 262,942,650,543 5.4 2008 291,383,081,231 1.7 2009 281,574,762,729 -0.7 2010 340,923,571,200 7.5 2011 370,608,559,050 7.5 2012 397,290,682,074 0.8 2013 419,888,628,523 7.2 2014 404,320,038,916 2.7 2015 395,281,580,952 2.8 Note: Adapted from World Development Indicators, Retrieved from the World Bank Group website: http://data.worldbank.org/indicator/NY.GDP. MKTP.CD

Based on Thailand’s Gross Domestic Product (GDP) and its annual growth, table 4.1 shows that Thailand recovered from the Asian financial crisis and achieved growth over 4 percent in the years 1999 and 2000. Thailand’s exports reached 2,773,827.02 million Baht in 2000, as shown in figure 4.1 below, on Thailand’s import-

Ref. code: 25595403040131WTU 42 export statistics. Manufacturing shared 35 percent of Thailand’s GDP in 2000, whereas agriculture’s share decreased to 12 percent of Thailand’s GDP.

(Unit: Millions of Baht)

Figure 4.1 Thailand’s Import – Export Statistics, 1995-2015. Adapted from Bank of Thailand. (2015). EC_XT_001 Trade Classified by Commodity Group. Retrieved from http://www2.bot.or.th/statistics/ReportPage.aspx?reportID=50&language=eng

Foreign aid was necessary for Thailand’s economic recovery and China provided Thailand with financial aid and export credit through bilateral channels. China’s pro-active policies and response to the Asian financial crisis were not only appreciated greatly by Thailand, Thailand was also recognized by China as an increasingly powerful economic player in the region. Because of this, the relationship between Thailand and China shifted from security cooperation to economic cooperation. In 2001, once Thaksin Shinawatra was elected as Thailand’s Prime Minister, his first official visit after the other ASEAN member countries was to China, instead of the United States. For this visit he went to Beijing and followed this with a visit to Guangdong, where his Chinese ancestors once lived before they left to Thailand. His official visit to China sent a signal of preference and it was an important step

Ref. code: 25595403040131WTU 43 towards furthering Thailand and China’s relations (Chinwanno, 2008). Thaksin visited China again in late 2001, 2003, 2004 and 2005. Free trade became an important feature of ‘Thaksinomics’, Thailand’s economic policy under the Thaksin government. In the 2000s, more multinational corporations began operating at the regional level and China, Japan and South Korea started discussions about an ASEAN+3 free trade agreement (ASEAN+3 FTA). However, due to the slow progress of ASEAN+3 FTA negotiations, China individually decided to negotiate a bilateral free trade agreement with ASEAN. Later this same year, China formally announced its intention to start talks on establishing a free trade agreement between ASEAN and China at the 2001 meeting in Brunei. Thaksin often expressed his intention for strengthening economic engagement with China and strongly encouraged the negotiation of ACFTA and a trade in goods agreement under ACFTA was signed in November 2004. Under this agreement, Thailand exported 367,405.14 million Baht in 2005 an increase of 22.24 percent within one year of export growth, as shown in to figure 4.2 on Thailand’s trade with China. After this, Thailand’s exports to China continuously increased and a similar Trade in Service agreement was signed in January 2007. Economic cooperation with such a large potential foreign market facilitated Thai export market growth and contributed to its economic stability. Aside from Thaksin’s focus on economic engagement, he tried to broaden Thailand’s strategic relationship with China in other areas. Under his government, Thailand repaid all its debts to the International Monetary Fund (incurred after the Asian Financial Crisis) four years ahead of schedule. Under the Thaksin government, free trade agreements (FTA) with China, New Zealand, Australia, India and United Arab Emirates were signed. Prior to the government being overthrown by a military coup in 2006, FTA negotiations were underway with the United States and Japan. In September 2006, Thaksin’s government was deposed by a military coup and this led Thailand to enter a period of domestic political instability. Following the coup, demonstrations between the People's Alliance for Democracy (PAD) and United Front of Democracy Against Dictatorship (UDD) caused political turmoil in Thailand for a number of years. However, a joint action plan with 15 areas of cooperation between Thailand and China was negotiated and launched

Ref. code: 25595403040131WTU 44 under Surayuth Chulanond, the new Thai Prime Minister who was installed by the coup. In May 2008, the then Prime Minister Samak Sundaravej made an official visit to China at the invitation of Wen Jiabao, the Chinese Premier. Thailand’s export-dependence ratio increased from almost 60 percent in the early 2000s to 70 percent in 2008. The Thai export structure was heavily dependent on manufacturing products, which made up 78.68 percent in 2015, while agricultural products made up 9.41 percent and agro- industrial products comprised 7.76 percent in the same year. The remaining 4.15 percent’s of the Thai export structure belonged to mining and fuel products. Because of this, an overall slowdown in foreign markets directly impacted Thailand’s exports, particularly the impacts of the global financial crisis in September 2008. This caused Thailand’s economic slowdown in 2008 – 2009. Table 4.1 shows that Thailand’s annual GDP growth in 2008 to 2009 were only 1.7 percent and -0.7 percent respectively. In addition, Thailand had a balance of trade deficit around 11,111.35 million Baht in 2008.

(Unit: Millions of Baht)

Figure 4.2 Thailand’s trade with China during the years 1995-2015. Adapted from Bank of Thailand. (2015). EC_XT_003_S2 Trade Classified by Country (US$). Retrieved from http://www2.bot.or.th/statistics/ReportPage.aspx?reportID=744&language=eng

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In 2009, Thailand’s head of government changed to Abhisit Vejjajiva, who made an official visit to China in June that year, including visits to Beijing, Tianjin and Guangzhou. During Abhisit’s official visit, he signed three agreements; 1) the Protocol on Inspection and Quarantine Requirements for Thai Fruit Exports from Thailand to China, 2) the Agreement on Expanding and Deepening Bilateral Economic and Trade Cooperation (EDBETC), and 3) the Agreement on Education Cooperation. Following this, in December 2011, Xi Jinping, China’s Vice President at that time, visited Thailand at the invitation of the government of Yingluck Shinawatra. It was the first time in eleven years that a member of the Chinese leadership made an official visit to Thailand. The visit of Xi encouraged more trade and investment between Thailand and China, targeting 20 percent in trade growth and 15 percent in investment growth over the next five years. The following year, in November 2012, China’s Premier Wen Jiabao also made an official visit to Thailand. After the next coup in 2014, Prayuth Chan-ocha became Thailand’s Prime Minister. Prayuth made his first official visit to China in November 2014 and Xi Jinping, now President of China, assured him that the comprehensive strategic partnership cooperation between the two countries would remain positive and be enhanced to a bilateral friendship. One month later, China's Premier Li Keqiang made an official visit to Thailand. In December of the following year, Prayuth visited China. China’s Ambassador to Thailand expressed, in a remarkable speech on the occasion of the 40th anniversary of the establishment of diplomatic relations in, that although there was domestic political instability and a change of government in Thailand, it would not affect the relationship between the two countries and Thailand remained a strategic partner to China. Importantly, Thailand was appreciated by the Chinese government for the positive role it played in coordination between China and ASEAN. From the regular official visits of Thailand’s Prime Minister to China and the increasing number of official visits of Chinese leaders to Thailand, it can be implied that a good relationship continues between these two countries. China’s interest in Thailand shows its importance as a strategic partner in the Southeast Asian region. Aksornsri Phanishsarn (2015) expressed the view Thailand has become a good choice for China to use as a base for the Chinese economy in ASEAN. At present, China is heavily involved in trade and investment, especially in the tourism and service sectors.

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With their competitive geography proximately, the development of ASEAN-China relations has received great interest and attention from both inside and outside, especially by the United States. Thailand’s domestic political instability does not effect its relationship with China as much as it does with Western countries, such as the United States. In order to compare political interests in Southeast Asia, U.S. President Barack Obama made his official visit to Southeast Asia in November 2012 and Thailand was the first country he visited among Southeast Asian nations. From this can be implied that the United States’ interest is to rebalance its power towards this region in order to compete with the increasing power of China in the region. Furthermore, the United States views Thailand as an important ally, with over 180 years of diplomatic relations between them. Japan’s Prime Minister, Shinzo Abe, made his official visit to Thailand in 2013, the first official visit in 11 years by a Japanese Prime Minister to Thailand. These recent official visits by foreign leaders to Thailand reflect Thailand’s good foreign relations and important political role in Southeast Asia region. Thailand’s important import trade partners are other ASEAN countries, the EU, China, Japan and the United States, with the highest level of imports coming from Japan. In 1995, Thai imports from Japan totaled about 538,711.37 million Baht, 30.54 percent of Thailand’s total imports. The second largest import trade partner in 1995 was the EU, from which Thailand imported 289,786.07 million Baht in 1995, 16.43 percent of total imports. ASEAN became an important import trade partner to Thailand in in 1998, when ASEAN imports exceeded those from the EU. In 1998, Thailand imported from ASEAN about 266,576.69 million Baht, compared to about 227,128.68 million Baht from the EU (see table 4.2). This reflects that the intra-ASEAN economy recovered well after the Asian financial crisis in 1997. ASEAN has remained Thailand’s second-largest import partner since then, with one of the main reasons being the signing AFTA in 1992 after which intra-trade within ASEAN dramatically developed. From Thailand’s import statistics (see table 4.2), in 2004 China surpassed the United States to be Thailand’s third largest import trade partner. Thailand imported 329,631.52 million Baht from China, 8.67 percent of Thailand’s total imports in 2004. For the United States, Thailand’s imports decreased to 291,182.56 million Baht. In 2013, the ranking of Thailand’s import trade partners changed significantly. ASEAN became Thailand’s largest trade partner, with an import value of 1,277,989.22 million Baht, or

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16.6 percent of Thailand’s total imports, while China and Japan shared 15 percent and 16.4 percent respectively. In 2014, Thailand imported 1,251,528.28 million Baht from China and Chinese imports surpassed Japanese to make it the second largest import trade partner. In 2015, China became Thailand’s largest import trade partner, ahead of ASEAN and Japan. Imports from China now make up 20.31 percent of Thailand’s total imports, while ASEAN and Japan share 18.94 percent and 15.40 percent respectively.

Table 4.2 Thailand’s Import Value to Selected Trade Partners between 1995 -2015

(Unit: Millions of Baht) Import Value to Selected Trade Partners Year ASEAN EU China Japan The US 1995 234,981.61 289,786.07 52,187.45 538,711.37 211,947.90 1996 244,537.11 286,588.82 49,499.35 518,106.39 228,973.98 1997 247,630.23 277,973.77 69,467.22 492,079.78 267,302.13 1998 266,576.69 227,128.68 74,807.13 420,297.50 249,745.34 1999 302,359.88 228,123.35 94,593.82 464,573.21 243,463.53 2000 415,230.84 262,289.05 135,699.85 615,661.82 293,580.30 2001 445,931.09 348,568.97 165,060.21 613,499.34 318,733.09 2002 467,276.50 313,318.89 211,706.56 639,104.27 265,803.91 2003 522,071.26 324,729.20 251,071.50 755,895.54 296,331.26 2004 640,316.68 380,456.55 329,631.52 901,118.93 291,182.56 2005 869,710.04 435,415.46 448,917.04 1,046,874.81 349,405.38 2006 905,681.60 432,692.49 521,523.79 985,755.28 367,062.84 2007 872,246.35 416,024.49 564,566.24 987,890.71 330,240.27 2008 1,002,144.58 477,286.91 670,342.74 1,116,459.47 380,675.40 2009 850,952.38 415,407.21 586,143.35 860,124.95 288,565.54 2010 972,605.91 445,008.00 775,391.18 1,211,476.41 342,119.90 2011 1,134,038.17 546,319.60 930,826.32 1,288,145.90 408,651.25 2012 1,261,078.25 631,100.70 1,160,448.99 1,523,457.50 391,397.68 2013 1,277,989.22 673,755.23 1,155,295.93 1,256,045.21 447,475.67 2014 1,333,908.79 633,177.23 1,251,528.28 1,154,512.91 474,102.42 2015 1,308,137.50 616,453.66 1,403,176.69 1,064,179.66 472,025.91 Note: Adapted from Bank of Thailand. (2015). EC_XT_003_S2 Trade Classified by Country (US$). Retrieved from http://www2.bot.or.th/statistics/ReportPage.aspx?reportID=744& language=eng

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Thailand’s key export trade partners are ASEAN, the EU, China, Japan and the United States. From the export statistics in table 4.4, these trade partners combined share 67.64 percent of Thailand’s total exports. Thailand’s exports have dramatically developed, particularly since the early 2000s. After Thailand signed AFTA in 1992, Thai exports to ASEAN increased markedly. AFTA was the first free trade agreement Thailand signed and ASEAN remains Thailand’s largest export destination for collective trade. The export trade volume between Thailand and ASEAN was over two times larger than with the EU in 2015 (see table 4.4). Moreover, it has, increased over 500 percent from 305,660.12 million Baht in 1995 to 1,859,365.04 million Baht in 2015. This changed only once, after the Asian financial crisis in 1998, when the United States became Thailand’s largest export trade partner, as many countries in ASEAN were affected by the crisis. At this time, Thailand exported 500,786.96 million Baht to the United States, 22.27 percent of its total exports. ASEAN once again became Thailand’s largest export destination in 2002 and the EU became Thailand’s second largest export destination in 2007. Thai exports to the United States decreased greatly in 2009 due to the global economic crisis (see table 4.2 and 4.4). In 2009, Thai exports to ASEAN, the EU, Japan and the United States decreased to 1,106,492.51 million Baht, 619,989.76 million Baht, 535,880.34 million Baht and 567,698.96 million Baht respectively. In 2010, China overtook the United States to become Thailand’s third- largest export destination with export value of 678,631.83 million Baht and in 2011, China overtook the EU to become Thailand’s second largest export partner. Thailand exported 791,212.19 million Baht to China in 2011, 11.79 percent of total exports. In 2015, Thailand exports to ASEAN had a value of 1,859,365.04 million Baht, 25.72 percent of total exports, continuing as the largest export market. The second largest destination in 2015 was the United States, which surpassed China to return to the second rank of top export destinations, with an export value of 811,346.28 million Baht, 11.22 percent of Thailand’s total exports. At the same time, Thailand exported 801,234.98 million Baht to China, while for the EU and Japan, Thailand exported 740,811.15 million Baht and 675,702.27 million Baht, or 10.25 percent and 9.34 percent respectively (see table 4.3).

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Table 4.3 Thailand’s Exports to Selected Trade Partners in 1995 -2015

(Unit: Millions of Baht) Export Value to Selected Trade Partners Year ASEAN EU China Japan The US 1995 305,660.12 232,178.05 40,867.65 236,099.41 250,684.82 1996 305,529.53 234,341.11 47,369.95 237,523.90 253,799.76 1997 390,410.12 302,120.66 55,495.84 270,765.87 354,551.66 1998 409,056.87 413,281.86 72,853.17 308,416.31 500,786.96 1999 411,650.29 382,996.49 70,569.79 312,842.62 479,361.08 2000 537,507.05 452,218.31 113,282.53 408,340.99 591,688.20 2001 557,801.15 482,623.53 127,205.17 439,830.20 584,496.96 2002 582,130.28 454,788.12 152,591.67 427,023.43 579,071.63 2003 684,943.21 508,252.85 236,057.84 471,956.25 565,094.87 2004 852,487.24 580,019.67 285,685.98 541,487.66 622,496.98 2005 975,867.90 603,815.83 367,405.14 602,899.87 680,321.96 2006 1,029,179.98 686,085.56 445,978.11 623,930.99 740,695.70 2007 1,129,092.27 749,263.10 511,109.61 625,037.13 669,511.38 2008 1,319,391.23 771,428.74 532,319.04 661,565.54 667,746.82 2009 1,106,492.51 619,989.76 548,760.05 535,880.34 567,698.96 2010 1,403,105.43 691,050.78 678,631.83 641,910.14 638,820.07 2011 1,628,801.33 728,974.77 791,212.19 719,382.47 656,591.57 2012 1,744,998.12 671,041.70 829,848.16 725,043.96 703,918.36 2013 1,792,533.74 678,487.87 824,672.21 671,804.54 694,326.19 2014 1,909,196.51 751,280.54 806,437.58 698,951.82 767,856.29 2015 1,859,365.04 740,811.15 801,234.98 675,702.27 811,346.28 Note: Adapted from Bank of Thailand. (2015). EC_XT_003_S2 Trade Classified by Country (US$). Retrieved from http://www2.bot.or.th/statistics/ReportPage.aspx?reportID=744& language=eng

From analysis of Thailand’s imports and exports, we can see that Thailand’s import structure remains heavily based on raw materials and intermediate goods, which shared almost 37 percent of Thailand’s total imports in 2014. The major export products

Ref. code: 25595403040131WTU 50 of Thailand are vehicle parts, which make up 12 percent of Thailand’s total exports, followed by automatic data processing machines, jewelry, polymers of ethylene, and refined fuels, which shared 8.2 percent, 5.1 percent, 3.8 percent, and 3.7 percent respectively in 2015. For agricultural products, rubber made up 2.3 percent and rice 2.1 percent of Thailand’s total exports in 2015. Before the year 2000, trade volume between Thailand and China was low and China’s average trade volume during the period 1995-1999 accounted for only 3.3 percent of Thailand’s total trade volume. Thai exports to China were lower than Thai exports to other powerful countries such as Japan and the United States (see tables 4.4 and 4.5). Thailand’s exports to China in 1995 totaled 40,867.65 million Baht, or only 2.9 percent of the total value. In the year 2000, Thailand exported 113,282.53 million Baht to China and imported 135,699.85 million baht from China. In this year, exports to China increased by 37 percent. After this, negotiations for ACFTA began and the China-ASEAN Framework Agreement of Comprehensive Economic Cooperation was signed in November 2002. Since the beginning of the ACFTA process, Thailand has had more cooperation with China, especially in trade. Thailand exported 152,591.67 million Baht to China in 2002, making up 5.2 percent of its total exports, a 73.17 percent increase from 1995. In 2003, Thailand exported 236,057.84 million Baht to China, 7.09 percent of its total exports showing a 35.35 percent growth in exports from the previous year. This was because of accelerated tariff elimination under the EHP (AEHP) between Thailand and China, which was agreed in June 2003 and became effective on 1 October 2003. Thailand exported 285,685.98 million Baht to China, 3.9 percent of total exports, at the time of the full implementation of the Early Harvest Program in 2004. This program created significant change in Thailand’s exports, especially for vegetables and fruits and this issue will be separately analyzed in section 4.1.1. At the time of the full implementation of ACFTA in 2010, Thailand exported 678,631.83 million Baht to China, an increase of 19.13 percent within one year. Exports increased greatly compared to pre-ACFTA, from around 113,282.53 million Baht in 2000 to 678,631.83 million Baht in 2010 after the full implement of ACFTA, an increase of 83.3 percent. Thailand’s exports to China reached a total of 801,234.98 million Baht in 2015, making up 11 percent of total exports. Overall trade

Ref. code: 25595403040131WTU 51 volume between Thailand and China reached 15 percent of Thailand’s total trade volume in the same year. Trade volume between these countries has continuously increased, despite the instability of Thai domestic politics since 2006. On the other hand, the trade volume of Thailand with Western countries was more effected by this situation and exports decreased. Even though Thai exports to China have grown year by year since the year 2000, Thailand has accumulated a trade deficit to China. In 2014, Vietnam surpassed Thailand to become the second largest trade partner of ASEAN and Thailand ranked as only the fourth largest trade partner for ASEAN in 2014. Thailand’s trade volume to China expanded only 2 percent whereas Vietnamese trade volume to China expanded 27.7 percent. Aksornsri Panichsarn (2015) argues that this decreased trade volume was an effect of the global economic crisis, which made Chinese exports decrease. Investment is another important sector for Thailand’s economic development and Thailand is one of the key investment destinations in ASEAN. Previously, since 1993, China was the largest recipient of FDI globally, however in 2014 ASEAN become the largest recipient of FDI in the developing world. FDI flow was 136.2 billion US dollars to ASEAN in 2014 with FDI flow to Thailand making up 3.65 percent of ASEAN’s total inflow of FDI. ASEAN has become an important production base for multinational corporations (MNCs) from Japan, Europe, and the US and for large emerging Asian firms (Kawai & Naknoi, 2015). The EU and the United States invest mostly in finance, while ASEAN intra-investments focus mostly in the primary sectors (agriculture and mining activities) and real estate. Recently, the FDI landscape in ASEAN has changed, as there have been transfers of labour-intensive manufacturing activities to the CLMV countries (Cambodia, Lao PDR, Myanmar, and Vietnam). These changes have increased manufacturing competitiveness among ASEAN and impacted Thailand as well. As shown in Table 4.6, Thailand’s inflow of FDI slightly decreased to 6,411.46 million US dollars due to the global economic recession. In 2010, Thailand received 14,746.67 million US dollars of FDI, an increase of 56.52 percent from previous years. A “One Start One Stop Center” was established under Abhisit’s government to serve as a point of contact that would help facilitate foreign investors to access relevant Thai authorities. Foreign investors were accorded privileges, for

Ref. code: 25595403040131WTU 52 example, in regards to property rights and tax-breaks for up to a maximum of 13 years. In 2011, Thailand received its lowest inflow of FDI in ten years, only 2,473.69 million US dollars, because there were large floods in industrial areas which caused huge damages to foreign investors’ property. Thailand’s inflow of FDI started increasing again in 2012 and 2013, with 12,899.04 million US dollars and 15,935.96 million US dollars respectively. Domestic political instability occurred again in 2014, with a military coup did against Yingluck’s government. This affected the confidence of foreign investors and inflow of FDI was only 4,975.46 million US dollars for the year.

Table 4.4 Thailand’s Foreign Direct Investment

(Unit : Millions of US Dollars) Net flow of FDI for all sectors Country 2005 2010 2015p ASEAN 2,022.20 2,220.92 441.91 EU 650.74 1,276.52 1,070.31 China 18.36 633.43 240.78 Japan 2,997.55 4,400.04 3,022.87 South Korea -34.66 180.23 148.78 The United States 812.75 1,431.05 1,100.86 Note: Adapted from Bank of Thailand. (2015). EC_XT_057 Foreign Direct Investment Classified by Country (US$) 1/ 2/. Retrieved from http://www2.bot.or.th/statistics/Report Page.aspx?reportID=654&language=eng

China’s plan to sign an FTA with ASEAN must be understood within the context of Chinese and Japanese competition for political leadership in East Asia, alongside the desire of China to assure neighbors that its ascension to the WTO would not cause them economic hardship. ACFTA implementation was strongly influenced by the dynamics and challenges of the political and economic changes taking place in the East Asian region. Thailand’s important FDI partners are ASEAN, EU, Japan, and the United States. As shown in table 4.4, Japan has been the largest foreign investor to Thailand for the past decade. According to JETRO Bangkok (2016), the top source of foreign investment in Thailand still is Japan, accounting for 39 percent. Compared to

Ref. code: 25595403040131WTU 53 this, China accounts for 7 percent of total FDI. Foreign investment also comes from Singapore at 12 percent, Hong Kong at 6 percent and other countries make up the remaining 36 percent. In 2008, Chinese investors submitted application for 21 projects to the Board of Investment (BOI) of Thailand. By the end of 2014, the total number of project applications reached 74, of which the BOI approved 40. Increasing trade volume and gradually increasing investment into Thailand has deepened economic ties between these two countries. The statistics of trade volume between Thailand and China show that China has used its economic power through trade and investment to influence Thailand. According to Lee (2013), China is using economic influence to achieve its political objectives. The more economic ties, the more influence over strategic and political decisions. Moreover, Sompop Manarungsan (2012) analyzed that due to these increasing trade and investment ties, it may soon become harder for Thailand to balance its relationships between China and the United States. Overall however, China seems to be not only a huge market for Thailand, but also a major competitor in trade and investment to Thailand. For example, ACFTA has benefits to China in allowing the export of more lower-priced fruits and vegetables to Thailand and other ASEAN member countries. Many other products from China can also be very competitive because of their lower prices. Nasha Anachotikul (2011) suggests that Thailand should learn from China’s successes in productivity, industrial upgrading and technological advancement, as serious efforts in this direction are much needed to help Thailand to escape the middle income trap. In terms of the research question, there are a number of key causes for cooperation between Thailand and China under ASEAN China Free Trade Agreement framework. From above informative analysis, the author’s point of view is that there are three driving forces behind the cooperation under ACFTA. Firstly, Thailand’s economy heavily depends on its exports; secondly, China is steadily expanding its power in the region using economics rather than politics; and finally, the two major Asian powers, China and Japan, continue to compete and both consider Thailand an important base of trade and investment for projecting power into the ASEAN region. In the first area, Thailand’s economic policy largely relies on trade, especially in terms of exports. After the reform of its economic orientation from agriculture to hard manufacturing, Thailand’s trade volumes have dramatically

Ref. code: 25595403040131WTU 54 increased but also its exposure to risks of international financial crises as seen in the Asian crisis and the 2008 global crisis. but unfortunate crisis occurred in 1996. According to Lauridsen (1998) stated that “During 1996 it became clear that the Thai economy had lost its momentum. The economy was slowing down, heading toward the lowest rate of growth in GDP in a decade. Thailand suddenly experienced negative export growth and export sales of labor-intensive goods such as footwear, textiles, garments and plastic products. As imports kept growing the current account deficit was booming”. Besides, the deficit of Thai’s trade continuously increased; 8 percent in 1995 and 7.9 percent in 1996 and 1997 of GDP respectively. Moreover, during 1995 and 1996, the export growth rate reduced by 23.5 percent. It led Thailand to hugely borrow external funding (Craig, 2000). However, during the crisis, China exportation consistently determined comparing with other countries in Asia. According to Yang (1998) mentioned that China rapid export growth and large capita inflows in the capital account made a powerful China Yuan among world currencies. Investors trusted that Chinese domestic market with competitive exports were very attractive. Therefore, China launched aids to help Thailand and other Asian countries out of this obstacle. According to Ministry of Foreign Affairs of the People’s Republic of China (“Pro- active policies,” n.d.), stated that “It actively participated in the IMF-organized aid projects for some Asian countries. In the wake of the financial crisis in 1997, the Chinese Government provided Thailand and other Asian countries with over 4 billion US dollars in aid, within the framework of IMF or through bilateral channels. It offered Indonesia and other countries export credit and emergency medicine given gratis”. China has been an important player in Thailand’s recovery during these financial crises, providing support and aid to help Thailand overcome its economic hardship. In terms of the second point, China continues to expand its authority and power in the region primarily by using economics instead of politics. Kirton (2017) explained the role of Chinese economic policy in Asia as follows:

“As the Asian financial crisis opened, China faced the global economy from a position of relative strength. Unlike Japan and South Korea at a comparable stage of their economic development, China had an outward looking policy grounded in considerable amount of inward and outward foreign direct investment… The latter included a major trade surplus both

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overall and with the United States in particular, and the world's second largest source (after Japan) of convertible foreign exchange reserves. It was thus understandable that China was seeking to play a larger role in regional and global affairs, and that the crisis offered it an opportunity to do so”.

As China expands its economic power in the region, its main targets will remain Southeast and Northeast Asia. China uses its extensive network of business communities, along with its bilateral relations at the national level to increase its influence on countries throughout Asia (Bremmer, 2013). Furthermore, China’s influence over ASEAN is also increasing with its increasing business ties. According to Goh (2014), Chinese economic power has heavily impacted the region. The volume of trade between China and ASEAN has increased rapidly; from US$8 billion in 1980 to $178 billion in 2009 (during which China became ASEAN’s largest external trading partner) and $280 billion in 2011. China utilizes economics for strategic and diplomatic purposes and its policies are unique and complex, effective tools for encouraging other countries to act according to China’s preferences (Reilly, 2013). Thirdly, China and Japan compete with each other to be the leading power in the region and Thailand is the main target for both countries in their strategy to expand their power in ASEAN. For China, Thailand is an important trade partner with the ACFTA being a key economic mechanism. China also makes closer relations with neighboring countries through policies such as the Maritime Silk Road and the Asian Infrastructure Investment Bank (AIIB), which support the expansion of its economic power in Southeast Asia region, helping to develop its overall influence (Mazza, 2015). According to Guerrero (2007), development assistance is an alternative mode of support that China uses to balance its relations with ASEAN members. This also contributes to a good relationship between China and its neighbors within the region. “This shows that there are diversities in comparative advantage between two countries economically in the use of natural resources and the stage of economic development. The changing pattern of comparative advantages between two countries would shape the long-term sustainable economic relationship” (Lu, 2016). At the same time, Japan is still acting in its role as a powerful partner of both Thailand and ASEAN. Thailand is the main base for Japanese factories and other investments, while ASEAN is the largest FDI source as well as the second largest trade partner of Japan. The main

Ref. code: 25595403040131WTU 56 interactions between Japan and ASEAN countries are also economic which help to tighten relations. Japan also strongly supports ASEAN cooperation, including by establishing funds for regional projects and exchanges (Kawai, Thuzar, and Hayton, 2016). Because Thailand is the main base for Japanese investment, both countries have strong and effectiveness economic linkages. The Japan-Thailand Economic Partnership Agreement (JTEPA) came into effect in 2007, with the aim to enhance trade, investment and cooperation. It directly affected the total volume of trade between the two countries and also increased Japan’s direct investment (“Japan-Thailand relations,” 2016). Consequently, China and Japan both still see Thailand as the most strategic country in ASEAN in terms of trade as well as investment, which are both increasing continuously. “Since 2012, China has been Thailand’s largest trade partner but this is a recent phenomenon. Previously, Japan held this position since at least 1993. Last year, trade volume with China was around 2 percent higher than that with Japan. After a Free Trade Agreement was struck in 2003, Thailand-China trade began to significantly increase, along with a widening trade deficit which rose almost three-fold within a year of enactment (from $428 million to $1.26 billion). This trade deficit reached $17 billion last year. In contrast, Thailand runs a trade surplus with the U.S. (one of its top three trade partners) of between $6 billion to $10 billion a year. China only replaced the U.S. as top importer of Thai products during 2010-2014. Foreign Direct Investment is the life blood of Thailand’s economic growth and export-led economy. Japan always tops the list of FDI sources by a large margin. Last year, Japanese investment stood at $4.2 billion, followed by Singapore, which contributed $1.1 billion. China did not make the top five” (Chingchit, 2016). It can be implied that both China and Japan will continue to expand their power in ASEAN, especially with Thailand as their main strategic partner. Following on from the above, we can apply the international relations theories of neoliberalism and regionalism to the relationship between China and Thailand. The theory of regionalism applies to the monetary support of China to Thailand during the Asian Financial Crisis in 1997. To enhance economic cooperation within the region, ASEAN incorporated China into ASEAN plus Three and later established ACFTA to further economic collaboration and integration. During

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Thailand’s economic hardship, China provided aid funding to help boost the Thai economy and get it back on track again. This explains the objective of regionalism in terms of government to government cooperation. According to Halloran (1998), China’s Vice Minister of Foreign Trade and Economic Cooperation, Long Young-tu, agreed to support Thailand, saying that …

“We have evaluated the pros and cons and decided that it is in the best interests of China not to devalue. This might affect China's competitive position but we have more important things to do”.

Furthermore, the Ministry of Foreign Affairs of the People’s Republic of China (“Pro-active policies,” n.d.) mentioned that China would not devalue its currency to maintain the situation for regional economic restoration.

“While sticking to its non-devaluation policy, the Chinese Government adopted the policy of boosting domestic demand and stimulating economic growth. This policy played an important role in ensuring a healthy and stable economic growth at home, easing the pressure on the Asian economy and leading it into recovery”.

Neoliberalism refers to China’s use of economic cooperation to broaden power in ASEAN. After the country’s reformation, China opened its markets freely and became one of world’s fastest development countries. China later signed ACFTA with ASEAN, which brought free trade, and tariff and tax reductions to the region to increase its potential market in the global economy. “The impressive growth of the biggest developing country in the world is currently a key economic and political issue. China’s high rate of economic expansion is based on a development model that combines a modernization of state-led economic organization and regulation with a gradual, controlled neoliberalization in which (foreign) transnational companies play a central role. China thus developed a successful model of mixing public and private roles and investment in order to achieve growth through economic integration in the world market” (Fernandez & Hogenboom, 2007). Both theories, regionalism and neoliberalism, can be applied to the competition between China and Japan to play the leading role in this region, primarily by using their economic power. The establishment of ASEAN plus Three allowed both

Ref. code: 25595403040131WTU 58 countries to increase their politics, economics, and cultural cooperation with ASEAN, bringing further prosperity and wealth into East and Southeast Asia. In addition, China agreed to establish ACFTA with ASEAN, and later became one of the leading trade partners for both Thailand and ASEAN. However, Japan also agreed to establish JTEPA in order to boost its economic cooperation with Thailand. Japan then became the largest investor in Thailand. Therefore, to answer the research question, the author interprets that both regionalism and neoliberalism are accurately applied to the relationship between China and Thailand in the context of ACFTA.

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CHAPTER 5 CONCLUSIONS AND RECOMMENDATIONS

Since the changes in the international strategic landscape in the 1970s, there has been more regional cooperation in East Asia. The outstanding regional organization in Southeast Asia is ASEAN, a gathering of ten member countries, all diverse in term of politics, economy and socio-culture. For this reason, ASEAN has been an attractive focus for the policies of more powerful countries. Besides the internal cooperation between its ten members, ASEAN has broadened its cooperation through external partnerships. One of the most important of these is the ASEAN-China relations, which began officially in 1996. China is one of the most important external partners of ASEAN because its rising political influence and the consumer power of its growing middle class has increased its role on the world stage. China nowadays has become comparable to the United States in term of its political influence. In terms of its influence on the regional economy, China can be best compared to Japan. Importantly, China’s location next to ASEAN gives it a competitive advantage. The Chinese doctrine of peaceful rise and its policies of ‘Look South’ and ‘Good Neighbor’, show the overall good intentions of the Chinese government toward ASEAN. The recovery period after the Asian crisis was the starting point for ASEAN and its three partners in Northeast Asia to strengthen economic relations within the region. During this period, China showed its potential in providing financial support to Southeast Asian countries, both by maintaining its exchange rate and helping the affected ASEAN member countries via the IMF rescued plan. This helped the relationship between China and Southeast Asian countries become stronger and solidified their intention to deepen their economic cooperation with each other. This became a driver of economic regional integration and free trade among these countries. Thailand, under Prime Minister Thaksin Shinawatra’s government at the time, also played an active role in this matter. The relations between China and Thailand became broader and deeper under the Thaksin government, as shown by his making an official visit to China before the United States, reflecting his preference. This was an important step for Thailand and China’s relations. Comprehensive economic and strategic

Ref. code: 25595403040131WTU 60 partnerships were pushed to strengthen relations between Thailand and China after the return of Thaksin to Bangkok. His government also played an important role in negotiating the beginning of the ASEAN-China Free Trade Agreement, known as ACFTA. The economic relationship between China and Thailand has developed greatly since the year 2001 and their trade volumes have increased dramatically. The trade volume between Thailand and China has continuously increased, despite the instability of domestic politics, the coup d’etat against Prime Minister Thaksin in 2006 and the global economic recession in 2008. The ASEAN community has not only strengthened its own relationships, it has also resulted in attracting foreign direct investment from other powerful countries, especially China, Japan and the United States. ASEAN has become a prime investment destination for FDI, of which these three countries are the largest foreign direct investors. ACFTA’s implementation has been strongly influenced by the dynamics and challenges of the political and economic changes in the East Asian region. Thailand’s export dependence ratio increased from almost 60 percent in the early 2000s to 70 percent in 2008. Thailand’s export structure is heavily reliant on manufacturing products, which make up more than 70 percent. Thailand’s important trade partners are both individual trade partners, such as China, Japan and the United States and collective trade partners, such as ASEAN, and the EU. Among its individual trade partners, China surpassed Japan and the United States to become Thailand’s main trade partner in 2010. This was the case until 2015, when the United States once again became Thailand’s largest trade partner. The major export products of Thailand are motor car parts, which made up almost 12 percent of Thailand’s total exports, automatic data processing machines, jewelry, polymers of ethylene and refined fuels which made up 8.2 percent, 5.1 percent, 3.8 percent, 3.7 percent respectively in 2015. For agricultural products, rubber shared 2.3 percent and rice shared 2.1 percent of Thailand’s total exports in 2015. Both the AEHP and EHP provided great opportunities for Thailand’s exports, helping them to access the Chinese market. However, these programs also created suffering for local Thai farmers, due to the lower price and enormous volume of fruit and vegetable imports from China. Overall, the top source of foreign investment to Thailand is still Japan, accounting for 39 percent, while China accounts for only 7 percent of total FDI. In addition, considering Overseas

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Development Assistance (ODA) to Thailand, there is low ODA from China, as it is not a major aid donor to Thailand. The official visits of Chinese leader, Wen Jiaboa, and US leader, President Barack Obama, to Thailand in 2012 show the interest of both powerful countries in Thailand. It is a challenge for Thailand to continue to rebalance its relationship with these two countries, particularly as they develop increasing trade and investment ties with Thailand. Since the year 1990, relations between Thailand and China have focused more on economic cooperation. China’s rapid economic growth has increased its active role, both at the regional and global level. As the country with world’s largest population, China has a large market with an increasing number of potential consumers in the middle-income class. Since the year 2000, economic cooperation between Thailand and China has grown rapidly and nowadays, economic cooperation between Thailand and China has become more tied to trade, investment and tourism. The signing of the ACFTA in the early 2000s, and its full implementation in 2010, provided a great opportunity for increased trade and investment between Thailand and China. Adding to this, the implementation of AEHP in 2003 provided further opportunity for Thailand to access Chinese markets. In terms of trade, Thailand’s GDP ranked the second highest among ASEAN countries, behind Indonesia, in 2015. At the same time, China surpassed Japan in terms of higher GDP and became the largest trade partner to Thailand. Under ACFTA and the EHP, Thailand can export more agricultural products to China. In addition to the increasing level of Thai exports to China, tourism in Thailand has benefited from the growing middle class in China and has become a prime destination for Chinese tourists. In terms of investment, there are more inflows of investment from China in both the government and private sector in Thailand. The most important recent project is a railway in Thailand, which will connect and facilitate logistics in the future. Importantly, the good relationship between China and Thailand continues to strengthen and promote more cooperation between these two countries. Thailand has become one of China’s most important strategic partners in Southeast Asia, particularly

Ref. code: 25595403040131WTU 62 as there are no obvious points of conflict. It is expected that these two countries will develop closer ties in all aspects in the near future.

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APPENDICES

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APPENDIX A LIST OF PRIME MINISTERS OF THAILAND

No Name Term of the office 28 June 1932 – 20 June 1933 1 Phraya Manopakorn Nititada (358 Days) 21 June 1933 – 16 December 1938 2 Phraya Phahonphonphayuhasena (5 Years and 178 Days) 16 December 1938 – 1 August 1944 3 Plaek Phibunsongkhram (5 Years and 229 Days) 1 August 1944 – 31 August 1945 4 (1 Year, 30 Days) 31 August 1945 – 17 September 1945 5 Tawee Boonyaket (17 Days) 17 September 1945 – 31 January 1946 6 (136 Days) 31 January 1946 – 24 March 1946 (4) Khuang Aphaiwong (52 Days) 24 March 1946 – 23 August 1946 7 (152 Days) 23 August 1946 – 8 November 1947 8 Thawan Thamrongnawasawat (1 Year, 79 Days) 8 November 1947 – 10 November 1947 - Phin Choonhavan (2 Days) 10 November 1947 – 8 April 1948 (4) Khuang Aphaiwong (150 Days) 8 April 1948 – 16 September 1957 (3) Plaek Phibunsongkhram (9 Years, 161 Days) 16 September 1957 – 21 September 1957 - Sarit Thanarat (5 Days) 21 September 1957 – 1 January 1958 9 (102 Days) 1 January 1958 – 20 October 1958 10 Thanom Kittikachorn (292 Days) 20 October 1958 – 8 December 1963 11 Sarit Thanarat (5 Years, 49 Days) 9 December 1963 – 14 October 1973 (10) Thanom Kittikachorn (9 Years and 309 Days) 14 October 1973 – 15 February 1975 12 (1 Year, 124 Days)

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No Name Term of the office 15 February 1975 – 14 March 1975 (6) Seni Pramoj (27 Days) 14 March 1975 – 6 October 1976 13 Kukrit Pramoj (1 Year and 124 Days) 6 October 1976 – 8 October 1976 - Sangad Chaloryu (2 Days) 8 October 197 – 20 October 1977 14 Thanin Kravichien (1 Year, 34 Days) 20 October 1977 – 10 November 1977 - Sangad Chaloryu (21 Days) 11 November 1977 – 3 March 1980 15 (2 Years, 113 Days) 2 March 1980 – 4 August 1988 16 Prem Tinsulanonda (8 Years and 154 Days) 4 August 1988 – 23 February 1991 17 (2 Years and 204 Days) 24 February 1991 – 2 March 1991 - Sunthorn Kongsompong (6 Days) 2 March 1991 – 7 April 1992 18 (1 Year and 36 Day) 7 April 1992 – 10 June 1992 19 (47 Days) 24 May 1992 – 10 June 1992 - (17 Days) 10 June 1992 – 23 September 1992 (18) Anand Panyarachun (105 Days) 23 September 1992 – 13 July 1995 20 (2 Years and 293 Days) 13 July 1995 – 25 November 1996 21 Banharn Silpa-acha (1Year and 135 Days) 25 November 1996 – 9 November 1997 22 Chavait Yongchaiyudh (349 Days) 9 November 1997 – 9 February 2001 (20) Chuan Leekpai (3 Years 3 months) 9 February 2001 – 5 April 2006 23 Thaksin Shinawatra (5 Years and 55 Days) 5 April 2006 – 23 May 2006 - Chitchai Wannasathit (48 Days) 23 May 2006 – 19 September 2006 (23) Thaksin Shinawatra (119 Days) 19 September 2006 – 1 October 2006 - (12 Days) 1 October 2006 – 29 January 2008 24 (1 Year and 120 Days)

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No Name Term of the office

29 January 2008 – 2 September 2008 25 Samak Sundaravej (224 Days) 8 September 2008 – 2 December 2008 26 Somchai Wongsawat (92 Days) 2 December 2008 – 15 December 2008 - Chaovarat Chanweerakul (15 Days) 17 December 2008 – 5 August 2011 27 Abhisit Vejjajiva (2 Years and 231 Days) 5 August 2011 – 7 May 2014 28 Yingluck Shinawatra (2 Years and 275 Days) 7 May 2014 – 22 May 2014 - Niwatthamrong Boonsongpaisan (15 Days) 29 Prayut Chan-o-cha 22 May 2014 – Present Source: List of Prime Ministers of Thailand, adapted from History of Thai Prime Ministers, Retrieved 12 September 2016 from http://www.soc.go.th/ bb_main01.htm. Copyright 2015 by the secretariat of the cabinet, Prime Minister's Office

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APPENDIX B LIST OF PRESIDENT OF CHINA

No Name Term of the office

1 Mao Zedong 27 September 1954 – 27 April 1959

2 Liu Shaoqi 27 April 1959 – 31 October 196 Acting Chairman Dong Biwu 24 February 1972 – 17 January 1975 Honorary Chairwoman Song Qingling 16 May 1981 – 28 May 1981 3 Li Xiannian 18 June 1983 – 8 April 1988

4 Yang Shangkun 8 April 1988 – 27 March 1993

5 Jiang Zemin 27 March 1993 – 15 March 2003

6 Hu Jintao 15 March 2003 – 14 March 2013

7 Xi Jinping 14 March 2013 – present

Source: List of President of China, Adapted from World President DB, Retrieved on 15 December 2016, from http://www.worldpresidentsdb.com/list/countries/China/ Copyright 2007-2016 by WorldPresidentsDB.com

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APPENDIX C EARLY HARVEST PROGRAM between Thailand and China under Thailand and China Free Trade Agreement Tariff = 0% since Oct 1, 2003

Applied Rate หลังการลดภาษี NO. HS. Description (%)

2004 2005 2006

group 1 > 15 % 10 5 0 1 010190 Live horses, not for pure-bred breeding 10 5 0 2 010410 LIVE SHEEP, NOT FOR BREEDING 10 5 0 3 010420 LIVE GOATS 10 5 0 4 010511 LIVE FOWLS OF THE SPECIES GALLUS DOMESTICUS, WEIGH 10 5 0 5 010512 TURKEYS, WEIGHTING NOT MORE THAN 185 G, FOR BREEDING 10 5 0 6 010519 LIVE DUCKS, GEESE, TURKEYS AND GUINEA FOWLS, WEIGH 10 5 0 7 010592 LIVE FOWLS OF THE SPECIES GALLUS DOMESTICUS, WEIGHTING MORE 10 5 0 THAN 185 G, BUT NOT MORE THAN 2,000 G, F 8 010593 LIVE FOWLS OF THE SPECIES GALLUS DOMESTICUS, WEIGH 10 5 0 9 010599 LIVE DUCKS, GEESE, TURKEYS AND GUINEA FOWLS, WEIGH 10 5 0 10 010611 Primates, for draught, consumption of meat, milk or eggs, imported not for breeding 10 5 0 11 010612 Whales,dolphins and porpoises(mammals of the order Cetacea);manatees 10 5 0 and dugongs(mammals of the orde Mammals, for draught, consumption of meat, milk or eggs, imported for 12 010619 breeding 10 5 0 13 010620 Reptiles (including snakes and turtles), for draught, consumption of meat, 10 5 0 milk or eggs, imported fo 14 010631 Birds of prey 10 5 0 15 010632 Psittaciformes (including parrots, parakeets, macaws and cockatoos), for 10 5 0 draught, consumption of mea Other birds, for draught, consumption of meat, milk or eggs imported for 16 010639 breeding 10 5 0 17 010690 Frog 10 5 0

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Applied Rate หลังการลดภาษี NO. HS. Description (%)

2004 2005 2006 18 020110 MEAT OF BOVINE ANIMALS, FRESH OR CHILLED, CARCASSES AND 10 5 0 HALF-CARCASSES 19 020120 MEAT OF BOVINE ANIMALS, FRESH OR CHILLED, OTHER CU 10 5 0 20 020130 MEAT OF BOVINE ANIMALS, FRESH OR CHILLED, BONELESS 10 5 0 MEAT OF BOVINE ANIMALS, FROZEN, CARCASSES AND HALF - 21 020210 CARCASSES 10 5 0 22 020220 MEAT OF BOVINE ANIMALS, FROZEN, OTHER CUT WITH BON 10 5 0 23 020230 MEAT OF BOVINE ANIMALS , FROZEN, BONELESS 10 5 0 MEAT OF SWINE, FRESH OR CHILLED, CARCASSES AND HALF- 24 020311 CARCASSES 10 5 0 25 020312 MEAT OF SWINE, FRESH OR CHILLED, HAMS, SHOULDERS AND CUTS 10 5 0 THEREOF, WITH BONE IN 26 020319 MEAT OF SWINE, FRESH OR CHILLED, OTHER CUT WITH BONE IN OR 10 5 0 BONELESS 27 020321 MEAT OF WSINE, FROZEN, CARCASSES AND HALF-CARCASSES 10 5 0 28 020329 MEAT OF SWINE, FROZEN, OTHER CUT WITH BONE IN OR B 10 5 0 29 020410 CARCASSES AND HALF-CARCASSES OF LAMB, FRESH OR CHI 10 5 0 MEAT OF SHEEP, FRESH OR CHILLED, CARCASSES AND HALF- 30 020421 CARCASSES 10 5 0 31 020422 MEAT OF SHEEP, FRESH OR CHILLED, OTHER CUTS WITH B 10 5 0 32 020423 MEAT OF SHEEP, FRESH OR CHILLED, BONELESS 10 5 0 33 020430 CARCASSED AND HALF-CARCASSES OF LAMB, FROZEN 10 5 0 34 020441 MEAT OF SHEEP, FROZEN, CARCASSES AND HALF-CARCASSES 10 5 0 35 020442 MEAT OF SHEEP, FORZEN OTHER CUTS WITH BONE IN 10 5 0 36 020443 MEAT OF SHEEP FROZEN, BONELESS 10 5 0 37 020450 MEAT OF GOATS 10 5 0 MEAT OF HORSES, ASSES, MULES OR HINNIES, FRESH CHILLED OR 38 020500 FROZEN 10 5 0 39 020610 EDIBLE OFFAL OF BOVINE ANIMALS, FRESH OR CHILLED 10 5 0 40 020621 TONGUES OF BOVINE ANIMAL, FROZEN 10 5 0 41 020622 LIVERS OF BOVINE ANIMAL, FROZEN 10 5 0

Ref. code: 25595403040131WTU 80

Applied Rate หลังการลดภาษี NO. HS. Description (%)

2004 2005 2006 42 020629 EDIBLE OFFAL OF BOVINE ANIMAL, FROZEN 10 5 0 43 020630 EDIBLE OFFAL OF SWINE, FRESH OR CHILLED 10 5 0 44 020641 LIVERS OF SWINE, FROZEN 10 5 0 45 020649 EDIBLE OFFAL OF SWINE, FROZEN 10 5 0 46 020680 OTHER EDIBLE OFFAL OF BOVINE ANIMALS, SWINE, SHEEP 10 5 0 47 020690 OTHER EDIBLE OFFAL OF BOVINE ANIMALS, SWINE, SHEEP 10 5 0 48 020711 NOT CUT IN PIECES, FRESH OF CHILLED FOWLS OF THE SPECIES 10 5 0 GALLUS DOMESTICUS 49 020712 NOT CUT IN PIECES, FROZEN FOWLS OF THE SPECIES GALLUS 10 5 0 DOMESTICUS 50 020713 CUTS AND OFFAL, FRESH OR CHILLED FOWLS OF THE SPEC 10 5 0 51 020714 CUTS AND OFFAL, FROZEN FOWLS OF THE SPECIES GALLUS 10 5 0 52 020724 NOT CUT IN PIECES, FRESH OR CHILLED OF TURKEYS 10 5 0 53 020725 NOT CUT IN PIECES, FROZEN OF TURKEYS 10 5 0 54 020726 CUTS AND OFFAL, FRESH OR CHILLED OF TURKEYS 10 5 0 55 020727 CUTS AND OFFAL, FROZEN OF TURKEYS 10 5 0 56 020732 NOT CUT IN PIECES, FRESH OR CHILLED OF DUCKS, GEES 10 5 0 57 020733 NOT CUT IN PIECES, FROZEN OF DUCKS, GEESE OR GUINEA FOWLS 10 5 0 58 020734 FATTY LIVERS, FRESH OR CHILLED OF DUCKS, GEESE OR 10 5 0 59 020735 CUT AND OFFAL (EXCLUDING FATTY LIVERS), FRESH OR C 10 5 0 60 020736 CUT AND OFFAL (EXCLUDING FATTY LIVERS), FROZEN OF 10 5 0 61 020810 MEAT AND EDIBLE MEAT OF RABBITS OR HARES, FRESH, CHILLED OR 10 5 0 FROZEN 62 020820 FROGS' LEGS, FRESH, CHILLED OR FROZEN 10 5 0 63 020830 Meat and edible meat offal of primates, fresh, chilled or frozen 10 5 0 64 020840 Meat and edible meat offal of whales, dolphins and porpoises (mammals of 10 5 0 the order Cetacea); of man 65 020850 Meat and edible meat offal of reptiles (including snakes and turtles), fresh, 10 5 0 chilled or frozen 66 020890 MEAT AND EDIBLE MEAT OF OFFAL, RICE BIRDS, FRESH, 10 5 0

Ref. code: 25595403040131WTU 81

Applied Rate หลังการลดภาษี NO. HS. Description (%)

2004 2005 2006 67 020900 PIG FAT FREE OF LEAN MEAT AND POULTRY FAT (NOT REN 10 5 0 68 021011 MEAT OF SWINE, HAMS, CHOULDERS AND CUTS THEREOF, W 10 5 0 69 021012 MEAT OF SWINE, BELLIES (STREAKY ) AND CUTS THEREOF, SALT, IN 10 5 0 BRINE, DRIED OR SMOKED 70 021019 MEAT OF SWINE BELLIES ( STREAKY ) AND CUTS THEREOF 10 5 0 71 021020 MEAT OF BOVINE ANIMALS, SALTED, IN BRINE, DRIED OR 10 5 0 72 021091 Meat and edible meat offal of primates, salted, in brine, dried or smoked; 10 5 0 edible flours and meals o 73 021092 Meat and edible meat offal of whales, dolphins and porpoises (mammals of 10 5 0 the order Cetacea); of ma 74 021093 Meat and edible meat offal Of reptiles (including snakes and turtles), salted, 10 5 0 in brine, dried or sm 75 021099 Other meat and edible meat offal, salted, in brine, dried or smoked; 10 5 0 including edible flours and m 76 030110 ORNAMENTAL FISH, LIVE 10 5 0 77 030191 TROUT ( SALMO TRUTTA, ONCORHYCHUS MYKISS, ONCORHYNCHUS 10 5 0 CLARKI, ONCORHYNCHUS AGUABONITA, ONCORHYNCHUS 78 030192 EALS ( ANGUILLA SPP. ), LIVE 10 5 0 79 030193 CARP, LIVE 10 5 0 80 030199 OTHER LIVE FISH 10 5 0 81 030222 PLAICE, EXCLUDING LIVERS AND ROES, FRESH OR CHILLED 10 5 0 82 030263 COALFISH, EXCLUDING LIVERS AND ROES, FRESH OR CHIL 10 5 0 83 030265 DOGFISH AND OTHER SHARKS, EXCLUDING LIVERS AND ROES, FRESH 10 5 0 OR CHILLED 84 030332 PLAICE, EXCLUDING LIVERS AND ROES, FROZEN 10 5 0 85 030378 HAKE, EXCLUDING LIVERS AND ROES, FROZEN 10 5 0 86 030559 OTHER FISH MEAL, DRIED, WHETHER OR NOT SALTED 10 5 0 87 040110 MILK AND CREAM, OF A FAT CONTENT BY WEIGHT NOT EXC 10 5 0 88 040120 MILK AND CREAM, OF A FAT CONTENT BY WEIGHT EXCEEDING 1 % BUT 10 5 0 NOT EXCEEDING 6 %

Ref. code: 25595403040131WTU 82

Applied Rate หลังการลดภาษี NO. HS. Description (%)

2004 2005 2006 89 040130 MILK AND CREAM, OF A FAT CONTENT BY WEIGHT EXCEEDI 10 5 0 90 040221 MILK AND CREAM, CONCENTRATED NOT CONTAINING ADDED 10 5 0 91 040229 MILK AND CREAM, CONTAINING ADDED SUGAR OR OTHER S 10 5 0 92 040291 MILK AND CREAM, IN POWDER, GRANULES OR OTHER SOLID 10 5 0 93 040299 OTHER MILK AND CREAM CONCENTRATED 10 5 0 94 040310 YOGURT, WHETHER OR NOT CONCENTRATED OR CONTAINING 10 5 0 95 040390 BUTTERMILK, CURDLED MILK AND CREAM,KEPHIR AND OTHE 10 5 0 96 040410 WHEY AND MODIFIED WHEY, WHETHER OR NOT CONCENTRATE 10 5 0 97 040490 PRODUCTS CONSISTING OF NATURAL MILK CONSTITUENTS 10 5 0 98 040510 BUTTER 10 5 0 99 040520 DAIRY SPREADS 10 5 0 100 040590 OTHER FATS AND OILS DERIVED FROM MILK 10 5 0 101 040610 FRESH CHEESE (NOT FERMENTED) INCLUDING WHEY CHEESE 10 5 0 102 040620 GRATED OR POWALERED CHEESE OF ALL KINDS 10 5 0 103 040630 PROCESSED CHEESE, NOT GRATED OR POWDERED 10 5 0 104 040640 BLUE-VEINED CHEESE 10 5 0 105 040690 OTHER CHEESE 10 5 0 106 040700 BIRDS' EGGS, IN SHELL, FRESH, PRESERVED OR COOKED 10 5 0 107 040811 EGG YOLKS, DRIED 10 5 0 108 040819 EGG YOLKS, FRESH, COOKED BY STEAMING OR BY BOILING 10 5 0 109 040891 BIRDS'EGGS, DRIED 10 5 0 110 040899 BIRDS EGGS, DRIED FRESH, COOKED BY STEAMING OR BY 10 5 0 111 040900 NATURAL HONEY 10 5 0 112 041000 EDIBLE PRODUCTS OF ANIMAL ORIGIN, NOT ELSEWHERE SP 10 5 0 113 050400 GUTS, BLADDERS AND STOMACHES OF ANIMALS (OTHER THA 10 5 0 114 050710 IVORY : IVORY POWDER AND WASTE 10 5 0 115 050790 TORTOISE-SHELL, WHALEBONE AND WHALEBONE HAIR, HORN 10 5 0 116 050800 CORAL AND SIMILAR MATERIALS, UNWORKED OR SIMPLY PR 10 5 0 117 050900 NATURAL SPONGES OF ANIMAL ORIGIN 10 5 0 118 051000 AMBERGRIS, CASTOREUM, CIVET AND MUSK; CANTHARIDES; 10 5 0

Ref. code: 25595403040131WTU 83

Applied Rate หลังการลดภาษี NO. HS. Description (%)

2004 2005 2006 119 051199 OTHER ANIMAL PRODUCTS NOT ELSEWHERE SPECIFIED OR I 10 5 0 120 060110 BULBS, TUBERS, TUBEROUS ROOTS, CORMS CROWNS AND RH 10 5 0 121 060120 BULBS, TUBERS, TUBEROUS ROOTS, CORMS CROWNS AND RH 10 5 0 122 060210 UNROOTED CUTTINGS AND SLIPS 10 5 0 123 060220 EDIBLE FRUIT OR NUT TREES, SHRUBS AND BRUSHES, GRA 10 5 0 124 060230 RHODODENDRONS AND AZALEAS, GRAFTED OR NOT 10 5 0 125 060240 ROSES, GRAFTED OR NOT 10 5 0 126 060290 OTHER LIVE PLANTS (INCLUDING THEIR ROOTS) 10 5 0 127 060310 CUT FLOWERS AND FLOWERS BUDS OF A KIND SUITABLE FO 10 5 0 128 060390 CUT FLOWERS AND FLOWERS BUDS OF A KIND SUITABLE FO 10 5 0 129 060410 MASSES AND LICHENS BEING GOODS OF A KIND SUITABLE 10 5 0 130 060491 FOLIAGE, BRANCHES AND OTHER PARTS OF PLANTS, WITHO 10 5 0 131 060499 FOLIAGE, BRANCES AND OTHER PARTS OF PLANTS, WITHOU 10 5 0 132 070110 POTATOES, SEED 10 5 0 133 070190 POTATOES, FRESH OR CHILLED 10 5 0 134 070200 TOMATOES, FRESH OR CHILLED 10 5 0 135 070310 ONIONS AND SHALLOTS (FRESH OR CHILLED) 10 5 0 136 070320 GARLIC, FRESH OR CHILLED 10 5 0 137 070390 LEEK AND OTHER ALLIACEOUS VEGETABLES, FRESH OR CHI 10 5 0 138 070410 CAULIFLOWERS AND HEADED BROCCOLI, FRESH OR CHILLED 10 5 0 139 070420 BRUSSELS SPROUTS, FRESH OR CHILLED 10 5 0 140 070490 CABBAGES, KOHLRABI, KALE AND SIMILAR EDIBLE BRASSI 10 5 0 141 070511 CABBAGES LETTUCE (HEAD LETTUCE), FRESH OR CHILLED 10 5 0 142 070519 LETTUCE, FRESH OR CHILLED 10 5 0 143 070521 WITLOOF CHICARY, FRESH OR CHILLED 10 5 0 144 070529 CHICORY, FRESH OR CHILLED 10 5 0 145 070610 CARROTS AND TURNIPS, FRESH OR CHILLED 10 5 0 146 070690 SALAD BEETROOT, SALSIFY, CELERIAC, RADISHES AND SI 10 5 0 147 070700 CUCUMBERS AND GHERKINS, FRESH OR CHILLED 10 5 0 148 070810 PEAS, SHELLED OR UNSHELLED, FRESH OR CHILLED 10 5 0

Ref. code: 25595403040131WTU 84

Applied Rate หลังการลดภาษี NO. HS. Description (%)

2004 2005 2006 149 070820 BEANS 10 5 0 150 070890 OTHER LEGUMINOUS VEGETABLES, SHELLED OR UNSHELLED, 10 5 0 151 070910 GLOB ARTICHOKES, FRESH OR CHILLED 10 5 0 152 070920 ASPARAGUS, FRESH OR CHILLED 10 5 0 153 070930 AUBERGINES, FRESH OR CHILLED 10 5 0 154 070940 CELERY OTHER THAN CELERIAC, FRESH OR CHILLED 10 5 0 155 070951 MUSHROOMS, FRESH OR CHILLED 10 5 0 156 070952 TRUFFLES, FRESH OR CHILLED 10 5 0 157 070959 Other mushrooms, fresh or chilled 10 5 0 158 070960 FRUITS OF THE GENUS CAPSICUM OR OF THE GENUS PIMEN 10 5 0 159 070970 SPINACH, NEW ZEALAND SPINACH AND ORACHE SPINACH, F 10 5 0 160 070990 OTHER VEGETABLES, FRESH OR CHILLED 10 5 0 161 071010 POTATOES (UNCOOKED OR COOKED BY STEAMING OR BOILIN 10 5 0 162 071021 PEAS (UNCOOKED OR COOKED BY STEAMING OR BOILING IN 10 5 0 163 071022 BEANS (UNCOOKED OR COOKED BY STEAMING OR BOILING IN WATER), 10 5 0 FROZEN 164 071029 OTHER LEGUMINOUS VEGETABLES, SHELLED OR UNSHELLED 10 5 0 165 071030 SPINACH, NEW ZEALAND SPINACH AND ORACHE SPINACH 10 5 0 166 071040 SWEET CORN (UNCOOKEE OR COOKED BY STEAMING OR BOIL 10 5 0 167 071080 OTHER VEGETABLES(UNCOOKED OR COOKED BY STEAMING OR 10 5 0 168 071090 MIXTURES OF VEGETABLE (UNCOOKED OR COOKED BY STEAM 10 5 0 169 071120 OLIVES, PROVISIONALLY PRESERVED BUT UNSUITABLE IN 10 5 0 170 071130 CAPERS, PREVISIONALLY PRESERVED BUT UNSUITABLE IN 10 5 0 171 071140 CUCUMBERS AND GHERKINS, PREVISIONALLY PRESERVED BU 10 5 0 172 071151 Mushrooms of the genus Agaricus provisionally preserved, but unsuitable in 10 5 0 that state for immediate 173 071159 Other mushrooms and truffles provisionally preserved, but unsuitable in that 10 5 0 state for immediate con 174 071190 OTHER VEGETABLES, PREVISIONALLY PRESERVED BUT UNSU 10 5 0 175 071220 DRIED ONION 10 5 0

Ref. code: 25595403040131WTU 85

Applied Rate หลังการลดภาษี NO. HS. Description (%)

2004 2005 2006 176 071231 Dried mushrooms of the genus Agaricus, whole, cut, sliced, broken or in 10 5 0 powder, but not further prep 177 071232 Dried wood ears (Auricularia spp.), whole, cut, sliced, broken or in powder, 10 5 0 but not further prepare 178 071233 Dried jelly fungi (Tremella spp.), whole, cut, sliced, broken or in powder, but 10 5 0 not further prepared 179 071239 Other dried mushrooms and truffles, whole, cut, sliced, broken or in powder, 10 5 0 but not further prepare 180 071290 OTHER DRIED VEGETABLES, WHOLE, CUT, SHICED, BROKEN 10 5 0 181 071310 DRIED PEAS, SHELLED, WHETHER OR NOT SKINNED OR SPL 10 5 0 182 071320 DRIED CHICKPEAS, SHELLED, WHETHER OR NOT SKINNED O 10 5 0 183 071331 DRIED MUNG, BEANS, SHELLED, WHETHER OR NOT SKINNE 10 5 0 184 071332 DRIED SMALL RED BEANS, SHELLED, WHETHER OR NOT SKI 10 5 0 185 071333 KIDNEY BEANS, INCLUDING WHITE AND PEA BEANS (PHSEO 10 5 0 186 071339 OTHER DRIED BEANS, SHELLED, WHETHER OR NOT SKINNED 10 5 0 187 071340 DRIED LENTILS, SHELLED, WHETHER OR NOT SKINNED OR 10 5 0 188 071350 DRIED BROAD BEANS AND HORSE BEANS,SHELLED, WHETHER 10 5 0 189 071390 OTHER DRIED LEGUMINOUS VEGETABLES, SHELLED, WHETHE 10 5 0 190 071410 MANIOC ROOTS, FRESH OR DRIED, WHETHER OR NOT SLICE 10 5 0 191 071420 SWEET POTATOES, FRESH OR DRIED, WHETHER OR NOT SLICED OR IN 10 5 0 THE FORM OF PELLETS 192 071490 TARO, FRESH OR DRIED, WHETHER /NOT SLICED OR IN T 10 5 0 193 080111 DESICCATED COCONUTS 10 5 0 194 080119 FRESH COCONUTS 10 5 0 195 080121 BRAZIL NUTS, IN SHELL 10 5 0 196 080122 BRAZIL NUTS, SHELLED 10 5 0 197 080131 CASHEW NUTS, IN SHELL 10 5 0 198 080132 CASHEW NUTS, SHELLED 10 5 0 199 080300 BANANAS, INCLUDING PLANTAINS, FRESH OR DRIED 10 5 0 200 080410 DATES, FRESH OR DRIED 10 5 0

Ref. code: 25595403040131WTU 86

Applied Rate หลังการลดภาษี NO. HS. Description (%)

2004 2005 2006 201 080420 FIG, FRESH OR DRIED 10 5 0 202 080430 PINEAPPLES 10 5 0 203 080440 AVOCADOS, FRESH OR DRIED 10 5 0 204 080450 GUAVAS, MANGOES,MANGOSTEEN FRESH OR DRIED 10 5 0 205 080510 SWEET ORANGES, FRESH OR DRIED 10 5 0 206 080520 MANDARINS (INCLUDING TANGERINES AND SATSUMAS); C 10 5 0 207 080540 GRAPEFRUIT, FRESH OR DRIED 10 5 0 208 080550 Lemons (Citrus limon, Citrus limonum) and limes (Citrus aurantifolia, Citrus 10 5 0 latifolia), fresh or dr 209 080590 OTHER CITRUS FRUITS, FRESH OR DRIED, OTHER THAN SU 10 5 0 210 080610 GRAPES, FRESH 10 5 0 211 080620 GRAPES, DRIED 10 5 0 212 080711 WATERMELONS 10 5 0 213 080719 OTHER MELONS 10 5 0 214 080720 PAPAWS (PAPAYAS), FRESH 10 5 0 215 080820 PEARS AND QUINCES, FRESH 10 5 0 216 080910 APRICOTS, FRESH 10 5 0 217 080920 CHERRIES, FRESH 10 5 0 218 080930 PEACHES, INCLUDING NECTARINES, FRESH 10 5 0 219 080940 PLUMS AND SLOES, FRESH 10 5 0 220 081010 STRAWBERRIES, FRESH 10 5 0 221 081020 RASPBERRIES, BLACKBERRIES, MULBERRIES AND LOGANBER 10 5 0 222 081030 BLACK, WHITE OR RED CURRANTS GOOSEBERRIES, FRESH 10 5 0 223 081040 CRANBERRIES, BILFERRIES AND OTHER FRUITS OF THE GE 10 5 0 224 081050 KIWIFRUIT 10 5 0 225 081060 Durians, fresh 10 5 0 226 081090 OTHER FRESH FRUIT, FRESH, OTHER THAN SUBHEADING NO 10 5 0 227 081110 STARBARIES UNCOOKED OR COOKED BY STEAMING OR BOILI 10 5 0 228 081120 RASPBERRIES, BLACKBERRIES, MULBERRIES LOGANBERRIES 10 5 0 229 081190 OTHER FRUITS AND NUTS, UNCOOKED OR COOKED BY STEAN 10 5 0

Ref. code: 25595403040131WTU 87

Applied Rate หลังการลดภาษี NO. HS. Description (%)

2004 2005 2006 230 081210 CHERRIES, PROVISIONALLY PRESERVED, BUT UNSUITABLE 10 5 0 231 081290 OTHER FRUITS AND NUTS, PROVISIONALLY PRESERVED, BU 10 5 0 232 081310 APRICOT, DRIED 10 5 0 233 081320 PRUNES, DRIED 10 5 0 234 081330 APPLE, DRIED 10 5 0 235 081340 OTHER FRUIT DRIED, OTHER THAN THAT OF HEADING NOS 10 5 0 236 081350 MIXTURES OF NUTS OR DRIED FRUITS OF THIS CHAPTER 10 5 0 237 081400 PEEL OF CITRUS FRUIT OR MELON (INCHEDING WATERMELO 10 5 0

Group 2 5%- 15 % 5 0 0 1 010290 LIVE BOVINE ANIMALS, NOT FOR PURE-BRED BREEDING 5 0 0 LIVE SWINE, NOT FOR PURE-BRED BREEDING, WEIGHING LESS THAN 50 2 010391 KG 5 0 0 LIVE SWINE, NOT FOR PURE-BRED BREEDING , WEIGHING 50 KG OR 3 010392 MORE 5 0 0 4 030211 TROUT(SALMO TRUTTA, ONCORHYNCHUS MYKISS, ONCORHYNC 5 0 0 5 030212 PACIFIC SALMON (ONCORHYNCHUS NERKA, ONCORHYNCHUS G 5 0 0 6 030219 OTHER SALMONIDAE, EXCLUDING LIVERS AND ROES, FRESH 5 0 0 7 030221 HALIBUT, EXCLUDING LIVERS AND ROES, FRESH OR CHILLED 5 0 0 8 030223 SOLE (SOLEA SPP.), EXCLUDING LIVERS AND ROES, FRES 5 0 0 9 030229 OTHER FLAT FISH, EXCLUDING LIVERS AND ROES, FRESH 5 0 0 10 030231 ALBACORE OR LONGFINNED TUNAS, EXCLUDING LIVERS AND ROES, 5 0 0 FRESH OR CHILLED 11 030232 YELLOWFIN TUNAS, EXCLUDINGING LIVERS AND ROES, FRE 5 0 0 12 030233 SKIPJACK OR STRIPE-BELLIED BONITO, EXCLUDING LIVES 5 0 0 13 030234 Bigeye tunas (thunnus obesus ), fresh or chilled 5 0 0 14 030235 Bluefin tunas (Thunnus thynnus), fresh or chilled 5 0 0 15 030236 Southern bluefin tunas(Thunnus maccoyii), fresh or chilled 5 0 0 16 030239 OTHER TUNAS, EXCLUDING LIVERS AND ROES, FRESH OR C 5 0 0 17 030240 HERRING, EXCLUDING LIVERS AND ROES, FRESH OR CHILL 5 0 0

Ref. code: 25595403040131WTU 88

Applied Rate หลังการลดภาษี NO. HS. Description (%)

2004 2005 2006 18 030250 COD, EXLUDING LIVERS AND ROES, FRESH OR CHILLED 5 0 0 19 030261 SARDINES, SARDINELLA, BRISLING OR SPRATS, EXCLUDIN 5 0 0 20 030262 HADDOCK, EXCLUDING LIVERS AND ROES, FRESH OR CHILLED 5 0 0 21 030264 MACKEREL, EXCLUDING LIVERS AND ROES, FRESH OR CHIL 5 0 0 EELS (ANGUILLA SPP.), EXCLUDING LIVERS AND ROES, FRESH OR 22 030266 CHILLED 5 0 0 23 030269 OTHER FISH, EXCLUDING LIVERS AND ROES, FRESH OR CH 5 0 0 24 030270 LIVERS AND ROES OF OTHER FISH, FRESH OR CHILLED 5 0 0 25 030311 Sockeye salmon (red salmon) (Oncorhynchus nerka) frozen, excluding livers 5 0 0 and roes, fish fillets an 26 030319 Other pacific salmon, frozen, excluding livers and roes, fish fillets and other 5 0 0 fish meat of headin 27 030321 TROUT (SALMO TRUTTA, ONCORHYNCHUS MYKISS, ONCORHYN 5 0 0 28 030322 ATLANTIC SALMON AND DANUBE SALMON, EXCLUDING LIVER 5 0 0 29 030329 OTHER SALMONIDAE, EXCLUDING LIVERS AND ROES, FROZE 5 0 0 30 030331 HALIBUT, EXCLUDING LIVERS AND ROES, FROZEN 5 0 0 31 030333 SOLE, EXCLUDING LIVERS AND ROES, FROZEN 5 0 0 32 030339 OTHER FLAT FISH, EXCLUDING LIVERS AND ROES, FROZEN 5 0 0 33 030341 ALBACORE OR LONGFINNED TUNAS, EXCLUDING, LIVERS AN 5 0 0 34 030342 YELLOWFIN TUNAS, EXCLUDING LIVERS AND ROES, FROZEN 5 0 0 35 030343 SKIPJACK OR STRIPE-BELLIED BONITS, EXCLUDING LIVER 5 0 0 36 030344 Bigeye tunas (Thunnus obesus), frozen, excluding livers and roes, fish fillets 5 0 0 and other fish meat o 37 030345 Bluefin tunas (Thunnus thynnus), frozen, excluding livers and roes, fish fillets 5 0 0 and other fish meat 38 030346 Southern bluefin tunas (Thunnus maccoyii), frozen, excluding livers and roes, 5 0 0 fish fillets and other 39 030349 OTHER TUNAS, EXCLUDING LIVERS AND ROES, FROZEN 5 0 0 40 030350 HERRINGS, EXCLUDING LIVERS AND ROES, FROZEN 5 0 0 41 030360 COD, EXCLUDING LIVERS AND ROES, FROZEN 5 0 0

Ref. code: 25595403040131WTU 89

Applied Rate หลังการลดภาษี NO. HS. Description (%)

2004 2005 2006 42 030371 SARDINES, SARDINELLA, BRISLING OR SPRATS, EXCLUDIN 5 0 0 43 030372 HADDOCK, EXCLUDING LIVERS AND ROES, FROZEN 5 0 0 44 030373 COALFISH, EXCLUDING LIVERS AND ROES, FROZEN 5 0 0 45 030374 MACKEREL, EXCLUDING LIVERS AND ROES, FROZEN 5 0 0 46 030375 DOGFISH AND OTHER SHARKS, EXCLUDING LIVERS ROES, F 5 0 0 47 030376 EELS, EXCLUDING LIVERS AND ROES, FROZEN 5 0 0 48 030377 SEA BASS, EXCLUDING LIVERS AND ROES, FROZEN 5 0 0 49 030379 OTHER FISH, EXCLUDING LIVERS AND ROES, FROZEN 5 0 0 50 030380 LIVERS AND ROES, FROZEN 5 0 0 51 030410 FISH FILLETS AND OTHER FISH MEAT (WHETHER OR NOT M 5 0 0 52 030420 FISH FILLETS, FROZEN 5 0 0 53 030490 OTHER FISH MEAT (WHETHER OR NOT MINCED), FROZEN 5 0 0 54 030510 FISH MEAL AND FISH PELLETS FIT FOR HUMAN CONSUMPTI 5 0 0 55 030520 LIVERS AND ROES, DRIED, SMOKED, SALTED OR IN BRINE 5 0 0 56 030530 FISH FILLETS DRIED SALTED OR IN BRINE, BUT NOT SMOKED 5 0 0 57 030541 PACIFIC SALMON (ONCORHYNCHUS NERKA, ONCORHYNCHUS G 5 0 0 58 030542 HERRINGS, INCLUDING FILLETS, SMOKED 5 0 0 59 030549 OTHER FISH MEAL, SMOKED 5 0 0 60 030551 COD, DRIED, WHETHER OR NOT SALTED 5 0 0 61 030559 OTHER FISH MEAL, DRIED, WHETHER OR NOT SALTED 5 0 0 62 030561 HERRINGS, SALTED BUT NOT DRIED OR SMOKED AND FISH 5 0 0 63 030562 COD, SALTED BUT NOT DRIED OR SMOKED AND FISH IN BRINE 5 0 0 64 030563 ANCHOVIES SALTED BUT NOT DRIED OR SMOKED AND FISH IN BRINE 5 0 0 65 030569 OTHER FISH MEAL, BUT NOT DRIED OR SMOKED AND FISH 5 0 0 66 030611 ROCK LOBSTER AND OTHER SEA CRAWFISH, FROZEN 5 0 0 67 030612 LOBSTERS (HOMARUS SPP.), FROZEN 5 0 0 68 030613 SHRIMPS AND PRAWNS, FROZEN 5 0 0 69 030614 CRABS, FROZEN 5 0 0 70 030619 OTHER CRUSTACEANS, FROZEN 5 0 0 71 030621 ROCK LOBSTER AND OTHER SEA CRAWFISH, NOT FROZEN 5 0 0

Ref. code: 25595403040131WTU 90

Applied Rate หลังการลดภาษี NO. HS. Description (%)

2004 2005 2006 72 030622 LOBSTER, NOT FROZEN 5 0 0 73 030623 SHRIMPS AND PRAWNS 5 0 0 74 030624 CRAB 5 0 0 75 030629 OTHER CRUSTACEANS, NOT FROZEN ; CRUSTACEANS MEAL A 5 0 0 76 030710 OYSTERS, WHETHER IN SHELL OR NOT 5 0 0 77 030721 SCALLOPS, INCLUDING QUEEN SCALLOPS, OF THE GENERAP 5 0 0 78 030729 SCALLOPS, INCLUDING QUEEN SCALLOPS, OF THE GENRAPE 5 0 0 79 030731 MUSSELS (MYTILUS SPP., PERNA SPP.), LIVE, FRESH OR 5 0 0 80 030739 MUSSELS (MYTILUS SPP., PERNA SPP.), LIVE, FROZEN, 5 0 0 81 030741 CUTTLE FISH, SQUID LIVE, FRESH OR CHILLED 5 0 0 82 030749 CUTTLE FISH HEAD,CUTTLE FISH,SQUID FROZEN OR DRI 5 0 0 83 030751 OCTOPUS (OCTOPUS SPP.), LIVE, FRESH OR CHILLED 5 0 0 84 030759 OCTOPUS, FROZEN OR DRIED, SALTED OR IN BRINE 5 0 0 85 030760 SNAILS , OTHER THAN SEA SNAIL, FROZEN, DRIED SALTED 5 0 0 86 030791 OTHER MOLLUSCS, LIVE, FRESH OR CHILLED 5 0 0 87 030799 OTHER MOLLUSCS, FROZEN, DRIED, SALTED OR IN BRINE 5 0 0 88 040210 MILK AND CREAM, IN POWDER, GRANULES OR OTHER SOLID 5 0 0 89 040221 MILK AND CREAM, CONCENTRATED NOT CONTAINING ADDED 5 0 0 90 040229 MILK AND CREAM, CONTAINING ADDED SUGAR OR OTHER S 5 0 0 91 040310 YOGURT, WHETHER OR NOT CONCENTRATED OR CONTAINING 5 0 0 92 040390 BUTTERMILK, CURDLED MILK AND CREAM,KEPHIR AND OTHE 5 0 0 93 040410 WHEY AND MODIFIED WHEY, WHETHER OR NOT CONCENTRATE 5 0 0 94 040490 PRODUCTS CONSISTING OF NATURAL MILK CONSTITUENTS 5 0 0 95 040590 OTHER FATS AND OILS DERIVED FROM MILK 5 0 0 96 050510 FEATHERS OF A KIND USED FOR STULLING, DOWN, OF BIR 5 0 0 97 050590 SKIN AND OTHER PARTS OF BIRDS WITH THEIR FEATHERS 5 0 0 98 051191 PRODUCTS OF FISH OR CRUSTACEANS, MOLLUSCS OR OTHER 5 0 0 99 080211 ALMONDS, IN SHELL, FRESH OR DRIED 5 0 0 100 080212 ALOMONDS, SHELLED, FRESH OR DRIED 5 0 0 101 080221 HAZELNUTS OR FILBERTS, IN SHELL, FRESH OR DRIED 5 0 0

Ref. code: 25595403040131WTU 91

Applied Rate หลังการลดภาษี NO. HS. Description (%)

2004 2005 2006 102 080222 HAZELNUTS OR FILBERTS, SHELLED, FRESH OR DRIED 5 0 0 103 080231 WALNUTS, IN SHELL, FRESH OR DRIED 5 0 0 104 080232 WALNUTS, SHELLED, FRESH OR DRIED 5 0 0 105 080240 CHESTNUTS, FRESH OR DRIED, WHETHER OR NOT SHELLED 5 0 0 106 080250 PISTACHIOS, FRESH OR DRIED, WHETHER OR NOT SHELLED 5 0 0 107 080290 OTHER NUTS, FRESH OR DRIED, WHETHER OR NOT SHELLED 5 0 0 108 080810 APPLES, FRESH 5 0 0

Group 3 < 5% 0 0 0 1 010110 Live horses, asses, mules and hinnies, for pure-bred breeding 0 0 0 2 010190 Live horses, not for pure-bred breeding 0 0 0 3 010310 LIVE SWINE, FOR PURE-BRED BREEDING 0 0 0 4 010410 LIVE SHEEP, NOT FOR BREEDING 0 0 0 5 010420 LIVE GOATS 0 0 0 6 010511 LIVE FOWLS OF THE SPECIES GALLUS DOMESTICUS, WEIGH 0 0 0 7 010512 TURKEYS, WEIGHTING NOT MORE THAN 185 G, FOR BREEDING 0 0 0 8 010519 LIVE DUCKS, GEESE, TURKEYS AND GUINEA FOWLS, WEIGH 0 0 0 9 010592 LIVE FOWLS OF THE SPECIES GALLUS DOMESTICUS, WEIGHTING MORE 0 0 0 THAN 185 G, BUT NOT MORE THAN 2,000 G, F 10 010593 LIVE FOWLS OF THE SPECIES GALLUS DOMESTICUS, WEIGH 0 0 0 11 010599 LIVE DUCKS, GEESE, TURKEYS AND GUINEA FOWLS, WEIGH 0 0 0 12 010611 Primates, for draught, consumption of meat, milk or eggs, imported not for 0 0 0 breeding

13 010612 Whales,dolphins and porpoises(mammals of the order Cetacea);manatees 0 0 0 and dugongs(mammals of the orde Mammals, for draught, consumption of meat, milk or eggs, imported for 14 010619 breeding 0 0 0 15 010620 Reptiles (including snakes and turtles), for draught, consumption of meat, 0 0 0 milk or eggs, imported fo 16 010631 Birds of prey 0 0 0

Ref. code: 25595403040131WTU 92

Applied Rate หลังการลดภาษี NO. HS. Description (%)

2004 2005 2006 17 010632 Psittaciformes (including parrots, parakeets, macaws and cockatoos), for 0 0 0 draught, consumption of mea 18 010639 Other birds, for draught, consumption of meat, milk or eggs imported for 0 0 0 breeding 19 010690 Frog 0 0 0 20 040700 BIRDS' EGGS, IN SHELL, FRESH, PRESERVED OR COOKED 0 0 0 21 050100 HUMAN HAIR, UNWORKED, WHETHER OR NOT WASHED OR SCO 0 0 0 22 050210 PIGS' HOGS' OR BOARS' BRISTLES AND HAIR WASTE THER 0 0 0 23 050290 BADGER HAIR AND OTHER BUSH MAKING HAIR 0 0 0 24 050300 HORSEHAIR AND HORSEHAIR WASTE, WHETHER OR NOT PUT 0 0 0 25 050610 OSSEIN AND BONES TREATED WITH ACID 0 0 0 26 050690 BONES AND HORN-CORES, UNWORKED, DEFATTED, SIMPLY P 0 0 0 27 051110 BOVINE SEMEN 0 0 0 28 051191 PRODUCTS OF FISH OR CRUSTACEANS, MOLLUSCS OR OTHER 0 0 0 29 051199 OTHER ANIMAL PRODUCTS NOT ELSEWHERE SPECIFIED OR I 0 0 0

Ref. code: 25595403040131WTU 93

BIOGRAPHY

Name Miss Kansinee Somjai Date of Birth 14 September 1988 Educational Attainment 2007: Bachelor of Arts 2011: Master of Social Science

Ref. code: 25595403040131WTU