Reflections on the Human Condition - Api-fellowships.org

THE STATE, DEVELOPMENT AND GLOBALIZATION
FREE TRADE IN ASIAN AGRICULTURE: AN ECONOMIC
PERSPECTIVE OF THAILAND
Zamroni
INTRODUCTION
In the last two decades, many developed or developing
countries have made regional free trade agreements
(FTAs) in order to enhance their trade and economies. 1
These regional trends emerged due to the slowly moving
General Agreements on Tariffs and Trade (GATT)-
World Trade Organization (WTO). 2 When the WTO
was established in 1995, the member countries explicitly
acknowledged the need to do more to help developing
countries to obtain the benefits of trade in order to
achieve sustainable development. But the WTO rounds
of negotiations have not accomplished that goal yet,
especially in dealing with the agricultural issues; the
member countries were stuck even at the Doha round.
Agriculture has been controversial and has often been
partially integrated into multilateral and/ or regional
free trade agreements. These were due to the conflicting
objectives between developed and developing countries
regarding the issue of domestic supports, a relatively
high protection 3 , and international competition in the
agricultural sector.
This study focused on the Asian free trade in agricultural
products, particularly on the economic perspective
of Thailand. The agricultural sector has become the
main sector in most Asian countries 4 especially related
to employment absorption. Thailand, as one of the
developing countries in Asia, was chosen as a sample
based on the assumption that it has a well-managed
and globalized agricultural sector. According to the
Food and Agricultural Organization (FAO) in 2002,
Thailand (with fewer natural resources than other Asian
countries such as India and Indonesia) was the second
largest exporter of agricultural products among Asian
countries. 5 In addition, Thailand has a more liberalized
agricultural sector. Compared to major countries such
as the EU, the US and other developed countries, the
Thai agricultural sector was relatively less subsidized by
the central government (i.e. the Thai government spent
only 7.5 percent of total values of gross farm receipts to
support its agricultural sector, while the EU was about
80 percent).
The research method used in this study is qualitative
analysis. The use of this analysis is presented by
scrutinizing data and information from field research. 6
By using the qualitative analysis, we will elaborate the
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existing condition of agricultural trade in terms of
globalization and any factors affecting and how the
country behaves in entering and managing free trade in
the agricultural sector. The qualitative data will be used
to construct the economic perspective of Thailand on
how the free trade in agriculture should be and what the
reality in the country is.
THE EMERGING FREE TRADE IN ASIAN
COUNTRIES
In the last few decades, in order for countries to compete
in the global trade, increasingly, they have been forming
or strengthening the regional trade agreements. This
was driven by the need to both attract investment and
promote international trade. Gaining access to overseas
markets and thus achieving economies of scale in
domestic production were also important driving forces.
(Josling, 1993) In addition, it is normally assumed that
the benefits from joining outweigh the potential losses
from not joining (Page, 2000). In practice, some countries
are in more than one membership, so that grouping may
overlap. The main objectives in entering into multiple
memberships are firstly, to access broader markets in
other regions outside the immediate region - especially
when there are tendencies for some regional blocs to
protect their markets from outsiders and secondly, to
get the benefits of the process of globalization. (Bhalla
& Bhalla, 1997; Frankel & Wei, 1998; Page, 2000)
Some studies conducted by Kawasaki (2003), Urata and
Kiyota (2003), Mallikamas (2002) show that the free
trade in Asian economies will give benefits to Thailand
and other member countries in term of the increase in
their GDP.
In the case of Southeast Asia, Association of Southeast
Asian Nations (ASEAN) became more active in
fostering economic cooperation in the region since the
1980s. In order to tighten the economic cooperation
among members, ASEAN formed the ASEAN Free
Trade Area (AFTA) in January 1992. The formation of
the AFTA was inspired by the current global trends of
regionalism and the slow progress in ASEAN regional
cooperation especially in the economic area. (Kim,
1994) The elimination of trade barriers among members
is expected to promote greater economic efficiency,
productivity and competitiveness.
Ref lections on the Human Condition: Change, Conflict and Modernity
The Work of the 2004/2005 API Fellows