VZCZCXRO8545
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHBK #1006/01 0910356
ZNR UUUUU ZZH
R 310356Z MAR 08
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC 2479
RUCNASE/ASEAN MEMBER COLLECTIVE
RUCPDOC/USDOC WASHINGTON DC

UNCLAS SECTION 01 OF 03 BANGKOK 001006 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
STATE PASS USTR 
USDOC FOR 4430/EAP/MAC/OKSA 
 
E.O. 12958:N/A 
TAGS: ECON ETRD KIPR TH
 
SUBJECT:  USTR PUSHES RTG TO ESTABLISH ECONOMIC DIALOGUE, RESOLVE CL 
ISSUE AND IMPROVE IPR 
 
REF:  A) BANGKOK 904; B) 07 BANGKOK 5405 
 
¶1.  (SBU) Summary:  On March 17 and 18, Assistant USTR Barbara 
Weisel and USTR Director for Southeast Asia David Bisbee met with a 
range of RTG officials and private sector contacts in a bid to renew 
regular contact on economic issues with the newly elected 
government.  Weisel proposed the two governments pursue a regular 
dialogue to discuss bilateral and regional issues to which Thai 
Commerce Department officials agreed.  The continuing controversy 
over compulsory licensing of patented drugs was raised by Thai 
officials in nearly every meeting.  RTG officials showed interest 
managing the issue and in continued discussions with the 
pharmaceutical industry, but made clear that relevant agencies had 
not yet coordinated their positions or reached a decision on next 
steps. A tentative way forward was reached in a meeting with Thai 
Customs that may resolve concerns over valuation of distilled 
spirits.   Weisel pressed officials in various meetings to clarify 
the country's trade and investment policies and send positive 
signals to investors, particularly in the face of increased 
competition from Thailand's regional competitors.  IPR protection 
was listed as a prime area of concern in which Thailand was falling 
behind its neighbors.  Despite its assertions that it wants to 
improve the trade and investment climate, the new government is 
still finding its way and coordination on economic policy may be 
sluggish in the short run.  End Summary. 
 
Economic dialogue 
----------------- 
 
¶2.  (SBU) Ms. Weisel noted to Commerce officials that since the 2006 
military coup and the suspension of FTA negotiations that there had 
been infrequent contact on economic issues.  She proposed to pursue 
a dialogue to regularly discuss bilateral and regional issues.  Ms. 
Chutima Bunyaprapharasa, Director General of the Department of Trade 
Negotiations, agreed that a regular dialogue would be useful but 
suggested it could be done on the margins of other international 
meetings.  Weisel disagreed as key officials were often not present 
at the same meetings, and proposed that dedicated meetings be 
arranged several times per year.  She said that holding sub-group 
meetings during these dialogues, for example on IPR issues, would be 
of particular value given the many specific issues that need to be 
discussed in detail.  Chutima suggested that Thai officials come to 
Washington in the next few months for a dialogue meeting. 
 
¶3.  (SBU) Weisel noted to Siripol that investors were closely 
watching the new government's statements, looking for signals of 
where trade and investment policy was headed.  As those signals were 
still not clear, Weisel urged Siripol to communicate the 
government's economic priorities to business and the general public. 
 She compared Thailand's economic performance unfavorably to 
regional competitors including Vietnam who were making strides in 
reforming business regulations and building institutions to drive 
trade and investment growth.  Siripol was somewhat dismissive and 
obviously sensitive to the comparison to Vietnam, but said he 
understood that investors were watching and hoped that trade would 
increase now that Thailand had returned to an elected government. 
 
Compulsory licenses 
------------------- 
 
¶4.  (SBU) In separate meetings, officials from the Ministries of 
Foreign Affairs, Commerce and Public Health asked AUSTR Weisel about 
her views on the new administration's policy on compulsory licenses 
(CL) of patented pharmaceuticals.  Weisel encouraged greater 
cooperation with the pharmaceutical industry and an undertaking of 
serious negotiations with affected companies.  PM Samak had earlier 
tasked these three Ministries to review the previous government's 
policy of breaking drug patents and come to a joint decision on how 
and whether to proceed with the policy.  Although receptive to 
negotiations and aware of the possible negative implications on 
Thailand's image as a dependable economic partner, officials 
indicated a lack of coordination among ministries and uncertainty 
about how to bring forth a resolution of the highly sensitive issue. 
 Officials said that meetings between the Ministries on the issue 
would continue over the next week, but were not clear on how they 
would come to a policy decision.  MFA officials said planned 
meetings have not yet taken place due to the Minister's travels. 
 
¶5.  (SBU) Deputy Permanent Secretary Dr. Paijit Warachit of the 
Ministry of Public Health told Weisel that the Ministry "did not 
intend to do new compulsory licenses."  Regarding those previously 
issued, he laid responsibility on the previous government, saying 
"we are not involved."  Weisel noted that should the current 
government import generic copies under the previous CLs that the 
government would be taking ownership of them. Weisel stated that a 
 
BANGKOK 00001006  002 OF 003 
 
 
real solution would have to include all previously issued CLs, and 
encouraged Paijit to engage with industry.  She suggested that 
industry's proposal for a Joint Committee of health officials and 
companies to work on public health issues expand to include the 
Ministries of Commerce and Foreign Affairs.  Paijit agreed the Joint 
Committee could be a beneficial element in improving public health 
for the poor, and disclosed he was planning to meet with the local 
industry association the next week to discuss it.  However, he 
opined that he was in "a difficult time" and was waiting for a 
policy decision from above. 
 
¶6.  (SBU) During a courtesy call by Ambassador John on Minister of 
Commerce Mingkwan Sangsuwan (reftel A), the Minister was asked for 
assistance in resolving the CL issue.  Mingkwan lamented that the 
previous government had left them such a controversial issue and 
promised that his staff would study the issue "with a positive 
attitude."  He believed the issue belonged with the Ministry of 
Public Health.  "We take a passive role," Mingkwan said, but said 
his Ministry would participate in deliberations.  In an ensuing 
meeting with Permanent Secretary Siripol Yodmuangcharoen, Weisel 
again encouraged the Ministry to reconstitute the Joint Committee 
and initiate a more constructive discussion on the CL issue, 
particularly before taking any actions that would threaten to 
dismantle the patent system that his Ministry was responsible for 
maintaining.  Siripol said the government had to balance its 
international IPR commitments with the interests of the country, but 
that he wanted "to do something." 
 
¶7.  (SBU) In other meetings on the issue it was clear that the 
previous government's arguments in favor of CLs continued to 
resonate and there was little understanding of industry's positions. 
 MFA officials brought up questions on the U.S. use of compulsory 
licenses and asked for any information that would counter NGO claims 
that compulsory licenses were a routine occurrence in the U.S. and 
around the world.  In a separate meeting with Mr. Kiat Sittheeamorn, 
shadow Commerce Minister in the opposition Democrat Party, Kiat 
noted that CL proponents claimed that the policy was WTO consistent 
and questioned why the USG had not provided a counter argument.  In 
a final meeting with industry representatives, several companies 
agreed that industry's efforts to explain their position to RTG 
officials, press and the general public had been generally 
ineffective. 
 
IPR and Special 301 
------------------- 
 
¶8.  (SBU) Weisel brought up with Commerce the ongoing USTR Special 
301 review of global IPR protection.  She noted that while the 
compulsory license issue had been a high-profile one for Thailand, 
it was only one of many issues and serious concerns remained on 
enforcement, judicial and legislative issues surrounding IP 
protection.  Ms. Puangrat Assavapisit, Director General of the 
Department of Intellectual Property, said her department was 
strengthening its IP task force and would be working more closely 
with police units to trace back pirated merchandise to the 
manufacturers.  An inter-agency working group would also be 
established to improve coordination on enforcement.  Siripol claimed 
that a great deal of effort had already been put into improving 
enforcement and believed that Thailand's enforcement was superior to 
other countries in the region.  Weisel disagreed with his 
assessment. She pointed out that Malaysia recently had taken on IP 
enforcement as a domestic issue in a bid to attract more 
knowledge-based industries and suggested Thailand do the same.  To 
get issue on track, she suggested that the two governments work on 
an IPR action plan. 
 
WTO and the Doha Round 
---------------------- 
 
¶9.  (SBU) Weisel turned to ongoing negotiations in the WTO Doha 
Round and expressed disappointment that ASEAN had recently submitted 
a paper demanding a revised Rules text as a precondition for moving 
Doha negotiations forward.  DG Chutima said she had not been 
following that particular issue closely, but would check on it. 
Weisel said she hoped that we could expect significant offers from 
Thailand on services and non-agricultural market access, noting that 
Thailand's current services offer included foreign ownership 
bindings much lower than what is currently allowed.  She also 
requested that Thailand consider taking commitments in several 
important sectors where Thailand currently has no GATS commitments. 
Weisel brought up Minister Mingkwan's stated desire to make Thailand 
a business hub and suggested that a reluctance to make significant 
commitments in important sectors such as telecommunications, 
distribution, express delivery and financial services would 
undermine any effort to reach that goal.  Siripol said that his 
 
BANGKOK 00001006  003 OF 003 
 
 
Ministry did not have the lead on many of the services sectors, but 
conceded that the RTG needed to push further with services 
liberalization. 
 
Customs 
------- 
 
¶10.  In a meeting with Thai Customs, Weisel inquired about an 
ongoing WTO case on Thailand's customs valuation procedures brought 
by the EU (reftel B), and asked whether a proposed settlement would 
apply to U.S. companies as well.  Weisel asked for assurances that 
there would be a permanent solution to the valuation problems, 
noting that a similar problem had arisen five years prior, was 
resolved temporarily and then reappeared.  Deputy Director General 
Chawewan Kongcharoenkitkul said the Customs Department would be 
implementing new guidelines to customs officers on how to apply 
customs valuation according to the WTO valuation system, accepting 
the declared valuation unless there was sufficient "reason to 
doubt."  She said she would send these guidelines to the U.S. for 
comment.  She added that front-line officers would not be authorized 
to make that judgment and would do so only in consultation with 
supervisors.  She also promised that pending cases under bank 
guarantee would be reviewed and cleared within three months.  Weisel 
said the U.S. would review the guidance, but that it would keep all 
of its options open for resolving the issue until it was satisfied 
that its concerns had been fully addressed. 
 
Comment 
------- 
 
¶11.  (SBU) Despite public comments that it will work to improve the 
investment and trade environment, the new RTG economic team appeared 
to still be struggling to outline its economic policies and 
coordinate between ministries on issues, particularly on a 
controversial issue like compulsory licenses.  In a number of 
meetings, our interlocutors expressed some doubt that this current 
lineup of Ministers would be in place for long, including Minister 
Mingkwan who frequently punctuated comments on his plans with "If 
I'm still here...".  Although RTG officials were receptive to the 
idea of bilateral dialogue on economic issues, high-level attention 
to coordination on individual issues may be sporadic as the new 
government finds its way. 
JOHN