VZCZCXRO4071
PP RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHBK #0483/01 0571012
ZNR UUUUU ZZH
P 261012Z FEB 10
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC PRIORITY 0113
INFO RUEHCHI/AMCONSUL CHIANG MAI 7768
RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUCNASE/ASEAN MEMBER COLLECTIVE

UNCLAS SECTION 01 OF 02 BANGKOK 000483 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON PARM EWWT TH
SUBJECT: Thai Customs DG Tells Ambassador Reforms on Track 
 
BANGKOK 00000483  001.2 OF 002 
 
 
Sensitive But Unclassified. 
 
Ref: 09 Bangkok 2969 
 
¶1.  (SBU) Summary: The Thai Director General for Customs told the 
Ambassador that the first two phases of the Customs reform effort 
mandated by the Abhisit government have been approved by the Cabinet 
and that the crucial third phase, which will revamp the rewards 
system, has been drafted and will be presented to the Cabinet in 
March.  The Director General said that his Department is ready to 
take possession of the Megaports system, as soon as the start date 
for the five-year U.S. maintenance commitment can be worked out. 
The Ambassador also raised concerns about major Customs disputes 
involving U.S. firms, and was assured they would receive fair 
treatment.  End Summary. 
 
¶2.  (SBU) Comment: While the Director General's presentation of the 
progress of the reform program is in line with what he told us in 
November (see reftel), it nevertheless came as very good news.  All 
three phases of the reform still have to be approved by Parliament, 
and the Director General could provide no timeline for that.  We 
have heard that the reform of the rewards system, from which Customs 
officers have benefitted handsomely for years, is being fiercely 
resisted in the Department.  If the Abhisit government can pull off 
all three phases of this reform program, it will have made a giant 
leap forward in bringing transparency and good governance to what 
has historically been one of the Thai government entities least 
known for such.  End Comment. 
 
Customs Reform on Track 
----------------------- 
¶3.  (SBU) During a visit February 24 to Royal Thai Customs, Director 
General Somchai Sujjapongse told the Ambassador that the first two 
phases of Thai Customs reform have already been approved by the 
Cabinet.  The first phase, he said, involved an explanation to the 
Cabinet of Thailand's need to be in compliance with international 
obligations stemming from the Kyoto Convention and agreements 
related to the Greater Mekong Sub-region. 
 
¶4.  (SBU) The second phase was approved by the cabinet two weeks ago 
and, according to DG Somchai, included the following: 
 
--an adjustment of the penalty structure giving judges the 
flexibility to assess penalties from zero to four times the value of 
the tariffs due.  Current law requires an automatic charge of four 
times the value. 
 
--the establishment of a recognition between "evasion" and 
"avoidance" in the intentions of a company found to be liable for 
unpaid tariffs, allowing the judge to recognize that a company may 
have failed to pay the proper tariff because of simple 
mis-estimation with no attempt to defraud. 
 
--a change in the charge for late payment "to be more fair than 
existing law."  Currently, companies can be charged a late fee of 1 
percent per month for up to ten years for tariffs judged to be in 
arrears, which can add up to more than the entire value of the 
tariffs owed.  With this change, late fees will be capped at a value 
equal to the tariffs owed. 
 
--discretion given to the Director General to waive duty charges of 
less than 1000 baht (30 dollars) to enable Customs to clear its 
books of nuisance accounts.  The previous limit was 20 baht. 
 
¶5.  (SBU) DG Somchai told the Ambassador that when he presented this 
second phase reform to the cabinet, he received stiff questioning 
from Prime Minister Abhisit and Justice Minister Pirapan 
Salirathavibhaga about the status of the initiative to reform the 
reward scheme.  He explained that this third phase reform seeks "to 
revamp the whole system."  This amendment, said DG Somchai while 
turning to his senior staff also in the meeting, needs to be 
acceptable to the Royal Customs Department, the private sector, and 
the whole country. 
 
¶6.  (SBU) The Customs Department has been hard at work on this 
reform.  A committee headed by Deputy Director General Wisan, the DG 
told the Ambassador, has now completed its work and the draft is now 
in the process of "fine tuning."   It will be ready for submission 
to the Cabinet in March, and will make the Customs Department 
"transparent." 
 
Megaports 
--------- 
¶7.  (SBU) DG Somchai thanked the Ambassador for the U.S. provision 
of the high-tech equipment involved in the Megaports project at Laem 
Chabang port.  He said that the 2007 Thai Constitution's Section 
190, which normally requires Parliamentary approval of any agreement 
with a foreign country, is "not a problem at all" with regard to 
Megaports.  The only remaining issue is one of timing.  The Thai 
 
BANGKOK 00000483  002.2 OF 002 
 
 
side would like the five-year U.S. commitment to fund maintenance on 
the equipment to begin when the formal turnover is signed 
(presumably in the next month or two).  We noted that the U.S. 
Department of Energy rep in Thailand believes that five-year period 
should begin when the equipment first went into full operation last 
April.  The Embassy will work with the U.S. Department of Energy and 
Thai Customs to resolve this impasse. 
 
U.S. Company Concerns 
--------------------- 
¶8.  (SBU) The Ambassador raised the case of Amway (which was 
notified last year of an exorbitant penalty charge), noting that 
this is a respectable U.S. firm and the leading importer of 
U.S.-manufactured goods into Thailand.  DG Somchai promised the 
Ambassador that Amway would receive "fair treatment" and noted that 
he was meeting in two days with Thai Trade Representative Kiat to 
discuss the Amway case.  Later, during the tour of Customs' 
high-tech monitoring center, we raised the FEDEX case, noting that 
while the company has tentatively agreed to seek a settlement, we 
hope that Customs will take action against the actual exporter of 
illegal goods (whose identification FEDEX has made known to Customs) 
and not just against FEDEX as the exporter of record. 
 
Other Issues 
------------ 
¶9.  (SBU) The Ambassador congratulated DG Somchai on Customs' 
successful interdiction of goods involved in the illegal animal 
parts trade as part of the ASEAN WEN initiative, which the U.S. 
supports.  DG Somchai appreciated that support. 
 
¶10.  (SBU) DG Somchai asked about the USG position on the current 
law requiring 100 percent scanning of containers entering the U.S. 
by 2012.  We responded that although the Department of Homeland 
Security has not officially backed away from that date, Secretary 
Napolitano has said publicly that the Department will seek an 
extension, thereby pushing it back two years.  In previous 
statements the Secretary had also suggested that implementation may 
be "tiered" or risk-based, rather than 100 percent from the 
beginning.  We also raised the issue of the return of cash 
guarantees to the spirits industry, to which Customs agreed 
following resolution of a valuation dispute, but has not yet 
fulfilled. 
 
JOHN