Troubles from Thailand

America’s critical efforts to promote good governance around the world face several obstacles. At the World Bank, for example, the lavishly paid globocrats seem incapable of stopping payment to Third World kleptoptocracies. And its president, Paul Wolfowitz, has had his good governance reform agenda stalled as he is embroiled in a scandal over payments to his Bank-employed lady friend.

But the importance of good governance has never been clearer. Let’s take as a “case study” something relevant this week when yesterday saw the celebration of World Intellectual Property Day, and the United States Trade Representative (USTR) is expected to release its “Special 301 Report” on Monday — an annual listing of IP violators around the world. Numerous organizations, including USA For Innovation, believe Thailand should be elevated to the Priority Watch List, a special section reserved for the worst offenders.

What happened to Thailand? We’ve long regarded Thailand as a fine little country, friendly to America, nice rulers — the stuff of “The King and I.”

Thailand has for years been one of the rising Asian tigers, growing rapidly as it harnesses the global trading system to its benefit. And since World War II, when Thailand became an ally of the United States and deepened its business and commercial ties with the West, it has grown at an average of almost 8 percent annually. It rose to become the second largest economy in Southeast Asia. But it’s no longer your grandfather’s Siam.

In September 2006, Thailand’s democratically elected government was toppled in a military coup, while Prime Minister Thaksin Shinawatra was deposed while addressing the U.N. General Assembly. When Daniel Patrick Moynihan titled his memoirs on serving as our ambassador to the U.N. “A Dangerous Place,” he didn’t know the half of it. The ruling junta has since initiated a series of policy measures that jeopardize Thailand’s economic prospects as well as American jobs and technological innovation.

Shortly after taking power, the coup leaders hastily and shortsightedly announced new foreign capital controls. In a fit of economic nationalism, the government is spooking outside investment in the country by increasing surveillance of economic transactions, restricting business advertising and pushing foreign investors to sell Thai holdings.

This political and economic recklessness is already taking a punishing toll. Foreign direct investment is understandably being scared off. Several estimates project Thai growth at less than 4 percent this year, far below the 7.3 percent that the World Bank forecasts for the economies of East Asia.

And now the military has set its sights on stealing U.S. innovation, the cornerstone of the American economy. A 2005 USA for Innovation bipartisan study by economists Rob Shapiro and Kevin Hasset estimates U.S. intellectual property is worth between $5 trillion and $5.5 trillion, equivalent to about 45 percent of U.S. GDP and greater than the GDP of any other nation in the world.

The new attack on American IP takes many forms. The International Intellectual Property Alliance noted in its annual recommendations to the USTR that piracy rates increased for every U.S. copyright-based product in 2006, at record-setting losses for American innovators. In addition to copyright concerns, piracy of consumer goods, satellite, cable and telecommunications signals thrive largely unchecked by the Thai government.

Most recently, the government brazenly announced it was breaking patents on drugs produced by Western corporations. And while this action is in line with the rampant theft of U.S. innovation in Thailand, it is also glaringly self-serving. An official Thai spokesman admitted busting patents “will be good for local pharmaceutical companies to improve their capacity.” Perhaps unsurprising, one local pharmaceutical supplier happens to be owned by the Thai government, the Government Pharmaceutical Organization.

Surely Thai officials in D.C. will offer some lame excuses. When making the rounds this week, its health minister will claim that his government must break U.S. patents since it cannot afford to pay for patented pharmaceuticals and other medicines.

This doesn’t fly. For his government somehow could afford a pay raise for the regime’s military buddies of $9 million, and to boost its overall military budget by a whopping $1 billion.

The government’s assault on intellectual property rights puts Thailand in the same camp with what I’ve called the “axis of IP evil.” This includes countries such as Brazil and China that flout established international norms.

And its growing militarism, attacks on democratic institutions and turn toward economic nationalism bring more to mind the behavior of its neighbor Burma.

The chairman of the House Ways and Means Committee, Rep. Charles Rangel, New York Democrat, noted that American high-tech firms were “paying for the research and development that we have in intellectual property.” He was right when he said if “you steal from them, you are stealing from Americans.”

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