Thursday, July 1, 2004

The United States and Thailand this week started negotiations on a free-trade agreement, opening sensitive talks on autos and other products with powerful political bases in Congress and the business world.

The pact would be the second U.S. free-trade agreement in Asia — Singapore finished a deal last year — and has broad support with major agricultural producers and many large manufacturers and service companies.

But a potential deal already is prompting strong congressional concern because of sensitive products on the table.

U.S. Trade Representative Robert B. Zoellick noted some of the challenges facing negotiators in a letter earlier this year notifying Congress that talks would start this month, including restrictions on services and autos as well as labor and human rights issues.

“We are sensitive to congressional concerns on automotive issues and will consult closely with Congress and U.S. auto manufacturers and workers in developing our positions on this issue,” Mr. Zoellick said.

Since then, more than 200 U.S. representatives and 36 senators have sponsored legislation that urges the Bush administration not to reduce the tariff on imported pickup trucks. The lawmakers are concerned that Japan, South Korea, India and other major producing countries would use Thailand as a base to flood the U.S. automobile market with small pickups, costing jobs at U.S. auto companies and suppliers.

U.S. imports of pickups have faced tariffs of 25 percent since 1963, when President Johnson used the trade barrier to retaliate against European restrictions on U.S. chicken exports.

The House and Senate resolutions are likely to die before reaching the floor, but the Bush administration has carefully considered congressional concerns and votes in past trade pacts. Mr. Zoellick, for example, took sugar, a sensitive product with a strong congressional lobby, off the table in negotiations with Australia.

Negotiations began this week and there is no set deadline to finish, according to the U.S. trade representative’s office. The low-key approach before elections has limited attention on the agreement.

The Big Three automakers do not have a common position on the pickup issue, and do not expect either government to form a position until after November’s election.

“There’s not going to be any progress on that until after the election,” said Dennis Fitzgibbons, director of public policy for DaimlerChrysler, the German-U.S. auto company.

“In general we are in favor of lower tariffs and trade barriers, but also in general you don’t negotiate something for nothing. You seek something in return,” Mr. Fitzgibbons said.

The lower tariffs have strong support from importers.

“If the American manufacturers had to compete with Korea or Thailand, they would get more competitive with their trucks. You are talking about a consumer benefit,” said Ralph Ghioto, president and general manager of Century Kia and Century Isuzu in Tampa, Fla.

“We would probably triple our Isuzu business, and we would probably increase Kia business by at least 25 percent,” he said.

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