Thailand Yet to Seal US Tax Deal, Deputy PM Concedes "Harder Work" Ahead

Thailand's ambition to finalise a new tax agreement with the United States remains unfulfilled following initial high-level negotiations. 

Deputy Prime Minister and Finance Minister Pichai Chunhavajira, leading "Team Thailand," acknowledged on Friday that "harder work" would be required after their recent visit to Washington.

Speaking from South Korea during a transit stop on his return journey, Pichai reported on the progress of the tax talks, which commenced on July 2. 

He confirmed that Thailand has formally begun negotiations with the US, engaging with key government figures and policymakers, including the US Trade Representative and the US Deputy Secretary of the Treasury. 

The delegation also met with long-standing American investors in Thailand and representatives from the agricultural sector.

"This official meeting provided crucial feedback, which will guide the preparation of new, additional proposals," Pichai stated. 

He reiterated that the goal is to achieve a "mutually beneficial agreement" that is "practical, fair, and sustainable," operating on a "win-win solution" principle.
 

Despite the positive reception, Pichai admitted that a final conclusion had not yet been reached. 

"Although the negotiations have not yielded a definitive agreement, the working group will continue its efforts to achieve the maximum benefit for both countries," he said, adding, "My working group and I will work even harder to ensure that the conditions we propose are clear and understood to be of mutual benefit to both sides."

Meanwhile, the Federation of Thai Industries (FTI) has voiced significant apprehension regarding the ongoing tax negotiations, particularly in light of a recent deal between the US and Vietnam. 

Kriengkrai Thiennukul, Chairman of the FTI, highlighted that Vietnam's original 46% tariff on goods to the US has been drastically cut to 20%, with US imports into Vietnam now facing a 0% tariff.

Kriengkrai described the Vietnam deal as "surprising and worrying," given Vietnam's status as a regional competitor to Thai exports. 

He cautioned that if Thailand's initial tariff rate of 36% remains significantly higher than Vietnam's 20%, it would render Thai goods 16% more expensive, severely impacting export competitiveness. 

He suggested that, based on the Vietnamese precedent, Thailand's tariff should ideally be reduced to no more than 15%, or 30% for goods re-exported from third countries.

"If Vietnam gets 20% but Thailand stays at 36%, we are at a direct disadvantage in the US market because our export structures are very similar," Kriengkrai warned. 

He urged the Thai government to prepare "emergency measures" for exporters, such as exploring new markets and providing financial support, should the negotiations fail to yield a favourable agreement.

The FTI chairman also underscored the importance of internal political stability. 

He stressed that while external factors like US policy are beyond control, Thailand's domestic political landscape must be robust and unified to ensure the nation does not lose opportunities in the highly competitive global market.

Kriengkrai also raised concerns about the "influx of cheap goods" from various sources, which he said has already significantly burdened Thai SMEs. He called for urgent measures to address this escalating problem.