Remarks by Ambassador William Itoh

At the Asia Society Washington Center

March 6, 1997

I am very pleased to have this opportunity to share with you some of my impressions on the state of our bilateral relationship with the Kingdom of Thailand after my first year in Bangkok.

The year has for me been a remarkable one. It was a real privilege to represent my country during the celebration of 50th anniversary of the King's accession to the throne. It was a year marked by significant progress in moving forward on our bilateral agenda including the signing of a civair agreement and a bilateral tax treaty. It was a year marked by a visit by the President of the United States which highlighted the many changes in Thailand in the 27 years since the last such visit.

The Bilateral Relationship

Our bilateral relationship with the Kingdom of Thailand has deep historical roots. Our oldest treaty with any Asian country is the Treaty of Amity and Commerce signed with the Kingdom of Siam in 1833. Just as trade and commerce was at the top of our agenda at the beginning of our relationship, so it has come to be our top priority today.

But much has happened in the last 164 years to broaden and deepen our relationship. Today it encompasses not only economic and commercial issues, but also a political and security relationship and transnational social issues such as counter-narcotics, law enforcement, HIV/AIDS and other health threats, and environmental protection.

Our dialogue today is not limited to bilateral issues. It reflects the reality of Thailand's role in the Southeast Asian region and both our countries' roles in an increasing number of international organizations, from the UN to the WTO to APEC and the ASEAN Regional Forum.

Political Overview

Thailand became a constitutional monarchy only in 1932. Since then Thailand has experienced alternating periods of freely-elected civilian government with authoritarian military rule. The country today, however, has enjoyed a five-year run of uninterrupted civilian rule by three successive freely-elected governments.

The current government, a six-party coalition led by Prime Minister Chavalit Yongchaiyudh was elected November 17 and sworn into office December 1 last year. Two peaceful transitions from one elected civilian government to another represent a notable achievement for Thai democracy.

While the Thai military still plays a major role in society, strong public opinion against military intervention in government, a vocal free press, and a change in focus of the military from internal to external affairs, indicate a decline of the military's role in politics.

The process of political evolution continues. One of the last acts of the previous parliament was to pass a bill mandating the writing of a new Constitution -- the country's 16th in 65 years -- in an attempt to address some of the political problems. On December 26, the clock began running on a 240 day time-limit to complete the draft, the first attempt to write a Thai constitution with broad public participation. Prime Minister Chavalit has stated he intends to dissolve the Parliament and hold elections once the new Constitution and implementing legislation are in place, approximately two years from now.

Economic Overview

Last year's elections came about because of the perception, based on reality, of Government interference in the sound management of the economy. The new government of Prime Minister Chavalit came into office faced with the first drop in economic growth rates below 8% in more than ten years. He has to deal with a persistently high current account deficit (8% of GNP 1995-96) and mounting public pressure to reform the political system, especially that part which made it so vulnerable to corruption.

The drop in the economic growth rate last year was to 6.7% -- a rate which any country in the developed world would regard as phenomenal. Nonetheless, the slowing of growth had a psychological effect in Thailand similar to that of a recession.

Thailand, after all, had enjoyed the world's fastest growing economy for the period 1985-1994, an average annual growth rate of 8.2%. It is too early to tell if this year will bring a significant rebound, but growth over the long term will depend on heavy investment in infrastructure and development of human resources, as labor intensive industries have already begun to migrate to low wage regional competitors.

The immediate challenge for the government is to rebuild the confidence of the business sector and the international investor community. With a credible economic team the Prime Minister is pushing a program of short-term fiscal austerity which nonetheless continues the support for infrastructure projects and human resource development so necessary for the nation's future growth.

Our short hand assessment is that while Thailand is facing some serious short-term challenges, the long-term prospects for the Thai economy remain promising. American companies continue to commit to large investments in Thailand which reflects this optimism.

U.S. Economic Interests

As any other bilateral Ambassador these days, I have spent much of my time in Thailand on economic and commercial issues -- both the problems and the opportunities. Last week I presided at the opening of the 150th Kentucky Fried Chicken outlet in Thailand. You of course knew that you were in Thailand.

The Thai classical dancers were followed by a group of dancing chickens. After sounding a gong (not cutting a ribbon) to formally open the store, we were all treated to a very familiar KFC meal with French fries made from potatoes from Idaho. The real concession to local tastes was the option of a special spicy chicken, which indeed accounts for some 60% of KFC's sales in Thailand.

As I suggested, we have made considerable progress in moving forward on issues of interest to the American business community. The civair agreement will provide additional frequencies for US carriers and will greatly expand opportunities for US cargo carriers. The bilateral tax treaty will help small and medium sized American companies wishing to enter the Thai market. A top priority of AMCHAM for many years, the tax treaty had been under active negotiation for more than 14 years and its signing in November during the President's visit was a major milestone in our bilateral economic relations.

As Thailand develops economically, its commercial interests coincide more and more closely with our own priorities. The Parliament has passed legislation addressing intellectual property rights and is expected to pass a bill on worker rights soon. In acting, the RTG is not just responding to us, but also to the needs expressed by its own business community, and the need to bring itself into line with international organizations like the WTO and ILO.

While we welcome IPR legislation including the Copyright Act and legislation to create special IPR courts, we continue to press for better enforcement of those laws.

Security Relationship

Our strong security partnership was forged during World War II, when the U.S. supported the Free Thai movement which played a role in facilitating the surrender and repatriation of Japanese troops. In return, Washington refused to recognize that Thailand, under Japanese pressure, had declared war on the United States. The Thai Ambassador in Washington, Seni Pramoj, ignored his instructions to deliver the declaration of war.

In the immediate post-war era, the U.S. became the foremost defender of Thailand's independence and sovereignty, an important factor in understanding the close ties between our two nations. In subsequent years Thai troops fought alongside our troops in Korea and Vietnam and Thailand provided support for our efforts in Desert Shield and Desert Storm.

As one of our five treaty allies in Asia, we have a extensive program of joint exercises each year including Cobra Gold. Last year's Cobra Gold involved more than 13,000 US troops and was our biggest exercise in Asia. Significant numbers of Thai military officers continue to receive training in the U.S. each year under our IMET Program and virtually every key leader in the Thai military is the graduate of one of our training programs. Prime Minister Chavalit was the guest of honor two weeks ago at an annual dinner involving hundreds of present and former Thai army officers who were graduates of the Command and Staff College at Fort Leavenworth.

Thai cooperation also plays a vital role in our ongoing effort to achieve the fullest possible accounting for American personnel missing from the Vietnam conflict. Our Embassy is host to JTF/FA (Joint Task Force/Full Accounting) Detachment 1, which handles the logistical support for deployments of POW/MIA search teams into neighboring Cambodia, Laos, and Vietnam. The DIA Stony Beach program is another important office which seeks information on discrepancy cases in the region.

Narcotics Cooperation

The US and Thailand have a long history of cooperation in efforts to stem the flow of narcotics, especially heroin, from the notorious Golden Triangle region and now, in particular, from Burma. Over the years, opium production in Thailand has dropped from an estimated high of as much as 200 metric tons in the 1970's to 30 metric tons in 1996.

In addition, Thai military and law enforcement officials cooperated closely with us in sealing the northern Burma border against trafficking by the notorious drug lord Khun Sa and in arresting 14 of his top officials and heroin brokers. Three of them have already been extradited to the US, and we expect the others to follow soon. The extradition of a former Thai member of parliament to stand charges on narcotics trafficking was also a landmark in Thai cooperation with the US in counter-narcotics efforts.

Policy Dialogue

We have for many years enjoyed a candid and productive dialogue with Thailand on regional issues. Aside from its ties to the U.S., Thailand's foreign policy lays primary stress on securing stable and constructive relations with border neighbors, other Southeast Asian states, and the major Asian powers, China and Japan. Bilateral efforts are complemented by an active Thai role in ASEAN, and active participation in APEC.

The Thai are acutely aware of China's current and future potential as a nearby major power and take care to cultivate excellent relations with Beijing. At the same time they encourage Chinese engagement with its neighbors in the region through trade and dialogue with ASEAN and participation in its regional security forum.

Thailand's relations with three of its four border neighbors have undergone major shifts in recent years. Changes of regime or government in Cambodia and Burma, post-Cold War mellowing in Communist Laos and economic liberalization by all three, have opened up opportunities for improved relations as well as Thai economic penetration. Thailand has responded by pursuing bilateral ties and supporting inclusion of these states in ASEAN possibly as early as this summer, while dropping its previous support of border insurgent movements that provided a hedge and, in some cases, a geographic buffer against once-unfriendly regimes.

With Cambodia this has translated into Thai efforts to help isolate the Khmer Rouge; in Burma it translates into a policy of "constructive engagement" with the military junta in Rangoon. With all three, it has brought increased emphasis on regional integration through stepped-up development of infrastructure of particular benefit to these poorer states.

Development Assistance

Monday evening I participated in a symposium on Capitol Hill on the Kenan Institute Asia, a new public-private partnership created to continue the work of development in Thailand. After 45 years and $1.1 billion in bilateral development assistance, AID closed its doors in Thailand last year. With an endowment funded by USAID, the Kenan Institute of the University of North Carolina, and the Royal Thai Government, the Kenan Institute Asia builds on the legacy of the past to continue to address Thailand's development needs into the future.

Building for the Future

In many ways the creation of the Kenan Institute Asia, the transition from an aid dependent relationship to a true partnership, symbolizes the changes that have taken place in the US-Thai relationship. Back in the early 1980's when I first visited Thailand, our bilateral agenda was dominated by security considerations, refugees and narcotics.

Now Vietnam is a member of ASEAN and an elected coalition government is in power in Cambodia. Refugees from Indochina have largely been resettled or returned. Thailand is no longer a major narcotics producer and joins us in unprecedented cooperation in counter-narcotics efforts. US-Thai trade exceeds $18 billion a year and American companies flock to Thailand because of the promise of its domestic market and its location as a base for reaching other markets in the region.

My concern as a bilateral Ambassador managing a "good news" relationship, is that we need to continue to devote the attention and resources to the relationship that we have in the past. Like a corporate manager, we have to reinvest in people, plant and equipment if we are to be as competitive in the future as we have been in the past.

The President's recent visit was most effective in highlighting the changes in Thailand over the past two decades and in bringing our close bilateral relationship into sharp focus. It likewise looked to the future as we highlighted the many areas where the US and Thailand will continue to work together in the productive partnership which has served both nations so well. We need to build on this foundation to strengthen even further our ties with one of our best friends in a region of the world so important to America's future.



For more information on Ambassador Itoh, visit the U.S. embassy in Bangkok online.