II. ADOPTION OF WTO LAWS IN THAI LEGISLATION

Under the commitments to the WTO and the nation's economic liberalization policy in both trade and investment, Thailand has made good progress in implementing WTO laws into its relevant policies, measures and domestic legislation.

2.1 Policies and Measures

2.1.1 Tariffs
To improve market access and increase potential of Thai products to compete in the world market in the long run, the Thai government has seen the need to modernize the tariff structure of the nation by reforming it. The first round of tariff restructuring began in 1990 and was completed in 1997(26). Under this reform, the structure of Thailand's tariff policy has been reduced from 39 tariff rates categories to only six categories. The six different categories are in accordance with the principle of value-added escalation(27). In 1998, due to the economic crisis and the shortfall in the government revenues, the Ministry of Finance announced the increase of tariffs on some items. Tariff on tobacco and clothing were raised from 30 to 60%. Some cosmetics and leather goods were raised from 10 to 40%. An additional temporary surcharge of 10% on all imports with a custom duty over 5% was also applied(28). Nevertheless, none of these tariff increases and surcharges violate the WTO tariff binding commitments of Thailand. In 1998, Thailand adopted a 6-digit Harmonized System (HS96) and has amended relevant laws and regulations accordingly(29).

For the agricultural products, within five years beginning from 1995, Thailand had reduced the tariff rates for only 564 items from 740 binding items since the tariff rates presently imposed on the rest products (176 items) have already been below the rates Thailand was bound(30). The Thai government has also opened the market access for the 23 agricultural products committed by putting them under the tariff quota system. However, there was increase of the domestic subsidies for production distorting the market mechanism from Bt15,773.25 million in 1995 to Bt16,402.10 million in 1998 or 4% of the increase. Nevertheless, the value of such subsidies are still not beyond the total value of subsidies Thailand is bound, namely, Bt19,028.48 million(31).

For other products, in 1995 the Ministry of Finance announced the package of tariff reduction starting from 1995-99 for industrial products and 1995-2004 for non-agricultural products and textiles and clothing. As a result the scope of tariff binding increased from 5% to almost 70% of total tariff lines(32).

2.1.2 Trade-Related Investment Measures
The Board of Investment (BOI) started to phase out some local content requirements in April 1993(33). As a result, the local content requirement previously imposed on a number of activities has been eliminated(34).

2.1.3 Customs Procedures
Considerable progress was made in reforming customs services as part of the efforts to enhance Thailand's competitiveness as a regional hub. The Customs Department has introduced some customs reforms such as express shipment handling, document simplification(35). In addition, the Customs Department has attempted to eliminate the barriers and difficulties of importers, exporters and custom brokers. Those who are qualified will be exempt from being checked on valuation, tariff classification and tax calculation during the formality execution process. The review will be carried out within 15 days after the goods have been released from customs custody. Such goods will be subject to half the normal opening rate for physical examination and exempt from review by the Investigation Bureau unless there is any information that requires officials to verify at a landing-go-down. Importers are required to deposit a security for any additional duty payable on the goods that have already been released from customs custody, or for a fine in case of an offence(36).

2.1.4 Services
Thailand has continually implemented the principle of progressive liberalization under GATS. The Thai government has made new commitments with respect to insurance, banking, and other financial services, first in its Schedule annexed to the Second Protocol to the GATS on Financial Services agreed in July 1995, and then, as a result of the WTO financial services negotiations concluded in December 1997, six months after the crisis erupted. These commitments, in particular, the elimination of the 25% limit on foreign equity participation, aimed to strengthen the financial sector by attracting new foreign capital and expertise and by increasing competition. Further, Thailand's recent commitment in basic telecommunications will allow foreigners to take part in public domestic and long distance and international services of voice telephone, telegraph, telex and facsimile services by the year 2006.

2.2 Domestic Legislation

2.2.1 Customs Valuation
The Customs Department has introduced amendments to the Customs Act regarding transaction value to implement the WTO Customs Valuation Agreement(37). As a result, the WTO valuation system has been applied since January 1, 2000.

2.2.2 IPRs Protection
Thailand has effectively implemented its obligations under the TRIPs Agreement. It has been working on the strengthening of the protection of intellectual property rights through various ways and means(38). Since the establishment of the WTO, there have been a number of outstanding development of Thai legislation on IP at both substantive and procedural levels(39).

For the substantive laws, the Copyright Act B.E. 2537 (1994) came into force on March 21, 1995. The Act incorporates all principles contained in the Beme Convention for the Protection of Literary and Artistic Works and the TRIPs Agreement including:

(1) providing protection of computer programs as literary work;
(2) providing protection of performers' rights, producers of sound recordings and broadcasting organizations: (3) increasing penalty in order to deter infringement; and
(4) incorporating use of copyrighted works and compulsory licensing.

The amendment Act of the 1979 Patent Act previously amended in 1995 came into force on September 27, 1999. Its important principles include:

(1) adoption of the national treatment principle by providing protection to patents owned by nationals of countries which are parties to the same international agreements to -which Thailand is a party;
(2) clear definition of exceptions of rights of patentee;
(3) application of exhaustion of rights to allow parallel import;
(4) less interference with the legitimate enjoyment of patent; and
(5) providing protection of petty patent.

The amendment Act of the 1991 Trademark Act came into force on June 30, 2000. It adds protection to a trademark which is in the form of a group of color, shape or appearance of an article. In addition, certain marks, including flags or emblems of international organizations and geographical indications, are prohibited from registration.

The Protection of Layout-Design of Integrated Circuit Act, B.E. 2543 (2000) entered into effect on August 10, 2000. The law accords protection to a creator of a layout-design of integrated circuit by offering the creator exclusive rights to reproduce, import, sell or distribute for commercial purposes the registered layout-design and making any of such acts without authorization of the right holder an infringement.

The Act for the Protection of New Plant Varieties B.E. 2542 (1999) came into force on November 26, 1999. The Act protects the rights of the plant breeders and the community where natural plants exist.

The recent development of the substantive law on IP is the trade secret law. As a member of the WTO, Thailand is bound to implement Articles 39 and 61 of the TRIPs Agreement concerning the protection of undisclosed information. The Trade Secret Act B.E. 2543 (2000) recognizes that the holder of trade secret has the rights to disclose, acquire or use the trade secret or authorizes others to disclose, acquire or use the trade secret with any conditions to maintain the secrecy.

With respect to the procedural law on IP, the Act for the Establishment of and Procedure for Intellectual Property and International 'IYade Court B.E. 2539 (1996) established the Intellectual Property and International 1 ade Court as the specialized court which has exclusive jurisdiction over IP matters. The Central Intellectual Property and International 'IYade Court inaugurated on December 1, 1997 has its own procedure specially created to handle EP and international trade cases effectively(40). Appeals against the decisions of the EMIT Court lie directly to the Intellectual Property and International Rade Division of the Supreme Court.

The Royal Thai Police and the Office of the Attorney-General also have special divisions to deal with IP matters.

To implement the policy to suppress the infringement of copyright, the Thai government adopted a scheme of coordination among government units, namely, the Ministry of Commerce, the Prime Minister's Office and the Royal Thai Police. In order to bring the policy into action, the set of extensive regulations were set up:

(1) Regulation of the Prime Minister's Office on the Administration of Laws relating the Prevention and Suppression of Copyright Infringement B.E. 2536;
(2) Regulation of the Ministry of Commerce on the Administration of Laws relating the Prevention and Suppression of Copyright Infringement B.E. 2536;
(3) Regulation of the Ministry of Commerce on the Implementation of the Regulation of the Prime Minister's Office on Administration of Laws relating the Prevention and Suppression of Copyright Infringement B.E. 2536;
(4) Operation Manual pursuant to the Regulation of the Ministry of Commerce on the Implementation of the Regulation of the Prime Ministry's Office on Administration of Laws relating the Prevention and Suppression of Copyright Infringement B.E. 2536(41).

2.2.3 The Foreign Business Act
The Foreign Business Act of 1999, which became effective on March 4, 2000, repeals and replaces the 1972 National Executive Council Announcement No. 281 (the Alien Business Law). The Act serves to define an "alien," and identifies the scope of foreign participation in business in Thailand. This legislation goes along the line with the further liberalization move of the GATS by allowing foreign participation in a wider range of activities. A number of activities which are further liberalized include brokerage services, wholesale and retail trade, construction, non-silk textile, beverage production and auction business.

2.2.4 Anti-dumping and Countervailing Measures
The Anti-dumping and Countervailing Act was promulgated and became effective on June 30, 1999. The Act provides a legal basis for anti-dumping and countervailing measures and ensures Thailand's compliance with the Agreement on Implementation of Article VI of GATT 1994 and the Agreement on Subsidies and Countervailing Measures(42). It also provides clear definition of important terms, details of procedure, time-frame, and appeal process in accordance with the WTO rules.

2.2.5 Competition Law
The Competition Act B.E. 2542 (1999) effective on April 30, 1999 has its objective td encourage and promote fair business practices by prohibiting abuse of market dominant as well as creating opportunities for new entrants to gain access into the markets(43). The enforcement and implementation of the Act is under the responsibility of the Committee on Competition which is chaired by the Minister of Commerce(44). This legislation is also in accordance with the goal of the WTO to promote free and fair trade.

III. FOREIGN DIRECT INVESTMENT IN THAILAND IN RELATION TO WTO

Since the late 1980s, there have been increasing investments in intermediate products, including parts and components of automobiles and electronics in Thailand. Thailand's major manufactured exports have also changed towards more sophisticated products like parts and components for computers, electronic products, and machinery parts. Special consideration on promotional privileges from the BOI is given to projects that contribute to the balance of payments, to resource utilization, and regional development, energy conservation, linkage creation, employment generation, and technology transfer. Tax incentive granted to promote firms include exemption from corporate income tax, and exemption or reduction of import duties on imported machinery and equipment, raw materials and components. Majority foreign ownership is permitted in export-oriented industries but majority local ownership is generally required for firms producing for the domestic market(45). Additional incentives are given to firms to locate outside the overcrowded Bangkok Metropolitan region, making decentralization a key objective of investment promotion. After the economic crisis in 1997, the Alien Business Law and the Alien Occupation Law have been revised to provide more lenient conditions for foreign investors(46). The Foreign Business Act of 1999 effective on March 4, 2000 plays a significant role over foreign direct investment in Thailand. It is also a good example of how far Thailand has gone towards the WTO's objective of trade liberalization.

Thailand is among the ASEAN countries which receive a significant amount of FDI. Net FDI inflows to Thailand in 1999 accounted for 0.7 % of world FDI flows. During 1985-1995, net FDI inflows to Thailand was US$1.4 billion, less than that of China (US$11.7 billion), Hong Kong (US$4.0 billion), Malaysia (US$ 2.9 billion) and Singapore (US$4.1 billion)(47). According to the data from Bank of Thailand, FDI inflows to Thailand have spread out to several manufacturing industries. However, they are more concentrated in a few industries. In the 1980-1989 period, FDI inflows were mainly in electrical appliance and chemicals. During the period of 1990-2000, the FDI inflows were mostly in electrical appliances and machinery and transport equipment industries. TYansport equipment has become an important sector for FDI after 1995(48).

The Board of investment (BOI) is the main agency to provide incentives to foreign investors. BOI promoted industries with a significant proportion of FDI include electronic and electrical products, chemicals, metals and machinery, and transport equipment. In 2000, there were 761 foreign investment projects approved by the BOI with -the total investment value of Bt212,649 million(49). Among these, 380 projects were 100% foreign-owned with the investment value of Bt123,231 million(50). The rest of 381 projects were joint-ventures. There is no discrimination against foreign investors since the BOI treats all applications the same, regardless of whether they are foreigners or Thai nationals, or joint venture(51).

Under the Investment Promotion Act, the BOI provides guarantees against nationalization; competition from new state enterprises; price controls; state monopolization of the sale of products similar to those produced by promoted projects; against tax exempt imports by government agencies or state enterprises.

Part  3

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(26) Id. at 8.
(27) Id.
(28) Id. At 9
(29) Id.
(30) WTO and Thai Agncultural Products. supra note 7. at 8.
(31) Id. at 9-10.
(32) Trade Policy Review: Thailand, supra note 12, at 16.
(33) Id at 17
(34) Id.
(35) Id. at 10.
(36) Id.
(37) See Customs Department, GATT Valuation Agreement GVA Handbook 3-23 (1999) (in Thai).
(38) See Department of Intellectual Property . Ministry of Commerce of Thailand, Annual Report 1996 at 27-28; Department of Intellectual Property, Ministry of Commerce of Thailand, Annual Report 1998 at 61-63.
(39) See id. See also Department of Intellectual Property, Ministry of Commerce of Thailand. Annual Report 2000 at 20-21.
(40) See Akarawit Sumawong, The Role of the Central Intellectual Property and International Trade Court in Thailand, in Annual Report 1998, id. at 80-91.
(41) Dhajjai Subhapholsin. supra note 14. at 176.
(42) See Sakol Hamsuthivarin, Intellectual Property and International Trade Court over Antidumping and Countervailing Measures Cases, in The Intellectual Property and International Trade Law Forum: Special Issue 1999 at 125-39 (1999) (in Thai).
(43) See generally Sorawit Limparangsn, Competition Law: Basic Concepts, Policies and Problems 27-45 (2000) (in Thai) (discussing interesting views on the relationship between the roles of competition law and monopoly).
(44) See Section 6 of the Competition Act.
(45) Chanm Meephokee. Foreign Direct Investment in Thailand's Manufacturing Sector, http://www.boi.go.th/english at 2.
(46) Id.
(47) Id.
(48) Id. at 5.
(49) Id. at 6.
(50) Id.
(51) Thailand Board of Investment: Frequently Asked Questions, http://www.boi.go.th/englishlfaq/index.html at 1.