BANGKOK -- The European Union announced on Monday the resumption of "political contacts at all levels" with Thailand after a three-year hiatus triggered by a military coup in 2014.
The EU Council said that in view of recent developments, such as the promulgation of a new constitution and the latest promise by the military government to hold elections in late 2018, it is "appropriate to pursue a gradual political re-engagement with Thailand."
This includes suspended negotiations on a free trade agreement (FTA). The EU Council is inviting the European Commission to "explore possibilities" for resuming talks, even though these can only be pursued with a "democratically elected civilian government."
Trade between the EU and Thailand was worth $40.13 billion in 2016 -- 9.6% less than in 2013. The EU accounts for almost 10% of Thailand's overall trade, and the country is the third largest exporter to the EU in Southeast Asia.
Part of the recent decline is due to the expiration of the EU's generalized scheme of preferences (GSP) with Thailand in 2015. GSP enables developing countries to export to the bloc by paying lower or no export duties.
Thailand entered into FTA talks with the EU in 2013 under the government of former Prime Minister Yingluck Shinawatra prior to the GSP expiration, and a deal was expected in two years. Negotiations were put on hold, however, shortly after Yingluck's caretaker government was overthrown.
The EU Council said in June 2014 that engagement with Thailand, including official visits and the signing of any agreements, was under review. "Only an early and credible roadmap for return to constitutional rule and the holding of credible and inclusive elections will allow for the EU's continued support," it said.
The military initially promised an election by October 2015, but this has been postponed a number of times. After a new constitution was drawn up by an appointed committee and promulgated in May, it seemed possible that an election could be held by late 2018 once various supporting laws are in place.
In October, following a visit to the White House at the invitation of President Donald Trump, Prime Minister Prayuth Chan-ocha said the general election will be held by November 2018,
Some observers hope that EU statement urging "the constitutional timetable for holding the election be respected" will encourage the military government to keep its promise this time.
Prayuth appeared not to interpret the EU statement as conditional, however. "I think this is good news," he told reporters on Tuesday. "They just want to see us return to democracy through a credible election with parties taking part freely and fairly." He noted that the election delays were in part due to the cremation in in October of King Bhumibol Adulyadej who died a year earlier. He hinted that further delays are possible if the necessary organic laws take longer than expected to be drafted.
While businesses welcomed the prospect of normalizing relations with the EU, there has been little market reaction. As of Tuesday afternoon, the benchmark Stock Exchange of Thailand index fell 0.17% from Monday's close.
"Thailand has been cut off from the GSP benefits for many items, particularly agricultural products, which has downgraded our competitiveness," Visit Limluecha, vice president of the Thai National Shippers' Council, told Post Today. "If we can proceed with the Thai-EU FTA, it will enhance our capability to export to Europe."
It is not clear if any EU-based funds were restricted from Thai asset markets due to a lack of full diplomatic relations, according to Tim Leelahaphan, an economist with Standard Chartered. "What we can say at this stage is that Thailand did not have foreign equity fund flows over the past years, and we believe the issue [of military rule] was one of the reasons," he said.
The EU has been waving a yellow card at Thailand's fishing industry since 2015 amid concerns about illegal, unregulated, and unreported fishing. Thailand was threatened with an outright import ban if remedies were not found.
Former European Commission President Jose Manuel Barroso welcomed former Thai Prime Minister Yingluck Shinawatra to Brussels in early 2013 when a free trade agreement was up for negotiation.
© Reuters
In its Monday statement, the EU reminded that relations are still under review. Apart from the return to civilian government, the bloc called on the military regime to lift restrictions on freedom of expression, assembly, and the activities of political parties.
"The EU has to ensure that it's re-engagement with Thailand continues to put human rights concerns up front because nothing is final at this point in Thai politics, despite claims by the junta that they are preparing to give up power and restore institutional democracy through elections," Phil Robertson, deputy director of the Asia division of US-based Human Rights Watch, told the Nikkei Asian Review. "Making an announcement is just the start of the process for the EU because it's very clear that any real human rights progress in Thailand will likely be in response to outside pressure, not because the Thai junta thinks it is a good idea."
