US embassy cable - 05BANGKOK3283

C O N F I D E N T I A L SECTION 01 OF 05 BANGKOK 003283 
 
SIPDIS 
 
DEPARTMENT FOR D, EAP, EAP/BCLTV, EB, NEA, PM. HQ PACOM FOR 
FPA (HUSO). 
 
E.O. 12958: DECL: 05/04/2015 
TAGS: OVIP, PREL, PGOV, ECON, MARR, TH 
SUBJECT: THAILAND:  DEPUTY SECRETARY ZOELLICK'S MAY 4, 2005 
MEETING WITH FM KANTHATI 
 
 
Classified By: Ambassador Ralph L. Boyce.  Reason:  1.5 (b,d) 
 
1.  (C)  Summary:  On May 4, 2005 Deputy Secretary Zoellick 
met with Thai Foreign Minister Kanthati Suphamongkhon at the 
Ministry of Foreign Affairs (MFA).  In an 80-minute exchange, 
they covered key areas for inclusion in the Free Trade 
Agreement (FTA) negotiations, Thai endorsement of the 
Proliferation Security Initiative (PSI) Statement of 
Principles (SOP), the Thai interceptor aircraft purchase and 
the F-16, the insurgency in southern Thailand, and Burma 
(including the ASEAN Chair issue).  They also briefly 
discussed Indonesia, the East Asia Summit (EAS), China, 
Japan, North Korea, shrimp, avian flu and tsunami relief. 
End Summary. 
 
 2.  (SBU)  Deputy Secretary Zoellick congratulated FM 
Kanthati on his appointment as foreign minister and noted 
that close U.S.-Thai cooperation on delivering regional 
humanitarian assistance in the aftermath of the tsunami had 
strengthened bilateral ties.  He said that the start of the 
second terms of President Bush and Prime Minister Thaksin was 
a good time to exchange views on key issues and move forward. 
 
 
FREE TRADE AGREEMENT 
 
3.  (C)  The Deputy Secretary said that a Free Trade 
Agreement (FTA) was one important legacy that could be 
achieved as both leaders looked towards the coming several 
years.  He recalled that on his last visit to Thailand as 
USTR, PM Thaksin had made time while in the hospital for him 
and they had launched discussions on an FTA.  It was natural 
that elections had slowed momentum a bit, but given the 
strong history of friendship and partnership of the two 
countries, and with strong leadership now in place, an 
opportunity for renewed impetus presented itself.  The U.S. 
would like to conclude a comprehensive, gold-standard FTA 
which, experience had shown, would send a signal to investors 
and traders.  Such an FTA could give an additional push for 
growth and development in Thailand. 
 
4.  (C)  The Deputy Secretary reviewed four sets of issues 
that he planned to raise with PM Thaksin.  He hoped there 
would soon be new instructions to Ambassador Nitya 
Pibunsongkram, the Thai FTA negotiator, to work on with new 
USTR Rob Portman.  The four areas were: Financial Services; 
Services and Investment; Intellectual Property Rights (IPR); 
and Environment and Labor.  For each area, he noted awareness 
of Thai sensitivities but explained the advantages that 
Singapore and others had gained after taking on similar 
commitments.  The Deputy Secretary emphasized that upcoming 
fourth round of FTA discussions in Montana, the home state of 
Democratic Senator Baucus, Ranking Member of the Senate 
Finance Committee, was an opportunity to garner political 
support if the session went well.  He also expressed pleasure 
that the Small and Medium Enterprise (SME) sector was being 
drawn into the talks.  The Deputy Secretary said he was aware 
of discussions about a Science and Technology accord and 
agreement to work on an Open Skies agreement.   He said he 
hoped, together with the Prime Minister, to get the FTA back 
on track and to combine it with these other areas of 
cooperation into a good package. 
 
5.  (C)  FM Kanthati responded that the Deputy Secretary's 
points on the FTA were very much on Thai minds.  He said that 
the perception in the general public was that in negotiations 
with a major power, Thailand would lose out.  The RTG, he 
said, had moved beyond the public mindset, but its experience 
in dealing with Peru showed how powerful perceptions can be. 
The Peruvian public had looked on Thailand as the "major 
power" in that encounter.  Kanthati added, however, that 
Thailand had "no problem" in principle with the notion of a 
comprehensive FTA.  In FTA negotiations with China, Thailand 
had chosen an "early harvest" approach concentrating on 
fruits and vegetables but was looking at a more comprehensive 
agreement with China as well. 
 
6.  (C)  Kanthati confirmed that the banking industry is 
concerned about the impact of opening Thai financial services 
to competition.  He noted that the Finance Ministry would be 
involved in the next FTA round and opined that the 
discussions "should move ahead." On IPR, Kanthati said there 
was public concern that an FTA would increase the price of 
pharmaceuticals and reduce access to medicine, especially for 
drugs to treat HIV/AIDS and similar diseases.  In general, 
however, Thailand shared U.S. views on IPR and the need to 
protect knowledge-based industries.  Thai musicians, for 
example, had to be protected from IPR violations, and the 
government would like to see more Thai brands gain 
international recognition.  Kanthati said that involving SME 
also fit well with what PM Thaksin had in mind and that 
Thailand would welcome the chance to work with U.S.  national 
and state authorities to establish direct links with 
different U.S. states in this area. 
 
7.  (SBU)  Overall, Kanthati said, Thailand is faced with 
strong domestic hesitation about FTA, but Ambassador Nitya 
was doing a good job negotiating with the U.S. and explaining 
back home what he was doing.  The RTG wanted and needed a 
successful FTA, but he emphasized that it must result "not 
only in free trade but fair trade."  Kanthati noted that if 
aspects of the FTA impact on Thai laws, it will have to be 
reviewed and approved by the Thai Parliament. 
 
8.  (C)  The Deputy Secretary said that one of his key aims 
was to address public attitudes and sensitivities on both 
sides.  Fair trade was a theme for many in the U.S. too. 
There was concern about competition from Thai small truck 
manufacturers, for example.  Regarding access to medicines, 
the important point was that nothing in our FTAs lessens the 
commitments made in WTO/TRIPS, including the access to 
medicines commitment made in August 2003.  It might be 
possible to amplify this point in a side letter, as we had 
done in other FTAs. 
 
PROLIFERATION SECURITY INITIATIVE (PSI) 
 
9.  (C)  The Deputy Secretary expressed appreciation for 
Thailand's strong cooperation on counter-terrorism and urged 
the RTG to endorse the PSI Statement of Principles (SOP), 
emphasizing that it did not obligate Thailand to do anything 
but would set in place the framework for Thailand to 
participate with us and others in PSI activities.  He 
outlined the importance of maritime security in Asia and 
pointed out that North Korea had a history of transporting 
WMD components on the region's waters.  Kanthati said that 
the RTG shared U.S. concerns about WMD and was in the process 
of seeking Cabinet approval of the PSI SOP. 
IRAQ 
 
10.  (C)  The Deputy Secretary reviewed recent developments 
in Iraq and underscored that 2005 is a key year for its 
future.  The Deputy Secretary provided an account of his 
recent visit to Baghdad and Falluja and discussed formation 
of the new Iraqi leadership, the positive signs of democratic 
politics in action there, progress in Iraqi capabilities to 
combat the insurgency, and the staying power of the Iraqi 
government.  He said that the U.S. and EU would convene a 
conference on June 22 to consider further support for Iraq 
and suggested that might be an opportunity for ASEAN and 
others in Asia to engage as well.  The Deputy Secretary 
thanked Kanthati for Thailand's military support of Operation 
Iraqi Freedom (OIF), and raised the letter sent by CJCS 
General Myers asking Thailand to contribute staff officers to 
man the OIF multinational headquarters. 
 
11.  (C)  Kanthati did not respond directly to the matter of 
CJCS Myers' request.  He said that Thailand had been pleased 
to send military engineers and medical personnel to Iraq to 
help with humanitarian assistance and continued to think 
about humanitarian support.  One factor, he said, was making 
sure that any Thai action did not have a negative impact on 
the Muslim separatist violence in Thailand's South.  He said 
that Thailand wants to help and is willing to invite Iraqis 
to train in Thailand.  (Note: He was not specific about the 
type of training.  End Note.) 
 
F-16 PURCHASE 
 
12.  (SBU)  The Deputy Secretary urged that Thailand 
favorably consider Lockheed Martin,s proposal to sell F-16s, 
noting the firm,s readiness to include a counter trade offer 
as part of its bid.   He stressed the value of 
interoperability; the F-16, alone among the competing 
aircraft, could ensure that allied air forces would be able 
to connect and communicate. 
 
13.  (SBU)  Kanthati said that with the end of the Cold War 
and the collapse of the Soviet Union, Sweden and Russia were 
eager to be competitive in sales of their aircraft.  The Thai 
defense establishment was responsible for weighing the 
options.  Sweden and Russia were willing to offer barter 
deals involving items such as Thai chicken, a high priority 
of PM Thaksin, who was concerned about Thailand's current 
account situation.  Kanthati said that Thailand had questions 
about the Lockheed Martin offer of offsets, because it was 
difficult to price the value of offsets.  He suggested that 
U.S. interest in Thai chicken would be important to the final 
recommendation by Defense.  He closed by noting that the 
competition was still open. 
 
SOUTHERN THAILAND 
 
14.  (SBU)  The Deputy Secretary said he was aware that PM 
Thaksin had established a National Reconciliation Committee 
(NRC) to address the separatist insurgency in the South.   He 
said that this seemed like an appropriate initiative and 
asked FM Kanthati for his views on the South. 
 
15.  (SBU)  Kanthati said there are grounds for optimism. 
The RTG was listening to all sides and convoked an almost 
unprecedented joint session of Parliament for extensive 
discussions.  PM Thaksin was deeply engaged.  The problem, 
Kanthati said, was not religion.  Certain groups were 
"pulling down" (i.e. exploiting) religion and attracting 
innocents to their cause.  The RTG recently invited the 
Chairman of the Indonesian moderate Islamic group, Nahdlatul 
Ulama (NU), to visit the South and, after talking to 1000 
people, he also had concluded that religion was being used to 
mask other activities.  The RTG was determined to win back 
support by following due process of law and transparency 
after past incidents of abuses by local military and police 
had alienated many Muslims.  Anand Panyarachun, the head of 
the NRC, was respected throughout Thailand for being open, 
transparent and fair.  His involvement added another positive 
dimension to the RTG southern policy.  Kanthati said that he 
recently accompanied PM Thaksin to Jordan and King Abdullah 
had explained that most Muslims are moderate.  The RTG 
believed the same was true in southern Thailand and wanted to 
focus on education, use due process to clear up old local 
abuses, and make ethnic Malay Thai Muslims feel that Thailand 
is their home.  This will take time, and complications from 
score settling and involvement by drug smugglers have to be 
overcome, but the violence can be ended, Kanthati said. 
 
BURMA 
 
16.  (C)  The Deputy Secretary asked for Kanthati's sense of 
regional positions on Burma and said that Burma's assumption 
of the ASEAN Chair in 2006 would reduce the U.S. ability to 
engage with ASEAN in ways that we would like to and that 
would advance common interests. 
 
17.  (C)  Kanthati said that Thailand continued to share the 
U.S. goal of wanting democratization in Burma as soon as 
possible.  To that end, he had recently engaged in 
consultations with Burmese Foreign Minister Nyan Win and 
others to explain the international community's concerns and, 
keeping in mind that the two countries shared a 2400 
kilometer border, to stress that Thailand wanted change. 
Kanthati said that Nyan Win had responded that an early 
release of Aung San Suu Kyi would create problems for the 
Burmese national reconciliation process.  The Burmese said 
release would have to wait until after the SPDC resumed the 
National Convention in November to finish drafting a new 
constitution and had held a referendum on the constitution. 
Kanthati said that he pushed for a quicker resumption of the 
National Convention, but Nyan Win seemed firm on November. 
There was also, he noted, continuing competition between SPDC 
leaders Than Shwe and Maung Aye for influence that impacted 
on the pace of reconciliation. 
 
18.  (C)  Kanthati said that he had also raised concerns 
about Burma assuming the ASEAN Chairmanship.  He claimed that 
Nyan Win had responded that ASEAN unity was more important 
than Rangoon's interests and that Burma won't detract from 
that.  Kanthati said that the Burmese privately expressed 
willingness to postpone assumption of the chairmanship. 
Kanthati said he told Nyan Win that timing was a factor, and 
that ASEAN will try to make it appear that passing up the 
ASEAN chair was a Burmese initiative.  Kanthati said he 
advised the Burmese FM that an early announcement would be 
best and Nyan Win had proposed July, although other Burmese 
still wanted to wait until the ASEAN Kuala Lumpur Summit at 
the end of the year. 
 
19.  (C)  The Deputy Secretary expressed appreciation for 
Thai efforts on Burma but was nevertheless concerned about 
Thailand's reputation.  Some may see Thailand as too 
accommodating to the thugs in Rangoon.  Kanthati said he 
hoped that the Deputy Secretary would help explain the actual 
situation and clear up misunderstandings.  He said he was 
open to consultations with anyone about Burma. 
 
SHORT TAKES ON INDONESIA, EAST ASIA SUMMIT, CHINA, JAPAN, 
NORTH KOREA, ETC. 
 
20.  (C)  The Deputy Secretary asked Kanthati for his views 
on regional issues.  Kanthati said that he had recently 
visited Jakarta and believed that the new government was 
successfully consolidating itself, although problems with 
Aceh continue.  He noted that Thailand had taken into custody 
five heavily-armed Indonesians aboard a vessel off southern 
Thailand, but the Indonesians had suggested that the 
detainees were more likely to be tied in to the Aceh conflict 
than the Thai South.  Kanthati said Indonesia was concerned 
about its ability to police the Malacca Strait and wanted 
help with capacity-building for that task. 
 
21.  (SBU)  Kanthati said that Thailand supported the 
"inclusive" approach to the East Asia Summit (EAS).  He met 
recently with ASEAN counterparts in the Philippines, he said, 
and they agreed that countries should be invited if they: 1) 
had substantial relations with ASEAN; 2) were ASEAN dialogue 
partners; and, 3) supported the Treaty of Amity and 
Cooperation.  He mentioned that New Zealand would probably 
join EAS and that the question of Australia was being 
weighed.  The Deputy Secretary said that a more open and 
inclusive EAS made more sense.  Thailand could play a central 
role. 
 
22.  (SBU) Kanthati said that Thailand looked at China as an 
increasingly formidable player in the region with which the 
RTG wanted closer ties as an economic partner.  It regarded 
Japan in much the same way, and had found the recent tension 
between Japan and China unsettling.  He said that it had been 
noticed that Japan had been strongly demanding an apology 
from China over the anti-Japanese demonstrations and then, 
suddenly, it was Japan which had apologized. 
 
23.  (SBU)  Kanthati also stated that the Thai government, 
and he personally, would be happy to help on the Korean 
Peninsula issues, given Thailand,s diplomatic relations with 
Pyongyang. 
 
24.  (SBU)  Kanthati asked for an update on the issue of Thai 
shrimp and U.S. anti-dumping investigations.  The Deputy 
Secretary said that the ITC had agreed to examine the issue 
 
SIPDIS 
of changed circumstances in light of the tsunami.  Its 
investigation would proceed in an open and transparent 
process that would play out in the coming weeks/months. 
 
25 (SBU)  The Deputy Secretary noted the importance of 
working closely with Thailand on avian influenza.  There was 
a need for early identification, accurate information, and 
transparency because, otherwise, the situation with the 
disease could quickly get nasty.  He also noted again how 
pleased and proud the U.S. was to have worked with Thailand 
on tsunami relief and how important that cooperation had been 
to Aceh in particular.  In addition to official USG 
assistance, the Deputy Secretary noted about USD 1.2 billion 
had been raised privately in the U.S. for tsunami recovery. 
Former President Clinton was expected to visit the region 
soon. 
 
26.  (U)  Participants: In this meeting, Deputy Secretary 
Zoellick was accompanied by Ambassador Boyce, EAP DAS Marie 
Huhtala, D Executive Assistant Ross Wilson, PA Deputy 
Spokesman Joseph Adam Ereli, D Special Assistant for EAP 
Chris Castro, D Special Assistant for Outreach and Public 
Affairs Christine Davies, D Personal Assistant Lisa 
Martilotta, Embassy Bangkok Economic Counselor Mike Delaney, 
and Political Counselor Bob Clarke (notetaker).  In addition 
to FM Kanthati, MFA Deputy Minister Preecha Laohapongchana, 
Advisors to the FM Dr. Pracha Guna-Kasem and Mrs. Sally 
Jutabha, MFA Deputy Permanent Secretary Pisan Manawapat, 
Americas Director-General Nongnuth Phetcharatana, Spokesman 
Sihask Phuangketkeow, and East Asian Affairs Director General 
Director-General Nopadol Gunavibool sat in on the Thai side. 
 
27. (U) This cable has been reviewed by the Office of the 
Deputy Secretary. 
ARVIZU