The U.S. is Thailand’s third-largest bilateral trading partner, only behind Japan and China. In 2017, the United States imported $26.5 billion goods from Thailand, which was 11.2 percent of total Thailand exports.
The U.S. and Thailand have been trading partners since 1833, when the two nations signed a Treaty of Amity and Commerce and formed diplomatic relations. Recently, these two countries have discussed ways to expand trade and address outstanding issues. The stock of U.S. foreign direct investment (FDI) in Thailand reached $7.4 billion in 2003, which pushed the U.S. to become the largest foreign investor in Thailand that year.
U.S. Benefits from Foreign Aid to Thailand: Trade
The U.S. benefits from foreign aid to Thailand comes mainly in the form of trade, as the Eastern nation holds abundant natural resources. The major Thai exports to the United States are textiles, tin, integrated circuits, rubber, precious stones and sugar.
In 2004, the United States and Thailand made Free Trade Agreement (FTA) negotiations. This agreement eliminates issues related to tariff barrier and facilitates U.S. import and export, especially agricultural goods.
In addition, FTA protects U.S. investment as it can guarantee U.S. preferential status of investments under the U.S.-Thailand Treaty of Amity and Economic Relations (AER).
There were six negotiating rounds about the FTA from 2004 to 2006. These negotiations adjusted the FTA to maximize profits of both countries and strengthen the competition for U.S. import-competing industries such as textiles, apparel and light trucks. As a result of this effort, the pact solves numerous aspects of the issue of job losses prevalent in the U.S.
In 2016, the U.S. ranked the top in all foreign aid with $30,765 million distributed by bilateral aid and international organizations, such as via organizations like the U.N. and the World Bank.
The U.S. planned to give Thailand $5.63 million; in the end, the nation invested around $12 million. This number increased to $7.17 million in 2017, and mainly focused on peace, security, education and social services.
The most vital foreign assistance of the U.S. in Thailand is the United Statement Agency for International Development (USAID), an organization that began in 1950. USAID trained Thais in various aspects of life such as agricultural productivity, health and family planning, science, technology, infrastructure development, human rights and governance, health and the environment.
Together, all of the USAID agencies spent $7 million in 2017 to further motivate Thailand’s development, and U.S. foreign aid and many U.S. companies brought Thailand from needing help to becoming self-sufficient, and an upper middle-income country.
“U.S. investments abroad help American businesses: by connecting them directly with new customers and suppliers,” Bill Gates wrote in his post on July 27, 2017. “America’s chief aid agency, USAID, uses its expertise to encourage private companies to collaborate on projects.”
A Prosperous Partnership
While Thailand gained numerous benefits from the FTA, the U.S. benefits from foreign aid to Thailand, too. Thailand’s average tariff on agricultural imports is around 39.9 percent, and the FTA largely trimmed U.S. expenses on tariffs in trading with Thailand, so the U.S. can access and acquire a substantial amount of much-needed Thai goods.
In April 2017, American and Thai leaders met under the U.S.-Thailand Trade and Investment Framework Agreement (TIFA) and, based on previous outstanding trade alliance outcomes, reaffirmed to expand trade and strengthen investment ties.
– Judy Lu