The Proposed Free Trade Area Negotiation with Thailand 
                           Tuesday, March 30, 2004 

--------------[Extract: Verbatim oral testimony of Jeffrey Race]--------------

The  hearings  came  to order at 10:00 a.m. in Rooms 1 and 2  of  the  1724  F 
Street, N.W., Washington, D.C., Carmen Suro-Bredie, Chair, presiding. 


Carmen Suro-Bredie  USTR

William Clatinoff   USTR

Ralph Ives          USTR

Leslie O'Connor     USTR

Barbara Weisel      USTR

Bob Mackie          Department of Agriculture

Steve Wixom         Department of Agriculture

Kevin Boyd          Department of Commerce

Jean Kelly          Department of Commerce

Jim Shea            Department of Labor

Kevin Honan         Department of State

Rob Rapson          Department of State

Won Chang           Department of the Treasury


Ernest Z. Bower, President, U.S.--ASEAN Business Council

Raymond J. Sander, U.S. Chamber of Commerce

Pamela  D.  Walther on behalf of Will and Emory  McDermott,  California  Cling 
Peach Board

Desiree Filippone, Eli Lilly, Warren Maruyama, Shira Kilcoyne, PhRMA

Michael Schlesinger, Vice President, International Intellectual 
 Property Alliance

John Goyer, Vice President, Coalition of Service Industries

Scott Otteman, Director of International Trade,
 Grocery Manufacturers of America

Todd Eckles, Director of Sales, Toray Plastics

Michael P. Daniels, International Trade Counsel,
 Footwear Distributors and Retailers of America

John Keeling, Executive Vice President and CEO, National Potato Council

Lee McConnell, Chairman, Sweetener Users Association

Julian Heron, Counsel, Blue Diamond Growers

Jack Roney, Director of Economics and Policy

Donald Philips, Trade Consultant, American Sugar Alliance

Thea Lee, Assistant Director for International Economics, AFL-CIO

Dr. Jeffrey Race

Shawna Morris, Trade Policy Coordinator, National Milk Producers Federation


CHAIR SURO-BREDIE:   Thank you.  Let's see our next witness, we're  running  a 
little  in  advance,  is Thea Lee.  I don't know if she's here.   No.  Is  Dr. 
Jeffrey Race here?

DR. RACE:  Yes.

CHAIR SURO-BREDIE:  Yes, would you mind testifying now?

DR. RACE:  Not at all.  I've come a long way and I'm glad to be here.


DR. RACE:   Thank  you.  Madam Chairman, distinguished committee  members  and 
friends.   Thank  you for the opportunity to speak about Thailand,  a  special 
country  where  I have been privileged to travel for 35 years  as  a  military 
officer,  an academic, a consultant to government, including  our  government, 
private  industry  and international organizations, and most  recently  as  an 

I'm a fluent Thai speaker and I have extensive experience in Southeast Asia in 
business  and  in the Thai law enforcement system.  I have  appeared  in  Thai 
courts  hundreds  of times in a variety of capacities  and  proceedings.   For 
numerous happy reasons, Americans and Thais get on very well together and many 
of  our  business relationships succeed brilliantly. But some do  not  due  to 
chronic  law  enforcement  issues.  That's what I want to talk  to  you  about 

I'm not here to ask you for anything.  

A foreigner is usually treated very well and very courteously in the Thai  law 
enforcement system.  And if he is in dispute with a nobody, he may expect jus-
tice.   If he's in dispute with a state body or with the well connected,  then 
that  prospect  recedes.  Many find that complaints of even grave  abuses  are 
cheerfully  ignored  by the Thai authorities.  For the facts on which  I  base 
these  conclusions, which I admit are rather strong, please refer to the  case 
studies  which were cited in my written submission which summarize Thai  offi-
cial  documents and detail what really happens in the bowels of the  permanent 
bureaucracy, in the courts and in the state enterprises. 

This  particular  series  of case studies recounts the  experiences  of  three 
families,  a mix of Thais and Americans, in a real estate investment and  some 
related  family  matters.  And the reason I raise them here  is  because  they 
spotlight issues which jeopardize all potential beneficiaries of the agreement 
that  you hope to realize and which I hope you do realize.  I'm a strong  sup-
porter of this agreement.  I just want it to work.

But  in  these cases, between 1984 and 2002, these parties litigated  over  $8 
million  of  assets  in which the foreigners shared ownership.   One  Thai  in 
league  with Thai officials and the employees of a state controlled  bank  has 
succeeded  in blocking the foreign owners from access to their assets  for  20 
years,  meanwhile laundering into the mists almost the entire corpus of  these 
assets.  So doing entailed numerous incidents of grave official misconduct and 
criminal acts by those working under government control. 

I'm  here today -- I lead the team seeking the restitution to  these  victims.  
When  it became clear to us that our opponents were above the law,  we  sought 
the  help  of our Department of State which sent the Thai foreign  minister  a 
diplomatic note, which I have a copy of here, which says essentially,  "Please 
tell  us  none of the allegations in the hundreds of pages of  attachments  is 
true".   That's these attachments here.  "But if any of them are true,  please 
tell us how you plan to remedy the injury to our citizens".

And in parallel with this, I myself contacted the following people; the  Cabi-
net Secretary, the Senior Policy Advisor to the Prime Minister, the  Permanent 
Secretary  of  the Ministry of Finance, the Executive Chairman of  the  state- 
controlled  bank  which was involved in the criminal  activity,  the  Attorney 
General,  the Minister of Justice, and the Legal Ethics Committee of  the  Law 
Society  of  Thailand.  Unfortunately, I have to tell you  that  nothing  good 
happened after all that effort. 

We  won a Supreme Court Judgment to liquidate the remnant of  the  unlaundered 
assets,  but when we went to the court, the Chief Judge informed us  that  the 
title  deeds had disappeared from the locked court storeroom and we  have  not 
been able to execute the judgment.  

The  Law Society refused to discipline the attorney who rigged a sham  auction 
to launder the assets that were involved not because there was no evidence--in 
fact,  we have his confession in open court--but because this is a  legitimate 
legal tactic in Thailand.  It's really true.  The Secretary to the Law Society 
Chairman told me that, just like this with a straight face.  

The public prosecutor refused to prosecute a case of blatant asset laundering.  
Thai law provides one important advantage to the people who are in a difficult 
situation like that.  You're allowed to conduct a private criminal prosecution 
in  Thailand  and  we conducted a private criminal prosecution and  we  got  a 
conviction.   And  later  we found out that a key prosecution  staffer  had  a 
monetary  interest  in the laundering transaction.  So we then  complained  to 
that Attorney General who investigated. 

I myself was deposed for three days.  It was a rather tiring experience and  I 
submitted  irrefutable evidence of criminal acts by an  assistant  prosecutor.  
After  two  years, I got a letter back.  The Attorney General denied  all  the 
allegations and exonerated his subordinate.

Then  more  evidence appeared.  There was a new investigation  and  the  Prime 
Minister's  office refused to allow us to see the report of the  investigation 
even  though it's our legal right to see that report.  

Now, yesterday, March 29th, 2004, was a year to the day since the Thai Foreign 
Minister  received  our diplomatic note.  Our Department of State  is  waiting 
very patiently for the honor of the Minister's reply.  

To this day, every Thai official involved in the misconduct which is document-
ed in these case studies remains at liberty to victimize other Americans.   

And  with one humorous exception, which I can tell you about if you're  inter-
ested,  every  agency  that we contacted has ignored, failed to  act  upon  or 
actively  rebuffed our attempts to make the Thai law enforcement system  work.  
Thailand advertises itself as a land of refinement and it is.  No one burst in 
with  guns  drawn shouting, "Get out, get out, we're taking  over",  as  might 
happen  in  some places that we read in the newspapers.  But  legally  refined 
trickery, cover-ups by the powerful and indifference at the cabinet level have 
the same effect. 

Of  the eight agencies approached to remedy the misconduct, only one  advanced 
any  interest, so far without any result.  And from this sample, I think  it's 
fair  to conclude that seven of eight at the top of the Thai government  won't 
lift  a finger for the rule of law. They do not oppose it; they are  just  se-
renely indifferent to it.  And this, by the way, answers the question that Mr. 
Michael Schlesinger had about his puzzlement about why nothing is happening in 
terms of IPR enforcement in Thailand.   

What  do these facts imply for your negotiations? I respectfully suggest  four 
things.   First, Thailand is special and earlier FTAs are no template  for  an 
FTA  with  Thailand and particularly the Singapore FTA which I  brought  along 
here.   Second, I ask you whether an FTA is now legally possible.   The  facts 
which  I  document  to you clearly void the usual presumption  of  good  faith 
between  contracting  parties in the specific subject matter  of  enforcing  a 
possible US Thailand FTA.  The Thai authorities decline to enforce their  laws 
to protect American citizens and they decline to reply to gracious  diplomatic 
correspondence from a valued ally--that's us.  Instead they conspire to  cover 
up criminal acts in their midst and cabinet ministers know this very well.

Can  an  American official legally sign an agreement when he  knows  that  the 
counterparty  is  signing in bad faith?  Ask your lawyers the answer  to  that 
question;  I know what they'll tell you.  Furthermore, as a legal  fiction,  a 
Thai  representative  can bind his government to an FTA but he  cannot  commit 
undisciplined state organs to implement it.  As of today, the Thai  government 
simply lacks the practical capacity to contract with us.   

Third,  I can offer two litmus tests that easily confirm whether  these  legal 
obstacles  persist.  Looking backward, does the Thai government cure  its  bad 
faith  by compensating the victims in these cases which are documented in  the 
URL  I  submitted to you and then does it respect  international  practice  by 
answering its diplomatic mail?  If not, how could one even imagine signing  an 

Looking  forward,  will the Thai authorities agree to quality  controls  which 
work independently of their intention to uphold the law?  I can offer  specif-
ics  in  the  question time if you're interested.  Now, I  would  just  simply 
suggest  that stringent public review procedures within the agreement are  the 
only  valid index of Thai willingness to implement the agreement, not just  to 
sign it and there's a big difference in Thailand.   

Fourth, I ask you to be sensitive to symbolism.  The Thai authorities are well 
known  to have evaded their solemn duty to uphold the law in these  cases  and 
they are known to ignore their diplomatic mail about these cases.  Signing  an 
FTA now would destroy the credibility of our Ambassador in Bangkok and  expose 
our diplomatic service to ridicule everywhere.  Many would infer that to  sign 
an  FTA America would endure any depth of humiliation and contemptuous  treat-
ment.  And from that inference they might act with impunity against our  firms 
and citizens elsewhere as they had in Thailand.  Now, these systemic disorders 
stem partly from the charming Thai preference for harmony over conflict.  It's 
one  of  the things that makes it such a pleasant place to  live.  I've  lived 
there for 35 years. 

In  fact, these disorders may victimize any nobody, not just  foreigners,  I'd 
like that to be clear.  Thai citizens suffer under these disabilities as  much 
as  foreigners  do, at least the nobody type citizens.   Many  Thai  officials 
deeply  regret  this state of affairs but they cannot act upon it.   And  many 
have  told me that we can ease their clean-up job if we politely  insist  upon 
the rule of law and what that means in operational terms.  And with our  help, 
I am sure that they can adapt the special charm of their culture to the  legal 
demands  of world commerce.  These negotiations provide you a splendid  oppor-
tunity  to help them while advancing the values that made our nation  a  light 
unto the world.   

This was to be the end of my oral presentation but something just came in this 
morning  I  would like to share with  you.  It's an e-mail  from  an  American 
attorney  who  actually read my testimony yesterday on the Internet.   And  he 
sent  me a message this morning. He's a law professor in Thailand. He's  lived 
there for 12 years.  He asked me to read this to you.  He said, "As an  Ameri-
can  and a lawyer who has lived in Thailand for the past 12 years  and  having 
taught  at  Thai  law schools, I can confirm the essence  of  your  testimony.  
There is very little idea in Thailand of the rule of law as we know it and the 
worst offenders are those in power.   You might make a point in your testimony
of how important the  concept  of status is in Thailand and how those who have
high status here feel that  they are  really above the laws.   It's one of the
reasons that I am  leaving  Thailand".   

May  I submit this to you?  You might like to contact  this  man  who seems to
know quite a lot about this problem.  

Thank you again for this opportunity to speak.  I wish you all success in your
negotiations and welcome any questions that you might have.

CHAIR  SURO-BREDIE:   Thank you, Dr. Race. 

[Verbatim  transcript of oral testimony of Jeffrey Race, before the Trade 
 Policy Staff Committee of the Office of the United States Trade 
 Representative, Washington DC, March 30, 2004, extracted from the 
 official record at <http://www.us-asean.org/us-thai-fta/USTR_Transcript.doc>,
 with minor corrections of misspellings and transcription errors.  This oral
 testimony slightly expands upon the written submission archived at 

[This extract is archived at <http://www.camblab.com/nugget/verb_01.htm>]

[Replies to questions are archived at <http://www.camblab.com/nugget/verb_02.htm>]