EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF THE U.S. TRADE REPRESENTATIVE
TRADE POLICY STAFF COMMITTEE PUBLIC HEARING
for
The Proposed Free Trade Area Negotiation with Thailand
Tuesday, March 30, 2004
[Replies of Jeffrey Race to questions from the Committee; continued from
verbatim transcript of oral testimony archived at
<http://www.camblab.com/nugget/verb_01.htm>]
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CHAIR SURO-BREDIE: Thank you, Dr. Race. I think we have a question by the
Department of State.
MR. RAPSON: I wasn't familiar with the details of the case prior to your
testimony, so thank you very much for your exposition here on your perceptions
of the legal system and legal protections in Thailand.
On a specific State-related matter, I would be curious to know what was your
last contact with the U.S. Embassy and the State Department. I know you
mentioned a diplomatic note, but has there been further follow-up on your
part?
DR. RACE: Well, it's one of the practical problems that you will face and
it's a very interesting question. There are people on all sides of the FTA
and there are people on all sides of the diplomatic note. I approached our
Embassy in Bangkok and they wouldn't talk to me about this. I had to fly to
Washington and this was reviewed at a high level at the State Department. I
used to be a consultant to the State Department, so I didn't come under the
category of the crazies who walk in the door every day. The documentation was
quite extensive on this and essentially [I asked] if we could follow it up
here because the Embassy there is concerned about something but I don't know
because they won't call me back or answer my letters. I'm sorry, it's that
way but people take different views on this matter just as they do on the FTA
and there's a group of people in the State Department here who think basically
this was an outrageous situation and the United States Government ought to
support its citizens in this matter and there's another group of people who
say, "Well, we don't want to make waves here". You'd have to ask our Ambas-
sador.
MR. RAPSON: Thank you.
CHAIR SURO-BREDIE: USTR?
MR. IVES: I listened and this is the first time I've heard the details of the
case, so I appreciate your testimony but I guess I'm a little bit confused.
You indicated you strongly support the negotiation of the free trade agree-
ment. You've indicated you've -- I think you said you've read the Singapore
Free Trade Agreement.
DR. RACE: I've read the whole thing. I didn't print out all 236 pages, but I
printed out about 60 pages which discuss some very interesting -- it was about
enforcement procedures.
MR. IVES: Okay, and I guess my question goes to exactly that. If the FTA
were in force, we have a dispute settlement procedure in the FTA which it
sounds like you've read. Doesn't that address at least the FTA part of our
bilateral relationship? It may not address all the domestic issues. It may
not address the court system. It may not address -- certainly probably would
not address your specific concern, but wouldn't the mechanism in the FTA
itself address the enforcement procedures for the FTA?
For example, ultimately, we could suspend some of the benefits we've given
Thailand if they're not complying with the FTA.
DR. RACE: Well, I've prepared a few notes about that and let me just get them
over here. In terms of the Singapore agreement, you know, I went through it
and it has a lot of discussions about, "shall cooperate, shall endeavor, shall
facilitate, shall investigate, shall bring enforcement actions, shall cooper-
ate on this and shall obtain -- may obtain judicial review". All of these are
predicated upon an intention to comply and upon a rule of law for which there
is no predicate in Thailand. So --
MR. IVES: Those are the transparency provisions. There should just be a
settlement mechanism that ultimately we could suspend some of the benefits
that we're giving Thailand which we're both giving each other mutual benefits.
DR. RACE: Yes. In fact, I had thought about this even before I read the
Singapore agreement and I think ultimately this is what it has to come to.
That there has to be -- what I would like -- well, there are two issues.
Thailand is not a party to the [ICSID]. So on the one hand you can go for
these international dispute procedures, for example, under FTA or you can go
take the trek through Thai courts that I and these other people went through
and I can tell you about some of the things. We had judges falsifying trial
records right in front of us and we had testimony which was distorted. We had
all kinds of really awful things like that. So if you go that route, essen-
tially, you run into all those problems.
If you go this [dispute resolution] route, essentially this is the alterna-
tive, but my point is that it has to be really clear and really stringent.
For every single thing, there has to be a place to go, I mean, a name, an
office. There has to be a time when they have to answer. I brought along
something. It's just typical of the kind of thing that people go through.
This is some poor German. He's the head of a company who has invested in some
public works project there and essentially, he's being squeezed out in all the
ways that people get squeezed out there and he's been sending letters to the
government for years and essentially they just ignore him which is exactly
what happened in these cases, they just ignore you.
So the procedures have to be, there has to be a place to go for every little
thing. What kind of things? Disappearance of records from the court, refusal
to answer correspondence, falsification of testimony, refusal to do your duty,
a prosecutor refuses to prosecute a case of asset laundering. We had all the
evidence. He refused to do anything. It turned out one of his people on the
staff was involved in the case getting money from it.
You heard Mr. Schlesinger talk this morning about how they refuse to enforce
intellectual property rights. So there has to be time limits, 14 days, 30
days. Okay, and the things have to be quite -- there can't be a high hurdle
on this thing. I mean, I looked at the procedure of the Singapore agreement,
this is quite an extensive thing, and the lags are very long. It's almost a
year before you get anything out of it but that's not the way it works.
You're just nickeled and dimed to death on every little possible thing that
can go wrong, you know, no documents, they're not here today, the minister's
busy.
And I'll give you an example about this funny case of how the one Thai agency
got interested in this. This was the case of the Law Society. The Minister
of Justice has the review authority over the decision of the Law Society. I
mean this is a lawyer who admits in open court how they rigged an auction. So
it's an open and shut disbarment case any place else. I just took the docu-
ments down to the Law Society and said, Proceed. They refused to do anything.
So I documented the whole thing, I put all the case files on a disk with
covering letters, took it down to the Minister's office at the Ministry of
Justice and gave it to the person.
I said, "This is very important, please make sure the Minister gets it".
"Yes, yes, we'll make sure he gets it right away". Two weeks later I call on
the phone, "We never got any letter from you". I mean, it was destroyed.
Okay. By chance, my daughter takes swimming lessons with the Minister's
daughters. So one day we were at the poolside and my daughter says, "Oh,
there's the Minister over there". So I walked over to him and I said, "Excel-
lency, have you had a chance to look at my letter yet". He said, "Who are
you"? I said, "I'm Jeffrey Race". He said, "I got no letter from you". He's
a very nice man. He gave me his private e-mail address. I sent him the case
file by e-mail and a couple weeks before I left, I got a very nice note from
the Secretary of the Ministry of Justice saying, "Okay, we're hot on this case
now". I don't know whether anything will happen, but the point is, you need a
procedure that works easily in cases like this. You can't just depend upon
being able to run into the Minister at poolside while the daughters are doing
laps in the pool together. You know, most Americans can't do that. I was
just lucky on that one.
And there has to be something -- and this is the kind of thing you're con-
stantly running into. You spend your whole life running down every little
thing because you're blocked on everything. And so the principle is correct,
that you need an independent review procedure but it has to be simple, not
with long lead times for simple little things like they won't answer a letter
or they say they never got it or they won't enforce the law and then ultimate-
ly, there has to be the revocation of rights and it has to be clear in the
agreement that it's separable and benefits are individually voided without
jeopardizing the whole agreement. And ultimately if they refuse to enforce
the agreement then essentially it becomes a one-sided agreement.
If they would agree to that, that's a glimmer of a possibility that they are
serious about enforcing it. But the point is, that I don't think Singapore,
essentially the hurdle is very high and the lead times are very long on get-
ting an answer. I don't think that's practical in the Thai case.
MR. IVES: Okay, thank you.
DR. RACE: Thank you very much.
CHAIR SURO-BREDIE: Thank you very much.
[Replies of Jeffrey Race to questions from the Committee, 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. These
questions and answers follow the oral testimony archived at
<http://www.camblab.com/nugget/verb_01.htm>.]
[This extract is archived at <http://www.camblab.com/nugget/verb_02.htm>.]