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 


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

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-

MR. RAPSON:  Thank you.


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

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 

[This extract is archived at <http://www.camblab.com/nugget/verb_02.htm>.]