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AMBASSADOR ITOH 5/12 REMARKS TO THE



Subject: AMBASSADOR ITOH 5/12 REMARKS TO THE ASIA SOCIETY OF NEW YORK

SOME POINTS TO PONDER RE:US/THAILAND RELATIONS FOR THE
RESEARCHERS,SCHOLARS,JOURNALISTS AND INTERNATIONAL OBSERVERS 


FILE ID:97051405.EEA
DATE:05/14/97
TITLE:14-05-97  TEXT:  AMB. ITOH 5/12 REMARKS TO THE ASIA SOCIETY OF NEW YORK

TEXT:
(U.S.-Thai relationship based on common interests)  (3310)

Washington -- "Changes in the geo~political landscape in Southeast
Asia," coupled with Thailand's economic growth over the past two
decades, have brought about significant changes in U.S.-Thai
relations, according to William Itoh, U.S. Ambassador to Thailand.

"Our important relationship with Thailand has undergone a significant
shift from the 1970s and 1980s, from a relationship based on security
and development needs to what I like to call a productive partnership
based on a wide range of common interests including the economic
prosperity of both nations," Itoh said in May 12 remarks to the Asia
Society of New York.

"In the past year we have made considerable progress in moving forward
on issues of interest to the American business community," Itoh said.
The United States and Thailand, Itoh said, recently signed a civil
aviation agreement and a bilateral tax treaty that will help small and
medium sized American companies wishing to enter the Thai market.

Thailand has also made progress on legislation to protect intellectual
property rights and worker rights, Itoh said.

Itoh stressed that the United States must ~~continue to devote
attention and resources to U.S.-Thai relations if the relationship is
to prosper. "Like a corporate manager, we have to reinvest in people,
plant and equipment if we are to be as competitive in the future as we
have been in the past," he said.

Itoh cited President Clinton's visit to Thailand last November as an
important contribution to this effort.

"The first visit by a sitting President since the visit of Richard
Nixon in 1969, it highlighted many of the dramatic changes which have
taken place in Thailand during the past two decades and helped in
bringing our close bilateral relationship into sharp focus," he said.
"It likewise looked to the future as we highlighted the many areas
where the U.S. and Thailand will continue to work together in the

partnership which has served both nations so well."

"We need to build on this foundation to strengthen even further our
ties with one of our best friends in the Asia-Pacific region -- an
effort which is so important to Thailand's future and to America's
future," he said.

Following is the text of Itoh's remarks:

(begin text)

AMBASSADOR WILLIAM H. ITOH
~"FROM SERI THAI TO KFC:
CONTINUITY AND CHANGE IN US-THAI RELATIONS"
REMARKS TO TH~E ASIA SOCIETY OF NEW YORK
MAY 12, 1997

I am pleased to be back in New York again and to see some old friends
here this afternoon. Considering how much construction is going on in
Bangkok these days, the skyline is beginning to look a little like New
York. Across the street from the American Ambassador's residence on
Wireless Road stand three 48 story towers which didn't exist when I
arrived in Bangkok a year ago February.

WWII and Security Concerns

The residence continues to be an oasis of green with the same house
that stood there in 1914. Once the Belgian legation in the 1920's, it
became the residence of the American Ambassador aft~er 1943 when
Josephine Stanton~, the wife of Ambassador Edwin Stanton, convinced
the Thai Government to allow the Americans to use it. Ambassador
Stanton~'s memoirs include his impressions of seeing the house an~d
grounds for the first time: he described the grounds as being littered
by war junk. Indeed, the house had been occupied by Japanese troops
and the grounds were used to repair vehicles. Unserviceable vehicles
were simply pushed into the surrounding klong, and it took some months
to clear away the remains of war and the Japanese occupation.

Today, the only reminders of World War II at the residence are two
small burn marks in the teak flooring on the surrounding porch from
the hibachis used by troops preparing their meals. The origins of our
modern partnership with the Kingdom of Thailand date back to World War
II, when the U~.S. supported the "Seri Thai," the Free Thai movement.
The Seri Thai were trained and supported by the OSS and infiltrated
into Thailand behind the lines to play a role in facilitating the
surrender and repatriation of ~~Japanese troops. In return, Washington
refused to recognize that Thailand, under Japanese pressure, had
declared war on the United States. The Thai Ambassador in Washington,
Seni Pramoj, simply ignored his instructions to deliver the
declaration of war.

In the immediate post-war era, the U.S. became the foremost defender
of Thailand's independence and sovereignty~, an important factor in
understanding the close ties between our two nations. In subsequent
years our security partnership continued as Thai troops fought
alongside our troops in Korea and Vietnam and Thailand provided
support for our efforts in Desert Shield and Desert Storm.

During this critical period of Thailand's modern history, we provided
considerable amounts of both military and economic assistance to
Thailand to meet threats to Thai security from beyond her borders and
from within. Over $1.1 billion of U.S. taxpayer funds went into
development programs for 45 years under the management for AID. In the
creation of highways and dams, AID projects helped open up the
Northeast to economic development, a critical factor in the success of
the Kingdom in containing and defeating a serious Communist insurgency
in this poor and populous region of the country. Later projects
assisted human resource development as over 100,000 students, nurses
and professionals were trained under AID sponsorship in Thailand and
some 20,000 individuals were trained in Universities and institutions
in the United States.

In addition to concerns about threats to Thailand's security, both
external and internal, another focus of our bilateral relations in
these critical years was on narcotics -- the production of and
trafficking in heroin. Over a period of many years we worked with a
succession of Thai governments on crop substitution programs to
provide viable alternatives to the growing of opium poppies by
hilltribe farmers. We also worked to coordinate law enforcement
activities and to help strengthen the agencies involved in the fight
against narcotics.

After 1975, we also worked closely with the Government of Thailand to
deal with the huge humanitarian challenge presented by the massive
outflow of refugees from Indochina. Over 1~.2 million refugees from
Indochina came to Thailand, and most of ~these were eventually
resettled in the United States.

Not long ago the focus of our bilateral relationship was therefore on
our mutual concerns for Thailand's security, the scourge of narcotics
and on the processing and resettlement of refugees. With the political
and economic transformation of Southeast Asia, the focus of our
bilateral relationship shifted as well. With Vietnam's entry into
ASEAN and the election of a coalition government in Cambodia, Thai
preoccupation with security concerns waned. Meanwhile, the dramatic
transformation of~ Thailand from an agricultural economy to one based
on manufacturing and services, moved our economic partnership to the
top of the agenda~.

Political Overview

Let me take a moment to comment briefly on some of the changes which
have taken place in Thai domestic politics and in the Thai economy.

Thailand became a constitutional monarchy only in 1932. Since then
Thailand has experienced alternating periods of freely-elected
civilian government with authoritarian military rule. The country
today, however, has enjoyed a five-year run of uninterrupted civilian
rule by three successive freely-elected governments.

The current government, a six-party coalition led by Prime Minister
Chavalit Yongchaiyudh was elected November 17 and sworn into office
December 1 last year. Two peaceful transitions from one elected
civilian government to another represent a notable achievement for
Thai democracy. While the Thai military still plays a major role in
society, strong public opinion against military intervention in
government, a vocal free press, and a change in focus of the military
from internal to external affairs, indicate a decline of the
military's role in politics.

The process of political evolution continues. One of the last acts of
the previous parliament was to pass a bill mandating the writing of a
new Constitution --~ the country's 16th in 65 years --~ in an attempt
to address some of the political problems. The first draft of the CDA
-- the Constitutional Drafting Assembly -- has been completed,
representing the first attempt to write a Thai constitution with broad
public participation. The draft is being discussed and debated in
Parliament and in the media. Prime Minister Chavalit has stated he
intends to dissolve the Parliament and hold elections once the new
Constitution and implementing legislation are in place, approximately
two years from now.

Economic Overview

Last year's elections came about because of the perception, based on
reality, of Government interference in the sound management of the
economy. The new government of Prime Minister Chavalit came into
office faced with the first drop in economic growth rates below 8% in
more than ten years. He has to deal with a persistently high current
account deficit (8% of GNP 1993-96) and mounting public pressure to
reform the political system, especially that part which made it so
vulnerable to corruption.

The drop in the economic growth rate last year was to 6.7% -- a rate
which any country in the developed world would regard as phenomenal.
Nonetheless, the slowing of growth had a psychological effect in
Thailand similar to that of a recession. Thailand, after all, had
enjoyed the world's fastest growing economy for the period 1985-1994,
an average annual growth rate of 8.2%. It is too early to tell if this
year will bring a signific~ant improvement, but growth over the long
term will depend on heavy investment in infrastructure and development
of human resources, as labor intensive industries have already begun
to migrate to low wage regional competitors.

The immediate challenge for the government is to rebuild the
confidence of the business sector and the international investor
community. With a credible economic team the Prime Minister is pushing
a program of short-term fiscal austerity which nonetheless continues
the support for infrastructure projects and human resource development
so necessary for the nation's future growth.

Our short hand assessment is that while Thailand is facing some
serious short-term challenges, the long-term prospects for the Thai
economy remain promising. American companies continue to commit to
large investments in Thailand. This reflects this optimism.

The Bilateral Relationship:  Economic Ties

The changes in the geo~political landscape in Southeast Asia coupled
with Thailand's remarkable economic growth over the past two decades,
have brought about significant changes in our bilateral ties. As I
suggested at the outset, our relationship with the Kingdom of Thailand
has deep historical roots. Indeed, our oldest treaty with any Asian
country is the Treaty of Amity and Commerce signed with the Kingdom of
Siam in 1833. Just as trade and commerce was at the top of our agenda
at the beginning of our relationship, so it has come to be our top
priority today.

Last year our two-way trade with Thailand exceeded $18 billion and by
the end of this year, we estimate that the cumulative total of
American investment in the country will exceed $16 billion.

In the past year we have made considerable progress in moving forward
on issues of interest to the American business community. One year ago
we signed a new civil aviation agreement after five years of active
negotiations. The agreement provides for additional f~~requencies for
US carriers and has greatly expanded opportunities for US cargo
carriers. Last November we signed a bilateral tax treaty which will
help small and medium sized American companies wishing to enter the
Thai market. A top priority of AMCHAM for many years, the tax treaty
had been under active negotiation for more than 14 years and its
signing during the President's visit was a major milestone in our
bilateral economic relations.

As Thailand develops economically, its commercial interests coincide
more and more closely with our own priorities. The Parliament has
passed legislation addressing intellectual property rights and is
expected to pass a bill on worker rights soon. In acting~, the RTG is
not just responding to us, but also to the needs expressed by its own
business community, and the need to bring itself into line with
international organizations like the WTO and ILO. While we welcome IPR
legislation including the Copyright Act and legislation to create
special IPR courts, we continue to press for better enforcement of
those laws.

As any other bilateral Ambassador these days, I have spent much of my
time in Thailand on economic and commercial issues -- both the
problems and the opportunities. Not long ago I presided at the opening
of the 150th Kentucky Fried Chicken outlet in Thailand. You of course
knew that you were in Thailand. The Thai classical dancers were
followed by a group of dancing chickens. After sounding a gong (not
cutting a ribbon) to formally open the store, we were all treated to a
very familiar KFC meal with French fries made from potatoes from
Idaho. The real concession to local tastes was the option of a special
spicy chicken, which indeed accounts for some 60% of KFC's sales in
Thailand.

KFC is one of hundreds of American companies which continue to regard
Thailand as a promising place to trade and invest. Many American firms
have invested in manufacturing facilities in Thailand attracted by the
promise of broad and increasingly sophisticated domestic market and
the prospect of accessing future markets in Vietnam, Laos and Cambodia
from facilities in Thailand. Recent investment decisions by Ford,
General Motors, Seagate Technologies, Proctor and Gamble, Colgate and
Kellogg's reflect long-term confidence in the Thai economy and the
promise of reaching regional markets from Thailand's strategic
location.

Security Ties

Our security partnership with Thailand also continues to be one of the
pillars of our bilateral relationship. As one of our five treaty
allies in Asia, we have a extensive program of joint exercises each
year including Cobra Gold, which is currently underway in Thailand.
This year Cobra Gold involves more than 17,000 US troops and is one of
our biggest joint and combined exercises in the world. Significant
numbers of Thai military officers continue to receive training in the
U.S. each year under our IMET Program and virtually every key leader
in the Thai military is the graduate of one of our training programs,
including Prime Minister Chavalit who is a graduate of the Command and
Staff College at Fort Leavenworth.

Thai cooperation also plays a vital role in our ongoing effort to
achieve the fullest possible accounting for American personnel missing
from the Vietnam conflict. Our Embassy is host to JTF/FA (Joint Task
Force/Full Accounting) Detachment 1, which handles the logistical
support for deployments of POW/MIA search teams into neighboring
Cambodia, Laos, and Vietnam. The DIA Stony Beach program is another
important office which seeks information on discrepancy cases in the
region.

Narcotics Cooperation

As noted earlier, the US and Thailand have a long history of
cooperation in efforts to stem the flow of narcotics, especially
heroin, from the notorious Golden Triangle region and now, in
particular, from Burma. Over the years, opium production in Thailand
has dropped from an estimated high of as much as 200 metric tons in
the 1970's to 30 metric tons in 1996.

In addition, Thai military and law enforcement officials cooperated
closely with us in sealing the northern Burma border against
trafficking by the notorious drug lord Khun Sa and in arresting 14 of
his top officials and heroin brokers. Three of them have already been
extradited to the US, and we expect the others to follow soon. The
extradition of a former Thai member of parliament to stand charges on
narcotics trafficking was also a landmark in Thai cooperation with the
US in counter-narcotics efforts.

Policy Dialogue

We have for many years enjoyed a candid and productive dialogue with
Thailand on regional issues. Aside from its ties to the U.S.,
Thailand's foreign policy lays primary stress on securing stable and
constructive relations with border neighbors, other Southeast Asian
states, and the major Asian powers, China and Japan. Bilateral efforts
are complemented by an active Thai role in ASEAN, and active
participation in APEC.

The Thai are acutely aware of China's current and future potential as
a nearby major power and take care to cultivate excellent relations
with Beijing. At the same time they encourage Chinese engagement with
its neighbors in the region through trade and dialogue with ASEAN and
participation in its regional security forum~.

Thailand's relations with three of its four border neighbors have
undergone major shifts in recent years. Changes of regime or
government in Cambodia and Burma, post-Cold War mellowing in Communist
Laos, and economic liberalization by all three, have opened up
opportunities for improved relations as well as Thai economic
penetration. Thailand has responded by pursuing bilateral ties and
supporting inclusion of these states in ASEAN possibly as early as
this summer, while dropping its previous support of border insurgent
movements that provided a hedge and in some cases, a geographic buffer
against once-unfriendly regimes.

With Cambodia this has translated into Thai efforts to help isolate
the Khmer Rouge; in Burma it translates into a policy of "constructive
engagement" with the military junta in Rangoon. With all three, it has
brought increased emphasis on regional integration through stepped-up
development of infrastructure of particular benefit to these poorer
states.

Development, Health and Environmental Issues

We also continue the work of development in Thailand. After 45 years
and $1.1 billion in bilateral development assistance, AID closed its
doors in Thailand last year. With an endowment funded by USAID, the
Kenan Institute of the University of North Carolina, and the Royal
Thai Government, the Kenan Institute Asia was established to build on
the legacy of the past to continue to address Thailand's development
needs into the future, with a particular emphasis on assisting with
programs to address health and environmental concerns in the nation.
In addition, the Peace Corps continues its important work of assisting
with the development needs in the North and Northeast, continuing the
work of the more than 5000 Peace Corps volunteers who have lived and
worked in Thailand over the years.

Building for the Future

As I have suggested, our important relationship with Thailand has
undergone a significant shift from the 1970s and 1980s, from a
relationship based on security and development needs to what I like to
call a productive partnership based on a wide range of common
interests including the economic prosperity of both nations. My
concern as a bilateral Ambassador managing a "g~~ood news"
relationship, is that we need to continue to devote the attention and
resources to the relationship that we have in the past. Like a
corporate manager, we have to reinvest in people, plant and equipment
if we are to be as competitive in the future as we have been in the
past.

One important contribution to reinvesting in this relationship was the
visit of President Clinton last November. The first visit by a sitting
President since the visit of Richard Nixon in 1969, it highlighted
many of the dramatic changes which have taken place in Thailand during
the past two decades and helped in bringing our close bilateral
relationship into sharp focus. It likewise looked to the future as we
highlighted the many areas where the US and Thailand will continue to
work together in the partnership which has served both nations so
well. We need to build on this foundation to strengthen even further
our ties with one of our best friends in the Asia-Pacific region -- an
effort which is so important to Thailand's future and to America's
future.

Thank you.

(end text)