Phuket Business: Corruption and Customs practices seen as major deterrent to trade

PHUKET: In a report released yesterday by the Office of the United States Trade Representative (USTR), the Thai Customs Department comes under fire as a barrier to trade, and does so to the disadvantage of both countries.

Corruption is seen to be at the root of the problem.

Herewith, some brief extracts from the report:

“The United States continues to have serious concerns about the lack of transparency of the Thai customs regime and the significant discretionary authority exercised by Customs Department officials. The Customs Department Director General retains the authority and discretion to arbitrarily increase the customs value of imports.

The United States has raised concerns with the Royal Thai government regarding this authority and has urged Thailand to eliminate this practice.

The U.S. Government and industry have also expressed concern about the inconsistent application of Thailand’s transaction valuation methodology and repeated use of arbitrary values by the Customs Department.

The U.S. Government and exporters continue to urge the Customs Department to implement overdue reforms, including publishing proposals for changes in customs laws, regulations, and notifications, and allowing sufficient time for comments on these proposals.

Of additional concern are the failure to publish customs rulings and the lengthy appeals process for these rulings, both of which create considerable uncertainty for importers.

U.S. companies also continue to report serious concerns about corruption and the inappropriate penalty reward system for customs officials.

In August 2009, the Royal Thai government proposed a series of reforms to its customs laws and procedures.

A first set of amendments that address some aspects of the penalty regime was approved by the Thai Cabinet in September 2010, but now must be reviewed and passed by Parliament.”

As for corruption generally, the report notes that the 2007 Thai Constitution contains provisions to combat corruption, including enhancement of the status and powers of the National Counter Corruption Commission, which is independent from other branches of government.

But, the report says, “Despite these steps, corruption continues to be a serious concern. Anti-corruption mechanisms continue to be employed unevenly, and the lack of transparency in many government administrative procedures facilitates corruption.”

The office of the USTR negotiates directly with foreign governments to create trade agreements, to resolve disputes, and to participate in global trade policy organizations. It also meets with governments, business groups, legislators and public interest groups around the world to gather input on trade issues.

Further background on the Office is available here.

A full copy of yesterday’s report on Thailand is available here.

Although the report contains nothing specific to Phuket, the impact of Thai Customs practices and corruption generally is felt here on a daily basis in the form of rapidly rising prices for both tourists and local residents alike.