VI. TRADE REGULATIONS AND STANDARDS Tariffs and Import Taxes Thailand's present imports regime maintains significant tariff barriers on most products, with current duty rates in the 30 to 60 percent range for a majority of the products on which duties are collected. However, duty exemptions are routinely granted to firms with investment promotion privileges, and rebates of import duties on raw materials are routinely granted upon export of the finished product. In compliance with GATT Uruguay Round commitments, a simplified import regime will result in a system of only 5 or 6 rates and a maximum duty for almost all products of 30%. Duties on most types of machinery were reduced from 30-40% to 5%, in 1990 and similar duty reductions were made on imported computers and parts in 1991. Duties have been lowered on ferrous metals and chemicals in January 1993 and non-ferrous metals and many miscellaneous items in January 1994. In March 1994. reductions were announced on 417 items (mechanical, electrical, and optical/measuring/medical categories). The average duties on the items fell from 28 to 14%, and in some cases duties were almost totally eliminated (e.g. medical equipment). High tariffs remain major barriers to U.S. exports of value- added agricultural products and apparel. At present, duties on most agricultural products, notably processed food products, are at 60% ad valorem or at equivalent or higher specific duty. High tariffs on beef, turkey, fresh and dried fruits and nuts, fruit juice, and processed food products currently present a substantial barrier to U.S. agricultural exports to Thailand. A surcharge on soybean meal imports is another significant restraint on U.S. agricultural exports to Thailand. Duties on wine and spirits are the higher of an ad valorem duty of 60% or a specific duty ranging from 10 to 110 Thai baht (USD .40 to USD 4.40) per liter, depending on the variety. Imported alcoholic beverages are also assessed a separate excise duty at rates varying from 10 to 48%. Separate excise duties are assessed on a number of other imported products such as tobacco and some electrical and petroleum products. Many textile and apparel products are currently subject to the higher of an ad valorem or specific duty. Customs Valuation Arbitrary custom valuation procedures constitute an import barrier to U.S. exports. The Customs Department keeps records of the highest declared prices of products imported into Thailand from invoices of previous shipments, and uses these "check prices" to assess tariffs on subsequent shipments of similar products from the same country. Customs may therefore disregard actual invoiced values in favor of the check price, a practice which may particularly affect agricultural products with seasonally fluctuating prices. For products shipped from a country other than the country of origin, the Customs Department reserves the option to use the check price of either the country of origin or the country of shipment, whichever is higher. These rules are applied to imports from all nations. Import Licenses The Thai Ministry of Commerce requires import licenses on certain raw material, petroleum, industrial, textile, and agricultural products. While licensing requirements have been dropped on a number of items in recent years, licenses are still required for some 37 categories of items. In the food products area, licensing requirements remain for powdered skim milk and fresh milk, potatoes, soy beans and soy bean oil, refined sugar, and corn for animal feed, among others. Many of these licensing requirements will be eliminated as Thailand completes the adjustments necessary to conform to its Uruguay round commitments. Food and pharmaceutical product importers are also required to apply for import licenses from the Thai Food and Drug Administration. The licensing process is time consuming and costly, and requires the disclosure of proprietary information. Licenses cost $600 per item. Products imported in bulk require laboratory analysis at a cost of $40 to $120 per item. Products imported in sealed containers (consumer-ready packaged) require laboratory analysis at a cost of $200 per item. Some 39 items must be registered as "specific controlled food items" at an additional cost of $200. Although the Thai Food and Drug Administration has made efforts to streamline the registration process, it usually requires 3 months or more to complete. Export Controls Thailand maintains few restrictions on exports, and most are related to national security, environmental protection, and cultural concerns, or pursuant to trade agreements (such as international commodity agreements, agreements governing the textile and apparel trade, agreements on subsidies and dumping, etc.) Thailand's quota program for the export of textiles and apparel is administered by the Department of Foreign Trade of the Ministry of Commerce. Import/Export Documentation Customs procedures require the submission of an export entry form or import entry form, along with several other documents (invoice, packing list, bill of lading, letter of credits, etc.) to the customs officer. An advance entry system has been implemented to assist importers, in which all documents may be submitted and processed prior to the arrival of goods. Upon arrival, then, only assessed duty and port charges remain to be paid. Imported food items must be registered with the Thai Food and Drug Agency, which at times can be a difficult and time consuming task. Under the Cosmetic Act, B.E. 2517, of 1974, both a method of analysis for that substance in final product form, as well as efficacy data showing consumer benefit, for all substances included as a part of a cosmetic product's labelling must be submitted to the Thai FDA for approval. Controlled cosmetics are also subject to product registration besides normal licensing requirements. To secure an import permit, product samples, quantitative formula, notarized/legalized letter guaranteeing compliance with the Thai cosmetics regulations, and identification of preservatives must be submitted to the Thai FDA. The following are needed to register controlled products (in addition to those requirements needed to secure a permanent import permit): method of analysis for the controlled (active) substance, compendia references for all non-active ingredients. U.S. medical equipment must have a "certification of products for export" issued by the U.S. Food and Drug Administration, and duly certified by the Royal Thai Embassy in Washington, D.C., or by the American Embassy in Thailand. Temporary Entry Products for exhibitions or demonstrations can be imported for up to 6 months without payment of custom duties and value added tax. Businesses must obtain a bank guarantee for the value of the imports. If the product is not re-exported within six months, the duties and tax will then be levied. Labeling, Marking Requirements Labels must be registered with the Thai Food and Drug Administration and affixed to food products imported for sale in Thailand. It is required that labels bear information identifying the product name, its description, net weight or volume, and manufacturing/expiration dates. If food is imported for sale to restaurateurs, in addition to the above, labels must identify the manufacturer or distributor's name and address, and the product/label registration number. Labels must be printed in Thai (not required for alcoholic beverages). Prohibited Imports Imports of only a few products, including aerosol mixtures of vinyl chloride monomers (for health reasons) and products constituting trademark infringement, are actually banned by Thailand. However, as noted above, imports of a larger number of items require licenses from various Thai ministries, and licenses to import some of these products may not be routinely available. Standards Only 10 Thai companies are certified to be in compliance with ISO 9000 international standards for quality in design, production, installation and servicing. These companies include: Esso Standard Thailand Limited, Shell Thailand Manufacturing Limited, Alphatec Electronics Co., Ltd., Union Plastics Limited, Sony Magnetic Products (Thailand) Co., Ltd., Thai Micro Systems Technology Corporation Limited, The Siam Refractory Industry Co., Ltd., Fujitsu (Thailand) Co. Ltd., and Filthai Co., Ltd. Thailand has its own national standards specifications, Thailand Industrial Standard (TIS), to which most other companies operating in Thailand adhere. Free Trade Zones/ Warehouses Thailand has several Export Processing Zones (EPZ). Firms located in EPZs are exempt from import duties and other taxes on factory construction materials, machinery, and equipment, and export manufacturing inputs. Within EPZs, foreign investors are permitted to own land and employ foreign technicians and experts. EPZs are generally collocated with industrial estates developed either by the Thai Industrial Estate Authority or by the private sector and therefore have full infrastructure facilities and generally good access to transportation. The Customs Department allows larger firms engaged exclusively in manufacturing for export to set up bonded warehouses and to import (duty-free) inputs for their export production. Producers who receive approval to establish bonded warehouses must submit guarantees for duties which would otherwise be payable and to pay an annual fee. Membership in Free Trade Agreements Thailand is a member of the Association of Southeast Asian Nations (ASEAN). In 1992 leaders of ASEAN governments approved a Thai proposal to establish the ASEAN Free Trade Area (AFTA), which aims to reduce tariffs on most processed agricultural and industrial products traded among ASEAN countries to 0-5 percent by the year 2007. Other ASEAN members are Brunei, Indonesia, Malaysia, the Philippines, and Singapore. Together, ASEAN -- and AFTA -- make up a market of nearly $400 billion. While Thailand has begun a program of phased reductions to meet the tariff reduction target, the extent of AFTA's coverage and the extent of participation of each member remain to be finalized. Thai 2officials have said that they favor expanding AFTA to include other countries in the region, and a possible linkage between AFTA and the Australia-New Zealand free trade arrangement is being discussed.