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ASEAN ANALYSIS  19  August 2010

Nationalism and foreign relations

By David Swartzentruber
AseanAffairs   19 August 2010

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When the Great Depression hit in the United States the adoption of the Hawley-Smoot tariff that raised U.S. tariffs on imported goods to the highest level in the country’s history is generally credited with exacerbating international trade and deepening that historic downturn.

The motive behind the tariff was economic nationalism, otherwise known as protectionism. In the 21st century, it seems that protectionism under various guises is still alive and well. Two current examples can be cited.

In the United States, a new law authorizing visa hikes will negatively impact Indian companies doing business in the United States. The law signed by President Barack Obama Friday steeply hikes H1-B and L worker visa fees in the case of companies whose workforce is less than half American to raise $ 600 million to strengthen security along the border with Mexico.

The Indian government protests to Washington over what it calls a highly discriminatory law that would largely affect Indian IT firms like Tata Consultancy Services, Infosys Technologies, Wipro and Mahindra Satyam and threatens to file a complaint with the World Trade Organization.

In Thailand, the National Telecommunications Commission (NTC) , charged with setting policy to benefit Thai consumers has put forth rules to curb foreign dominance in its telecom industry, in both shareholding and managerial positions.

These rules have been announced in spite of two curious situations. The two leading telecom firms have both foreign shareholders and foreign persons in managerial and executive positions. Also, the NTC is reported to have conducted road shows, undoubtedly financed with Thai taxpayer funds, to attract foreign firms to bid in its upcoming 3G spectrum auction.

Needless to say, although Chinese, Japanese and South Korean telecoms are reported to have expressed interest in the auction, none have as yet applied to be in the upcoming auction.

It would seem that Thai taxpayers should be appalled at this waste of their money for these road shows.

The European Union has already filed a complaint that the proposed rule may violate Thailand’s international trade agreements and it is suggested that the two firms dominating the current mobile phone market may file a court injunction before entering the 3G auction.

It would appear that in both the United States and Thailand both U.S. politicians and Thai regulators could be called the “gangs that couldn’t shoot straight.”

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