Thailand, Tier 3, and implications for US business

SI-Web-LogoCircleOnly-300dp BRIEFING TO US SEAFOOD COMPANIES ON IMPLICATIONS OF A DROP TO TIER 3 STATUS FOR THAILAND

20 May 2014

On June 1 the US Department of State will release the Trafficking in Persons (TIP) Report with a 2014 ranking for Thailand.  Currently on the “tier 2 watch list”, there is some likelihood that Thailand will drop to a tier 3 ranking[1] due to its unstable political situation and a provision in the law for an automatic downgrade for countries on the watch list more than 2 years.  Thailand has been on the watch list for 4 years and avoided a downgrade already[2].

Tier 3 status will mean a halt to non-trade related and non-humanitarian aid from the USA to Thailand, unless the President decides otherwise for the national interest.  It also puts an end to cultural/education funding. Trade related assistance continues. The President can advise the International Monetary Fund, World Bank and other inter-governmental banks to step out on aid to Thailand, but that is a discretionary power.

For comparison China and Russia are ranked at tier 3.  However, widespread trafficking in the seafood sector is a factor in Thailand’s 2014 ranking.

Some improvements have been made.  Many companies in the Thai seafood industry have signed on to codes of good conduct[3] or promises to end illegal labor[4].  But the political situation is deteriorating and in particular the rule of law in Thailand has not improved in 2014.

According to the 2013 TIP report “Corruption remained widespread among Thai law enforcement personnel, creating an enabling environment for human trafficking to prosper.”[5]  Following its release in Fall 2013 the Thai government tried to pass an amnesty on all commercial corruption. It led to civil protests that ultimately de-stabilized the government. A snap election held on 2 February was invalidated because the opposition boycotted the polls. A new election is called for July 20 but the prime minister and nine cabinet ministers were forced out of office in early May by Thai courts.  On May 19 the Army in Thailand declared martial law.

Clearly things are not ‘improving’ at the country level this year. The downgrade option will likely depend on whether or not the US government determines it to be an effective lever to motivate a weak government to take anti-corruption seriously.

For the seafood trade, the major impact of a tier 3 ranking will be more high profile media stories about forced and unpaid migrant labor in Thai seafood.

The value of Thai farmed shrimp in US imports in 2012 was $1.2 billion and $594 million for tuna, $70 million for crab and nearly $30 million for squid. If it seems intractable, the fact is the trafficking of migrant workers and indentured labor is at odds with business norms in the USA.  In an unstable climate sometimes the private sector is in the best position to act with due diligence measures.  See www.laborsafescreen.com to learn how.



[1]The tiers and their provisions through the US Department of State arise from the US Trafficking Victims Protection Act (TVPA).  The rankings are used to motivate countries to comply with the TVPA’s minimum standards but are not making significant efforts to do so.  The law lists factors to determine whether a country should be on Tier 2 (or Tier 2 Watch List) versus Tier 3. First, the extent to which the country is a country of origin, transit, or destination for severe forms of trafficking. Second, the extent to which the country’s government does not comply with the TVPA’s minimum standards and, in particular, the extent to which officials or government employees have been complicit in severe forms of trafficking. And third, reasonable measures required to bring the government into compliance with the minimum standards in light of the government’s resources and capabilities to address and eliminate severe forms of trafficking in persons.

[2] Earlier the Thai government avoided a downgrade to tier 3 by providing a plan to show it cared about resolving the issue. A downgrade in 2014 is meant to depend on whether there were significant signs of improvement in 2013.  

[3]Good Labour Practices program for Thai seafood, International Labour Organization http://www.ilo.org/asia/WCMS_221455/lang–en/index.htm

[4] Presidents of Thai Food Processors’ Association, The National Fisheries Association of Thailand, Thai Tuna Industry Association, Thai Frozen Foods Association, Thai Shrimp Association, Thai Overseas Fisheries Association, Thai Feed Mill Association and Thai Fishmeal Producers Association signed the declaration of intent to ‘Stop Illegal Labor in the Fishery Industrial Chain’ on November 11, 2013 in Bangkok.

[5] Thailand narrative, 2013 US Trafficking in Persons report. pp 358-362 is available online at http://www.state.gov/documents/organization/210742.pdf.