The European Union Delegation to Thailand has written to three ministers and the National Telecommunications Commission to express concern that the NTC's draft rules on preventing foreign dominance of local telecom operators could contradict the Kingdom's commitments under the General Agreement on Trade in Services (GATS).
The letter was sent on August 10 to Commerce Minister Porntiva Nakasai, Information and Communications Technology Minister Chuti Krairiksh and Finance Minister Korn Chatikavanij, as well as to the telecom regulator.
Chuti has already asked a Thai trade representative to examine whether the NTC draft could adversely affect foreign investment in Thailand.
The NTC will discuss the EU letter at its board meeting today.
It will then hold a public hearing on the draft with local telecom operators on Friday. Some commissioners believe the draft could be amended following the hearing.
The EU is concerned that the draft would run counter to the commitment undertaken by Thailand in its schedule of specific commitment in the field of trade in services under the World Trade Organisation's GATS.
The acts proscribed in the draft would also substantially restrict the freedom of foreign investors to manage and supervise their own businesses as the rules restrict important rights, the EU argues, such as the right to hold executive positions important to the establishment of policies and operations of the companies.
Its letter also cites the right to approve or veto investment and management policies.
The letter states that under Thailand's existing GATS commitments, there is no limitation referring to the same or similar prohibitions.
The EU also views that the draft could be viewed as a step backward in the NTC's efforts to open up the telecom market, and that it could discourage future investment in the sector.
NTC member Sudharma Yoonaidharma said Thailand was not bound by GATS Mode 4, which relates to the presence of natural persons or the temporary admission of foreign nationals or foreign permanent residents as service providers in the GATS members' territories.
He added that foreigners who could prove they work for local telecom operators and who protected their companies' interests would have no problem with the draft rules.
He said the rules would affect those working for foreign shareholders of local telecom operators and who protected only the interests of the foreign shareholders.
The NTC draft defines "foreign dominance" as foreigners' direct and indirect control or influence on a company in setting policy and management to an extent greater than is permitted by their share ownership.
Conduct or behaviour deemed to be foreign dominance includes the use of nominees and foreign ownership that exceeds the level permissible by law.
It also includes foreign shareholders or proxies having the authority to appoint key executives in the companies, and covers the recruitment of foreigners connected with foreign shareholders to key policy-making posts.
The rules will be applied to both 3G licence holders and private telecom concession holders.
The NTC will order businesses to remedy the situation if they are found to have breached the rules.