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Thailand Coup Impact on Trade Unclear

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The army has seized control of the government in Thailand, where tensions between rival political factions have been rising for several months. Army Chief General Prayuth Chan-ocha announced the coup in a national address Thursday and confirmed that the armed forces had taken over the country and suspended its constitution two days after declaring martial law in an effort to calm the pressure.

Several politicians, including recently oustered Prime Minister Yingluck Shinawatra, were detained. Protest camps were ordered to disperse and media, both broadcast and social, were censored. CNN posted a summary of events relating to the situation on its website after its television network was taken off the air in Thailand.

Such turbulence is not new to the country, dubbed “Teflon Thailand” by many economists. There have been 19 coups (12 successful) in the past 80 years, the most recent in 2006, when Prime Minister Thaksin Shinawatra was removed from office. This led to a movement that has gained traction and resulted in several widely-publicized periods of protest and violence between opposition “Yellow Shirts” and pro-government “Red Shirts” in the country over the past several years. General Prayuth reportedly convened a meeting of representatives from the two groups Tuesday to find a compromise, but when no progress was made, he announced he was seizing power.

The months of protest have already hurt Thailand economically. Tourism, a major industry, has suffered the most because of the instability. Prolongued political unrest will also hurt Thailand’s competitiveness and attractiveness to foreign investment.

Sometimes called “The Detroit of the East,” the country is an important manufacturer and assembly hub for things like automobiles (primarily for the Japanese market) and hard-disk drives.

After growing in 2011 and 2012, Thai exports to the U.S. were flat at almost $23 billion in 2013, and were dominated by computer parts and other electronics components ($4.5 billion), rubber products ($1.6 billion) and textiles and apparel ($1.2 billion). It is unclear whether the government takeover by the military will have any impact on manufacturing or trade in the near term.

Secretary of State John Kerry, in a statement made in Washington, D.C., called the coup unjustified, and warned that there would be negative implications for the US-Thai relationship. He said “I urge the restoration of civilian government immediately, a return to democracy, and respect for human rights and fundamental freedoms, such as press freedoms.”

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