The boy, whose twin sister was taken to Australia by the unidentified couple, needs urgent medical care.
The surrogate mother in Thailand says she will raise the boy as her own and an online campaign has raised $185,000 for his treatment.
The case has raised fears Australia could ban international surrogacy.
The baby boy, named Gammy, has a congenital heart condition and a lung infection as well as Down’s syndrome. He is currently receiving urgent treatment in a Thai hospital.
Pattaramon Chanbua was paid $15,000 to be a surrogate mother for the Australian couple.
The couple asked Pattaramon Chanbua to have an abortion after doctors informed her of the child’s condition four months after becoming pregnant. She refused, saying it was against her Buddhist beliefs.
Australian PM Tony Abbott said it was “an incredibly sad story” and illustrated “some of the pitfalls involved in this particular business”.
It is illegal to pay for surrogacy in Australia so couples have to find a surrogate who is happy to carry the child for no payment beyond medical and other reasonable expenses.
Advocacy group Surrogacy Australia said this “red tape” means many couples choose to go abroad to find a surrogate, with 400 or 500 each year venturing to India, Thailand, the US and other places.
Rachel Kunde, the group’s executive director, said she hoped the case would lead to better regulation by the Australian authorities of international surrogacy, rather than an outright ban.
“Our greatest fear is that Australia is going to ban international surrogacy altogether,” she said.
“We are hoping that the government will make accessing surrogates in Australia easier.”
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