Thailand 'Could Lose' EU, US Export Privileges

[webfact]

Kingdom 'could lose' EU, US export privileges

By Petchanet Pratruangkrai

The Nation

Higher wages, external economic woes cited.

The economic stagnation being experienced in the European Union and the United States, as well as higher incomes for workers under the government's policy, will soon cause Thailand to lose its export privileges, an official in the Commerce Ministry has warned.

Entrepreneurs should immediately prepare for the loss of the General System of Privileges (GSP) that had been granted to Thailand by the developed nations, warned Surasak Riangkrul, deputy director-general of the Foreign Trade Department.

The GSP granted by the EU and the US has provided tariff privileges for developing nations based on their per capita income and market share of exports for specific products. If Thailand's income per capita increases, the country will be at a significant risk of losing the GSP in the near future.

Currently, Thai income per capita is calculated at US$4,716 (Bt141,300) yearly.

The ministry has reported that the EU will soon upwardly revise its GSP privileges covering the next two years, to be enacted after current privileges expire in December 2012.

Surasak said that since many countries within the EU had to cope with their own financial crises, these countries might no longer be willing to extend tariff privileges for Thai exporters and might, instead, turn to protecting their own domestic businesses.

Similar to the US, the debt crisis and the second wave of the economic meltdown could persuade EU countries to end the GSP for Thai exports.

Surasak also urged exporters to prepare immediately for the loss of export privileges, at the same time recalling that Thailand has not enjoyed any of the advantages of a free-trade agreement with the EU or the US. However, he predicted that in response to a move to encourage the growth of exports, the export sector could lose its competitiveness and advantages.

To ensure competition, Surasak advised producers and exporters to increase the value-added to products, rather than focus on selling inexpensive goods. Further, exporters must not abandon EU and US markets, but need to focus increasingly on specific groups of consumers within those markets who have high purchasing |power.

Currently, Thailand's exports to the EU account for only 9.7 per cent of total export revenue, while shipments to the US are valued at 9.5 per cent.

Thai export products that significantly benefit from the GSP include automobiles (pickup trucks and vans), air-conditioners, rubber gloves, rubber tyres, canned pineapple, processed shrimp, frozen shrimp, footwear, plastics, and leather goods.

Last year, Thailand exported $7.8 billion worth of products using its GSP privileges to the EU, which accounted for 59.36 per cent of the total export value to this market.

-- The Nation 2011-08-13

[cloudhopper]

He might be right - the same sort of protectionism occurred in the 1930s.

[endure]

Look for quote marks. Anything enclosed in them is speculative bullshit...

[BuckarooBanzai]

The U.S. Generalized System of Preferences (GSP) is a program designed to promote economic growth in the developing world by providing preferential duty-free entry for up to 4,800 products from 129 designated beneficiary countries and territories.

GSP was instituted on January 1, 1976, by the Trade Act of 1974. Congressional authorization of the GSP program expired on December 31, 2010. As of mid-July 2011, Congress had not reauthorized the program.

http://www.ustr.gov/trade-topics/trade-development/preference-programs/generalized-system-preference-gsp

I would say there is a good chance that some countries may loose their preference from the US considering there is none.

Perhaps this is for local consumption so people will not expect a raise do to the dire outcome of such an increase in expenditures?

Edited August 13, 2011 by BuckarooBanzai

[cougar52]

I would say there is a good chance that some countries may loose their preference from the US considering there is none.

No GSP Second this.

Besides this the plan to raise the wages to 300 a baht a day is still way under the previous Gsp which authorized wages under excess of 380 Baht a day.

[HAL9000]

The US is standing by to sign the Free Trade Agreement. They are just waiting for Thailand to figure out who's in charge so someone can sign it.

[cloudhopper]

The US is standing by to sign the Free Trade Agreement. They are just waiting for Thailand to figure out who's in charge so someone can sign it.

How long have they been waiting?

[HAL9000]

How long have they been waiting?

Good question. I last talked to a US trade delegate about a year ago I guess.

[gosompoi]

The US is standing by to sign the Free Trade Agreement. They are just waiting for Thailand to figure out who's in charge so someone can sign it.

How long have they been waiting?

7 years almost, it was put on hold because of the coup in 2002.

[Hardie]

GSP is a bit out-dated and being replaced by individual and regional agreements... though all might be up for review. At this point, in the US at least, it's probably more about potential sources of revenue than protectionism, anything but taxes, now political suicide..