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Thai exporters to adapt for EU's GSP scrap


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Thai exporters to adapt for EU’s GSP scrap

BANGKOK, 22 December 2014 (NNT) – The Department of Foreign Trade (DFT) has suggested Thai exporters to adapt their export model and adjust their manufacturing cost in wake of the cancellation of GSP from European Union from 1 January 2015.


DFT’s Director of Trade Preference Division Supavadee Chaiyanukulkitti has said that the European Union (EU) will cancel the Generalised Scheme of Preferences (GSP) with Thailand on 1 January 2015 as Thailand's per capita income exceeds the GSP rate.

She said that this would cause up to 6,200 export items, both from the industrial sector and agricultural sector, to face higher tax. It is expected that shrimp products, automobiles, eyeglass lenses, and air conditioners will be affected the most as these items rely on 90-100 percent of the GSP.

She also mentioned that Thai exporters can still take advantage of the GSP until the end of this year.

The DFT has been informing Thai entrepreneurs to adapt themselves by finding new markets outside Europe, relocating production bases to countries where the GSP is still valid to reduce the exporting costs, or negotiating a Free Trade Area with the EU to extend a method of tax-exemption for these products, said the DFT’s Trade Preference Director.

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-- NNT 2014-12-22 footer_n.gif

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Thai exporters advised to adapt before preferential tax denied by EU

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BANGKOK: -- Thai exporters are advised to adapt their manufacturing process and their products when their preferential tax treatment products are to be denied by the European Union from next year.

Director of the Foreign Trade Department’s Trade Preference Division Mrs Supavadee Chaiyanukulkitti said that the European Union (EU) will scrap tax privileges under the Generalised Scheme of Preferences (GSP) with Thailand on January 1, 2015 as the country’s per capita income has exceeded the GSP rate.

With the scrapping of the preferential tax treatment, almost up to 6,200 export items, both from the industrial sector and agricultural sector, will face higher tax, she said.

Affected by high tax are shrimp products, automobiles, eyeglass lenses, and air conditioners which currently benefit from from the tax treatment of 90-100 percent of the GSP.

But she said exporters still have time until end of the year to reap benefits from the GSP.

She said the department has been informing Thai entrepreneurs to adapt themselves by exploring new markets outside Europe, relocating production bases to countries where the preferential tax treatment is still in force to lower cost.

News talk on Free Trade Area with the EU to extend a method of tax-exemption was also advised, she said.

Source: http://englishnews.thaipbs.or.th/thai-exporters-advised-adapt-preferential-tax-denied-eu

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-- Thai PBS 2014-12-22

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I actually think it is scandalous that is has reached this point, with the EU being the 2nd largest export market for Thailand. Clearly, higher EU import duties will have EU suppliers planning alternative sources where possible and this will likely have a significant impact on businesses and jobs in Thailand.

You can probably imagine which side has been dragging its feet in finalising a Thai-EU FTA to replace the GSP.....

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Seems a bit unfair to go from go to whoa based on a single number.

Might be easier for all concerned if there was a sliding scale.....make it steep if necessary...but at least allow for a gradual decline , not just wham bam thank you mam with, apparently, a weeks notice..

It will hurt the EU importers as well as the Thai exporters.

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Sorry, but..

When out of all S.E. Asean countries, incl Sri lanka, India, Pakistan, China, the import duty was REDUCED a little. see http://ec.europa.eu/taxation_customs/dds2/taric/taric_consultation.jsp?Lang=nl&Taric=&QuotaAuthorities=false&EndPub=&MeasText=&Area=&Regulation=&LangDescr=&MeasType=&SimDate=20111231&StartPub=&OrderNum=&GoodsText=&ContextPath=&Level=&Expand=false

Think of.. instead of 6,4 % for rice vermicelli, the import duty was only 2,9 %. For vegetable oils: 9,6% instead of 6,1%. For coconut milk: 12,8 % instead of 8,9 % . So, a .... 3-4 % difference. Not a mayor difference.

When these differences are compared with the 30-60 % import duty of foods from EU ( wines over 400 % ) , sorry, I donot have an idea, about what the Thais are complaining about. Imagine, the EU would impose the same regulations on Thai foods as the Thais did on EU foods: 99,99 % of Thai exports to EU would be wiped away.

Second: already many GSP preferences were ended 31 Dec 2013, so.. time to get awake 355 days after..

Third: it is for ALL Asian countries.

So, nothing special, only... the ADVANTAGES got so many years ( i remember in 1993 when I started this business, it was already in force ) to get the own export finally organised and competative with teh rest of the world ... was used to continue the sleeping.... as ALWAYS with Thais.

So much business is already taken over by the Chinese and in lesser extend: the Vietnamese.

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Don't worry - I'm sure that the Junta has a plan - DO NOTHING ! .... and then shortly thereafter as exports and employment fall, the Thai per capita income will again fall below the GSP qualifying rate. Pretty shrewd plan.

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