Thailand's export industry is facing a rude awakening. The tax privileges from the European Union (EU), which Thai products had enjoyed for decades, stopped on New Year's Day.
The challenge ahead to win consumers in the global market is immense when products from Thailand are now more expensive, and also tainted by human rights violations scandals and disregard for the environment.
This is especially true with the seafood industry which relies heavily on the EU market and its tax benefits.
The Foreign Ministry is correct when it said the stoppage of the EU's generalised system of preferences (GSP) for Thailand had nothing to do with the May 22 coup. It failed to point out, however, that the power seizure has also prevented any trade negotiations from taking place.
The GSP tax benefits are given to developing countries so that they can compete in the global arena. The privileges will stop if a particular country is stronger and ranked by the World Bank as a high-income or upper-middle income country for three consecutive years. That is the case with Thailand.
According to the Economic Intelligence Centre of Siam Commercial Bank, the discontinuation of the tax benefits will affect over 700 products including frozen shrimp, motorcycles, shoes, apparel, tyres, and canned tuna. The bank has estimated that the damage to the Thai economy will be at least $47 million (1.5 billion baht).
It is inevitable that exporters will have to seek new markets to compensate for the losses and to spread the risks. But this is not going to be easy given the current global economic doldrums.
Exporters will have to be more innovative to add new product value and to shift from old business bases to grab new economic opportunities in the digital era. Again this is easier said than done.
Much has been said about the need for Thailand to shift from a labour-intensive to a creative economy. But the truth is painful. How can we expect people to be creative when the political, cultural environment, and education system reward submissiveness and severely punish differences?
It is also difficult for Thailand to immediately forsake the export industries that are rooted in the country's agricultural and labour advantages. But when consumers pay attention to how their foods and goods are produced, the agro giants and other export-oriented industries have no choice but to change their ways. And if they refuse to do it, the government must make them through laws and regulations.
Respecting human dignity and the environment is the new way of doing business. Not because the country needs to maintain export markets overseas.
More importantly, environmentally destructive businesses — such as commercial trawlers that sweep clean the sea and the animal feed industry that destroy the forests — have destroyed our natural resources and the locals' sources of livelihoods for their profits for far too long. They must be stopped.
The fishery and agro industries are also notorious for abusing forced labour supplied by human traffickers. They can continue to do so for one main reason: corruption. Unless the government gets tough with corrupt officials who collude with trafficking rackets, there is little chance the country will eradicate its image as a hub of modern slavery and win back consumer trust and confidence.
Instead of seeing the halting of tax privileges from the EU and Thai seafood boycotts from Western consumers as trade obstacles, Thailand should welcome their power of the purse to do what our authorities have failed.
Business needs to learn the hard way that if they do not respect human dignity and the environment, they will not survive.