GSP removal not causing much concern

GSP removal not causing much concern

Department sees little impact as 11 items cut

A man checks the quality of durian for export at Queen Frozen Co in Pathum Thani province. Fresh durian was one of 11 products removed from the US's GSP list on Thursday. (Photo by Pongpat Wongyala)
A man checks the quality of durian for export at Queen Frozen Co in Pathum Thani province. Fresh durian was one of 11 products removed from the US's GSP list on Thursday. (Photo by Pongpat Wongyala)

Thailand's overall exports are unlikely to be affected much by the US's decision to cut 11 Thai products out of its Generalized System of Preferences (GSP), insists the Foreign Trade Department's chief.

Adul Chotinisakorn, director-general of the Foreign Trade Department, said the US's move, effective from yesterday, will have little impact on exports as Thai products remain competitive, given the relatively low tariff hike.

The 11 products are fresh-cut orchids, fresh durian, dried papaya, dried tamarind, prepared and preserved sweet corn, preserved fruit and nuts, prepared papaya, assembled flooring panels of wood for mosaic floors, offset printing machinery, washing machines, and tripods.

Of the total, 10 items controlled a market share of more than 50% of US imports, while washing machines fetched imports of more than US$180 million (5.94 billion baht).

The 11 Thai products are going to be subject to US import tariffs ranging from 1-8%.

"The department re-evaluated the utilisation of the US's GSP on 11 items, and the use of privileges under the GSP scheme by Thai exporters amounted to $46 million in 2017, representing 1.11% of US's GSP utilisation," he said.

In 2017, the value of the GSP used by Thai exporters on 3,400 items given trade privileges totalled $4.15 billion.

"The penalty rate is considered not that high," said Mr Adul.

"More importantly, this shows Thai products have high competitiveness, as up to 10 items were found to control more than a 50% share of US imports."

He said shipments of Thai washing machines are also unlikely to be much affected, as they are subject to a higher tariff of only 1%.

Mr Adul said Thailand was not alone in cuts to the GSP, as other competitors in the US market such as India, Brazil, Ecuador, Argentina, the Philippines, Indonesia also faced higher tariffs.

Ghanyapad Tantipipatpong, chairwoman of the Thai National Shippers' Council, said the GSP cuts on 11 products will affect exporters of agricultural products and those produced by Thai SMEs.

Importers may suspend purchase orders to cope with more expensive prices, she said, or importers may consider increasing their prices.

For the first nine months this year, Thailand's exports expanded 8.13% year-on-year to $189.72 billion, with imports increasing 15.2% to $186.89 billion, yielding a trade surplus of $2.83 billion.

The Commerce Ministry expects full-year exports to grow more than 8% this year, and has set a lofty export growth target of 8% for next year.

The private sector believes the increase will be 5% at best, citing negative momentum from the prolonged US-China trade dispute.

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