US trade move 'won't hurt Thai exports'
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US trade move 'won't hurt Thai exports'

GSP suspension imposes ordinary tax rate

Thai exports to the United States under the so-called Generalized System of Preferences will not be affected won't much affect by the US decision. (Bangkok Post file photo)
Thai exports to the United States under the so-called Generalized System of Preferences will not be affected won't much affect by the US decision. (Bangkok Post file photo)

The Commerce Ministry insisted on Saturday the announcement by US President Donald Trump to suspend preferential trade benefits for 231 Thai products under the so-called Generalized System of Preferences (GSP) won't much affect Thailand's export to the US.

Effective on Dec 30, the new GSP suspension will result in these products being taxed at a normal rate, not that they will be banned from entry to the US, said Keerati Rushchano, director-general of Department of International Trade Promotion.

A key reason cited to justify the GSP suspension is a lack of sufficient progress in providing the US with equitable and reasonable market access for pork products with ractopamine residues, he said.

Ractopamine is an animal feed additive used to promote leanness and increase food conversion efficiency in livestock in some countries, but banned in others. Because of safety concerns, about 160 nations ban or restrict the use of this drug during pig production, including the European Union, Russia and China. The maximum residue limit for ractopamine for meat in the USA is 50 parts per billion (ppb), or five times the standard set by the Codex Alimentarius.

Of the 231 products facing the new GSP suspension, only 147 will actually be affected as they will be subject to a higher rate of between 3% and 4% in export tariffs, amounting to about 600 million baht in total, he said.

Products that will be affected include auto parts such as steering wheels, wheels, and transmission boxes, plastic glasses frames, certain chemical products and rubber or plastic beddings, he said.

The reason that not all 231 such products named in the GSP suspension won't be affected is because only 147 of them are being imported into the US, he said.

"And if these Thai products maintain their quality and popularity, it's believed the higher tax won't hinder importers in the US from continuing to import them from Thailand as usual," he said.

The Commerce Ministry has put in place measures to help exporters cope with the new GSP suspension, including promotion of online business matching in both the US and other markets to allow Thai business operators to contact directly consumers in these markets, he said.

The ministry also has asked financial institutions such as the Export–Import Bank of Thailand to offer help to exporters facing new challenges as a result of the new GSP suspension, he said. In the first GSP suspension on 573 products last year, only 315 were actually affected, he said.

A follow-up on the export rate of these affected products to the US and other markets found they still are being exported well to all these key markets, with only an overall 10% drop observed in the US market, Mr Keerati said. It remains unclear whether the export drop was a result of the previous GSP suspension or the impact of the Covid-19 pandemic, he said.

Exports of 10 of these 315 affected products were actually found to have increased, including washing machines, sanitary ware, sheets, national flags, dishwashers, litchi and longan, he said.

This is a proof the first GSP suspension didn't have a serious impact on these 351 products, which were also found to have been exported at a higher rate to other countries, especially Europe, China and Hong Kong, he said. A total of 638 Thai products are still included in the US' GSP, Mr Keerati said.

The GSP allows duty-free entry into the US market for 3,500 products from 119 countries, which in exchange must take steps to protect worker rights, protect intellectual property rights, and assure "equitable and reasonable access to its markets."

The GSP, the largest US trade preference programme, is designed to promote economic development by allowing duty-free entry into the US for about 3,500 products from over 100 designated beneficiary countries and territories, according to the USTR.

Sanan Angubolkul, vice-chairman of the Thai Chamber of Commerce, agreed the new GSP suspension won't have any dramatic impact on exports, especially when compared with the impact of the strong baht.

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