Thailand and Indonesia are at risk of losing special trade status that gives developing economies preferential access to the US market, according to Maybank Kim Eng Research.
Thailand is the second-biggest beneficiary of the decades-old Generalised System of Preferences (GSP), while Indonesia is the fourth-largest, Maybank analysts led by chief economist Suhaimi Ilias wrote on Friday. The US recently dropped India and Turkey from a list of GSP countries.
The US review of Thailand’s status focuses on issues such as market access for American pork and workers’ rights. For Indonesia, it includes intellectual property rights and trade and investment barriers.
Major exports for Thailand under GSP include air conditioner components, rubber gloves, processed food, non-alcoholic beverages, motorcycles, reading lenses; for Indonesia under GSP, rubber tires, jewellery and chemicals.
Maybank sees US using currency manipulation and undervaluation labels, in addition to GSP removal threats, to potentially extract trade concessions or win an upper hand in US-China trade war.
“Vietnam, for example, appears to be turning increasingly cautious in its dealings with China’s trade and investments, given the increased US scrutiny for fear of being perceived as a backdoor,” Maybank said.
Thailand’s goods trade with the US was worth $48.3 billion last year, while for Indonesia the figure was $31.1 billion.