Kingdom 'could lose' EU, US export privileges

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Kingdom 'could lose' EU, US export privileges
By Petchanet Pratruangkrai
The Nation 2011-08-13

Higher wages, external economic woes cited.

The economic stagnation being experienced in the European Union and the United States, as well as higher incomes for workers under the government's policy, will soon cause Thailand to lose its export privileges, an official in the Commerce Ministry has warned.

Entrepreneurs should immediately prepare for the loss of the General System of Privileges (GSP) that had been granted to Thailand by the developed nations, warned Surasak Riangkrul, deputy director-general of the Foreign Trade Department.

The GSP granted by the EU and the US has provided tariff privileges for developing nations based on their per capita income and market share of exports for specific products. If Thailand's income per capita increases, the country will be at a significant risk of losing the GSP in the near future.

Currently, Thai income per capita is calculated at US$4,716 (Bt141,300) yearly.

The ministry has reported that the EU will soon upwardly revise its GSP privileges covering the next two years, to be enacted after current privileges expire in December 2012.

Surasak said that since many countries within the EU had to cope with their own financial crises, these countries might no longer be willing to extend tariff privileges for Thai exporters and might, instead, turn to protecting their own domestic businesses.

Similar to the US, the debt crisis and the second wave of the economic meltdown could persuade EU countries to end the GSP for Thai exports.

Surasak also urged exporters to prepare immediately for the loss of export privileges, at the same time recalling that Thailand has not enjoyed any of the advantages of a free-trade agreement with the EU or the US. However, he predicted that in response to a move to encourage the growth of exports, the export sector could lose its competitiveness and advantages.

To ensure competition, Surasak advised producers and exporters to increase the value-added to products, rather than focus on selling inexpensive goods. Further, exporters must not abandon EU and US markets, but need to focus increasingly on specific groups of consumers within those markets who have high purchasing |power.

Currently, Thailand's exports to the EU account for only 9.7 per cent of total export revenue, while shipments to the US are valued at 9.5 per cent.

Thai export products that significantly benefit from the GSP include automobiles (pickup trucks and vans), air-conditioners, rubber gloves, rubber tyres, canned pineapple, processed shrimp, frozen shrimp, footwear, plastics, and leather goods.

Last year, Thailand exported $7.8 billion worth of products using its GSP privileges to the EU, which accounted for 59.36 per cent of the total export value to this market.