US TRADE POLICY
Revamp to GSP to cost exporters
Thai firms to lose tariff privileges due to tax overhaul
The United States will in future grant Generalised System of Preferences (GSP) yearly instead of 10-yearly as the tax-privilege system has eaten into its national budget. The Bush administration has approved this in principle, and the US Trade Representative has drawn up a list of countries to which the new system will be extended. The US grants tax privileges to developing countries to strengthen their export competitiveness in the US market and as a temporary bridge to ease developing countries into the global trading system. Thailand is among the 136 developing nations enjoying low tariffs under the GSP. The US may restrict the low tariff rate when countries' per-capita income exceeds its guidelines. There will be a cut in the tax privilege extended to Thai products this year, according to a source from the Commerce Ministry. "The government doubts if Thailand will continue to enjoy the special tax rate any longer, because the US may consider Thai per-capita income and development too high," the source said. Thailand is in the top four countries on the highest level of the GSP. The others are Brazil, India and Angola. The ministry reported that Thailand's exports under the GSP had jumped 31 per cent to US$1.32 billion (Bt49.9 billion) during the first four months of this year, though this may, it said, reflect circumvention on textiles, ceramics and shoes. The source said Thailand was right to worry that the cut would hit exports, mainly due to delay over free-trade talks. "Thailand will lose export competitiveness due to the GSP cut: jewellery and electric appliances in particular could be badly hit," the source said. The source added that until Thailand actively encouraged FTA talks with the US, the GSP was the only hope for the Thai export sector. "If we lose both, many businesses will go bust, as the US is our biggest export market," the source said, adding that Thai private enterprises should im-prove their efficiency and not rely on the GSP for short-term benefits.
Petchanet Pratruangkrai The Nation
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