Thai exporters may lose duty-free benefits in the United States, as Washington is reviewing whether to withdraw its Generalised System of Preferences (GSP) for 13 countries, including Thailand, amid growing pressure from Congress to amend the programme.

Officials at the US Embassy in Bangkok said yesterday that leaders of the Congressional Trade Committee would not support the GSP being renewed beyond this year unless concerns over unfair distribution of benefits were addressed.

Congress has questioned Washington's GSP policy, which sees more than 50 per cent of the benefits concentrated on only four countries - India, Indonesia, Brazil and Thailand. These four are among 13 beneficiaries that receive 70 per cent of GSP benefits.

Economic officer Peter Thorin said, "One of the concerns is that the GSP benefits went largely to a small group of countries."

The GSP was created by the Trade Act of 1974, in order to boost economic development in countries with a weak export sector.

Last year, the US imported US$26.7 billion (Bt1 trillion) of products from 133 countries under the GSP programme. Around 1,000 export items worth $3.57 billion came from Thailand. Thailand was the second-largest GSP beneficiary, accounting for 13 per cent of all exports to the US under the system.

Thorin dismissed any idea, however, that the GSP revision was aimed at putting pressure on Bangkok to speed up talks on a free-trade agreement  with the US. He said the US trade representative (USTR) started the review process last October, when the bilateral FTA talks were going well.

But when asked what could make up any benefits Thai exporters would lose if the GSP were changed, he said, "There's always an FTA".

News of the review has prompted the Thai Chamber of Commerce to convene a special meeting tomorrow. And Thai sources say the Federation of Thai Industries will meet to discuss the issue next Tuesday.

Thorin refused to speculate on possible costs to Thai exporters if the GSP benefits were removed. He said only 18 per cent of Thai exports enjoyed duty-free status under GSP benefits; otherwise, the normal tariff range was around 2-14 per cent.

Jewellery and electric appliances are among the most active export sectors currently enjoying GSP benefits.

Pornchai Chuenchomlada, president of Thai Gems and Jewellery Traders Association, said export competitiveness would be drastically cut without the GSP.

"Normally, we have to compete with China and India in the market. Although China does not get the privileges, we already face tough competition from them. If we lose the GSP benefits, our exporters may face more difficulty competing with China and others countries in the US market, which is the biggest market for Thai jewellery exports," he said.

In a statement announcing the review of GSP benefits, US Trade Representative Susan Schwab said it was important the programme continued for many developing countries, even if benefits for others were reduced or withdrawn.

"One of the concerns that Congress has raised is that GSP benefits go largely to a few countries, while many developing countries are not trading much under the programme. We want to ensure that we are operating the programme as Congress intended," Schwab said.

James Carouso, acting economic counsellor at the US Embassy in Bangkok, said American lawmakers wanted GSP benefits spread to more countries that were less well-off, including 40 least-developed countries in Africa.

Washington was thus reviewing whether to "limit, suspend or withdraw" GSP benefits if the total value of US imports under the system exceeded $100 million last year. The review also involves countries classified by the World Bank as upper middle-income economies, or those accounting for more than 0.25 per cent of world exports last year. Thailand falls into both categories.

The 13 countries "targeted" by the review are Argentina, Brazil, Croatia, India, Indonesia, Kazakhstan, the Philippines, Romania, Russia, South Africa, Thailand, Turkey and Venezuela.

Thorin did not rule out the possibility that the US may eventually curtail GSP benefits for Thailand. But he said the USTR would consider all economic factors and review GSP eligibility country by country.

"I don't believe that they will have the same plan for all countries", he said.

Thai exporters or government officials can submit their comments on how the GSP cuts would affect their industries to the USTR (e-mail: fr0052@ustr.eop.gov) to September 5. The USTR will take any comments into consideration for the review. A final decision is due at the end of the year.

Foreign Trade Department deputy director-general Nuntawan Sakuntanaga said Thailand would try to collect all necessary documents to prove that losing GSP privileges would cost Thailand exports dearly.

"We'd lose out to the Chinese," she said. And some US importers were now delaying orders for Thai products out of uncertainty about the GSP programme.

Jeerawat Na Thalang,

Petchanet Pratuangkrai

The Nation