Earlier, the Commerce Ministry had set the Kingdom's 2007 export growth target at 12-15 per cent- or US$145.6 billion-$149.5 billion (Bt5.4 trillion-Bt5.6 trillion), based on the assumption that the US would prolong its tax privileges.

 As the country's largest export market, the loss of the GSP privileges would subject Thai goods to higher tariffs at an average of 4.5 per cent, reducing the country's competitiveness.

The GSP programme grants special tariffs to 1,218 Thai goods, accounting for 37.3 per cent of Thailand's total exports. However, the US announced that it might not renew the privilege for 13 countries, including Thailand.

 Aat Pisanwanich, director of the Centre for International Trade Studies (CITS), said Thailand was likely to lose the privileges because the Kingdom's per-capita income would exceed $9,200 this year.

 Thailand's economy is stronger than other developing countries, he said.

 Aat said that although the coup d'etat should not affect the US's consideration whether to cut Thailand's GSP, the country was at risk of losing the benefits because its exports are becoming more competitive in the market.

 "The coup is an internal political activity of the Kingdom," he said. "The US should not include the issue as a factor for considering whether to cut Thailand's GSP."

 Thailand's exports under the GSP programme gradually increased from $2.2 billion in 2001 to $3.57 billion in 2005. The duty-free privileges helped exports grow to $2.05 billion in the first half of this year.

The study reported that production would decrease by Bt1.45 billion a year as a result of the change. Products that would be most affected are industrial goods, including steel, electrical appliances, and agricultural goods.

 To ensure that Thailand's exports will be less affected by the loss of the GSP, Aat suggested that Thai enterprises improve their manufacturing efficiency. Exporters should also seek new markets such as China, India, Vietnam, Russia and South Africa where competition is lower.

 Aat also suggested that government agencies ask the US to extend the tariff for a few years until Thailand and the US can finalise a free-trade agreement.

 Pornsilp Patcharintanakul, deputy secretary-general of the Board of Trade of Thailand, said Thailand should continue to receive GSP benefits for a few years because the country is still developing.

 However, he said the benefits could be reduced as the country's export efficiency increases. He also suggested that exporters improve their efficiency to compete with other exporting nations.

Petchanet Pratruangkrai

The Nation