Thailand's gold-jewellery exports to the US will face cuts in their duty-free privileges next year when the US sets up new competitive-need limitations (CNLs) under its new Generalised System of Preferences programme.

President George W Bush recently signed legislation that extended the Generalised System of Preferences (GSP) programme for two years, until December 31, 2008.

This is the first time since the GSP programme was created in 1974 that it has been extended without a lapse.

While reauthorising the programme for all current beneficiaries, the legislation includes new statutory thresholds to identify products that have reached a level of competitiveness suggesting they no longer warrant duty-free benefits.

The new GSP legislation also authorises the president to grant a waiver to the limitations if certain statutory conditions are met.

The legislation amended the statute to provide that the president should revoke any existing CNL waiver that has been in effect for at least five years if a GSP-eligible product from a specific country has an annual trade level in the previous calendar year exceeding 150 per cent of the annual trade cap or comprises 75 per cent of all US imports of that particular product.

The current GSP statute includes two CNLs on the eligibility of a product for benefits under GSP if:

l The annual trade of a product from a specific country exceeds a monetary threshold [US$125 million (Bt4.4 billion) this year]; or

l The annual trade of a product from a specific country exceeds 50 per cent of total US imports of that product.

The US trade representative expects to issue a Federal Register notice late next February - when full-year data for 2006 becomes available - that will identify those waivers that meet either of the new thresholds and thus are subject to potential revocation.

Based on available import data for January to October 2006, a preliminary assessment of the CNL waivers meeting the new statutory thresholds are: Brazil, brakes and brake parts ($242 million) and ferrozirconium ($700,000); Ivory Coast, kola nuts ($4 million); India, gold jewellery ($1.6 billion) and brass lamps ($20 million); the Philippines, wiring harnesses ($329 million); Thailand, gold jewellery ($611 million); and Venezuela, methanol ($242 million).

"The GSP programme has proven to be very successful in creating US trade with, and development in, developing countries," said US Trade Representative Susan Schwab.

"Congress provided new guidance to address product competitiveness when it extended the programme. We will ensure that the programme adapts, so that it continues to assist developing countries in becoming more active participants in the global trading system."