The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) has assigned private sector agencies to study the potential effects should the United States revise its tariff privileges for Thailand under the generalised system of preferences (GSP).

Federation of Thai Industries chairman Santi Vilassakdanont said yesterday that if GSP were to be cut, it would strongly hit the country's exports of electrical appliances, tyres, gems and jewellery.

Each agency will take about one month to complete its study. Santi said they would look for solutions after the study results are completed.

"We don't want to be frightened about things that have not yet happened," he added.

Assessing the impact on various sectors is the committee's reaction to the US decision last week to put Thailand on its Priority Watch List for intellectual property violations.

 The downgrade coincided with the Thai government's adoption of compulsory licensing (CL) for five heart and Aids drugs. Public Health Minister Mongkol na Songkhla is now in the US to discuss the issue of CL, which will affect American pharmaceutical companies.

Thai business operators are concerned that, in retaliation, the US could cut Thailand's GSP benefits, which entail low tariffs on exports to the US.

Santi said Mongkol should explain the CL issue and negotiate with the US.

The Business Software Alliance (BSA), which represents computer software and hardware firms worldwide, said figures showing the use of illegal software had declined in countries such as China.

BSA director of marketing for Asia Roland Chan told Agence France-Presse that in 2006, illegal software use in several Asian countries had decreased marginally. Thailand, New Zealand and Australia showed little change.

Thai Frozen Foods Association president Poj Aramwattanont said that if

the US cut Thai GSP benefits, food exports would not be hurt but could face other non-trade barriers, particularly those related to terrorism and hygiene.

"The effect could be worth well in the territory of billions of baht a year," he said.

National Food Institute of Thailand executive director Yuthasak Supasorn said that Thai food exports rejected by the US were mostly those failing to pass quality requirements by the US Food and Drug Administration. Of rejected exports, 33.47 per cent are found to have contained unhygienic elements, most in marine products, spices, seasoning sauces and cereals.

The overall export value of the Thai food sector is forecast to grow by 10 per cent this year.

The Kingdom exports about 20 per cent of its output to the US. This year, the overall export target is US$141 billion (Bt4.9 trillion).

While exports - the only engine driving the battered economy - could be hurt by the GSP issue, Santi is optimistic that the economy will fare better in the second half of the year. He pinned his hopes on faster government spending, new investment projects in Map Ta Phut and a further cut in interest rates.

The Monetary Policy Committee will meet on May 23 to consider whether to cut the policy rate further. Analysts expect the panel to cut the rate by 50 basis points to boost the economy.

Yesterday, the JSCCIB also briefed a group of reporters from Turkey, Spain, Portugal, Hungary and the Czech Republic on the economy. 

Pramon Sutivong, chairman of both the Board of Trade and the Thai Chamber of Commerce, said after the meeting that they had mostly asked about Thailand's general situation, including the coup.

Thai Bankers Association secretary-general Thawatchai Yongkittikul said they had also asked about the country's economic slowdown.

"We told them that the problem lies mainly with the baht appreciation," he said. "We also told them that Thailand would focus more on borrowing Thai baht from other Asian countries under the currency swap infrastructure in order to reduce the scale of the appreciation. At least, we hope that the swap activity will make it harder for currency speculators."

Chalida Ekvitthayavechnukul

The Nation