Apart from resolutions to be made by ASEAN leaders at the ASEAN Summit in November, the Thai government will seek this opportunity to hold a talk with the U.S. regarding the decision to revoke the Generalized System of Preferences (GSP) treatment previously given to 573 Thai products.
The Thai Commercial Affairs office in Washington D.C. has been tasked with holding talks with the Office of the United States Trade Representative (USTR) tomorrow, to establish common practice during the 6-month period of grace prior to the proposed GSP cancellation, while the ASEAN Summit in Bangkok as a possible opportunity to hold discussions regarding the GSP will be reviewed for appropriateness, as discussions with the USTR would be the most direct route to solving the issue.
On labour concerns and Washington’s request to allow the migrant workers union’s establishment in Thailand, the Commerce Minister said today the Ministry of Labor is the responsible agency required to handle this question, and will have to weigh up what will affect the country more between allowing the migrant workers union to be set up, or losing the tax exemption scheme.
GSP cut to cost less than US$1.3bn
The United States recently announced the cancellation of Generalized System of Preferences benefits, which used to allow 573 items exported from Thailand to the US to be exempt of import duties.
The Ministry of Commerce yesterday announced that the lack of this duty-free status will cost less than 1.3 billion US dollars, with some time available to negotiate for reconsideration by the U.S. after the ASEAN Summit in early November.
The Ministry of Commerce’s Inspector General Keerati Rushchano, serving as acting director general for the Department of Foreign Trade (DFT), said the GSP cut is not immediately effective, allowing Thailand to pursue further negotiations with the U.S. to ask them to consider restoring the preferences. Thailand is hoping to hold talks on this matter after the ASEAN Summit in early November, and to hold negotiations based on the Thailand-U.S. trade and investment agreement.
He said all 573 items can still be exported to the U.S., however they will no longer enjoy special tax preferences.
The acting DFT chief admitted that one of the reasons for this cut is related to worker welfare, which is a separate topic from trafficking in humans, for which Thailand’s status has already improved to Tier 2 on the U.S. Department of State watchlist. The cut is, however, a result of complaints made by the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) since 2013, adding that the DFT is aware that these complaints will be considered by the U.S. when renewing the GSP.
In an attempt to remedy the issue, the DFT chief said there is still sufficient time to hold talks with the U.S. in an attempt to convince them to restore the GSP privileges.
Thai businesses also have other markets as alternatives through FTA agreements, market expansion in CLMV countries and the Mekong region and new-emerging markets such as Brazil, Russia, India and China. As alternatives, Thai investors may extend their investments to countries enjoying GSP from the U.S., including neighboring countries. The DFT there are still 6 months time to make necessary changes.