The European Union’s generalized scheme of preferences (GSP) will be withdrawn from over 6,200 Thai products in 2015.
The scheme provides developing country exporters with reduced or nil duties on exports to the EU until they are deemed competitive enough to no longer need such support.The increased tariffs will apply to around two thirds of product categories, including automotive parts, meats, precious stones, rubber products, seafood, and textiles.
Research from Siam Commercial Bank has projected that the tariff increases will lead to a loss of US$2.2 billion in market share for Thai exporters.
In 2012, exports to the EU made up 9.5 percent of Thailand’s total exports.
The duty on frozen shrimp exports to the EU will triple from 4.2 percent to 12 percent, as shrimp production in 2014 is expected by the Thai Frozen Foods Association to recover to approximately half of the annual average before the 2012 outbreak of early mortality syndrome (EMS)
According to BOT, Thai exports in 2015 will be affected by GSP cut but not to a great extent. The Bank of Thailand (BOT) estimates that Thai exports in 2015 will see a growth of 1.0% following the GSP cut by the European Union which has been effective since January 1.
BOT Spokesman Chirathep Seniwong Na Ayutthaya said that Thailand should begin to feel the pinch right in the first quarter of 2015. However, he was optimistic that the impacts would be at an acceptable level as Thai exports that used to benefit from the GSP in the EU market account only for 4 per cent of the country’s total exports. Besides, the EU still needs such imports as auto-parts, cars, and electrical equipment from Thailand.
According to him, Thai exporters would only have to pay 2-6 per cent more in terms of taxes, without the GSP. Only canned pineapples and processed seafood products need to pay much higher tax after the GSP is lifted.
The spokesman revealed that the GSP lifting would likely cause Thailand to lose a competitive edge to other trade rivals like Vietnam and Indonesia while Malaysia and Brazil which face similar cut like Thailand could offset their loss of revenue through FTA promotion with the EU.
Meanwhile, an FTA agreement between Thailand and the EU has not been signed yet, the BOT spokesman said.