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Thailand to ask US for a review of GSP decision

Thailand is to ask the United States to reconsider the removal of trade preferences for Thai exports under the Generalized System of Preferences, Commerce Jurin Laksanavisit said.

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The decision by the U.S. to suspend Generalized System of Preferences (GSP) treatment to Thailand, requiring all Thai exports to the U.S. to be subject to duties, has raised confusion among many sectors in Thailand.

Once trade preferences for Thai products are removed, Mr Jurin said that those products become subject to taxation of between 4% and 5%, making such products more expensive in the US market.

He said that, in the past, whenever trade benefits for Thai products exported to the US were suspended, Thailand appealed to the US adding, however, that it was at the US’s discretion whether to reconsider the suspension.

He played down the impacts of the US move, however, saying that, although US$1.8 billion worth of Thai exports were granted trade preferences by the US each year, only about US$1.3 billion worth of Thai exports actually applied for the benefits.

Mr Jurin said that, due to the taxation resulting from the removal of GSP privileges, Thai exporters will face costs, estimated at between ฿1.5 billion and ฿1.8 billion baht annually, should they wish to maintain the pre-change prices of its products in the US market.

A major issue for Thai exports

The Thai’s chief strategist Khunying Sudarat Keyuraphan, however, said that the suspension of trade benefits was a major issue which will heavily impact Thai exports to the US at a time when exports are already declining due US-China trade tensions and the strong baht currency.

She urged the Thai government to hold immediate talks with the US and to ascertain the actual reason for the US action against Thai exporters, while predicting unemployment in Thailand will increase, with as many as 500,000 Thai workers being laid off.

The Minister of Labour has called an urgent meeting to address the labour concerns cited by the U.S. as a factor in the decision to revoke trade preferences.

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Tourism

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Emirates retains cargo operations, but temporarily suspends passenger operations by 25 March

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Trade

Trade in Asia-Pacific declines for the first time since 2009

For the first time since the 2009 global economic crisis, the value and volume of trade in the region is declining. But the region is expected to bounce back in 2020 with positive trade growth.

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Bangkok (ESCAP news) – Asia-Pacific economies may see positive trade growth in 2020 but are still facing downside risks from the adverse impacts of the United States – China trade tensions, two new trade briefs by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) released today have revealed.

Trade in the Asia-Pacific region contracted during 2019

For the first time since the 2009 global economic crisis, the value and volume of trade in the region is declining. Total export volume fell by 2.5 per cent, while import volume decreased by 3.5 per cent.

Oil exporting economies such as Islamic Republic of Iran and Indonesia, as well as Japan, Singapore and Hong Kong, China registered some of the largest declines in export volume.

Merchandise trade in the region also faced strong headwinds in 2018-2019 caused by the worldwide economic growth slowdown and heightened trade tensions.

These have had an adverse effect on trade, particularly in the case of economies closely integrated with China through Global Value Chains (GVCs). Integration of smaller traders into the global and regional economy through GVCs is becoming more difficult. New import barriers increase the cost of production and reduce the competitiveness of companies participating in regional production networks.

Tariff war-related toll could reach $117 billion in the Asia-Pacific region

ESCAP earlier estimated the tariff war-related toll on gross domestic product (GDP) could reach as much as $400 billion worldwide and $117 billion in the Asia-Pacific region. These projections are materializing and could increase unless current efforts to reduce trade tensions are successful.

“For the Asia-Pacific region, the challenge is to increase trade and deepen economic integration to support sustainable development. Looking ahead to 2020, the agreement reached between China and the United States is welcome and should reduce policy uncertainty,”

United Nations Under-Secretary-General and Executive Secretary of ESCAP Armida Salsiah Alisjahbana.

She further underscored the importance of the multilateral trading system to underpin future trade growth.

The new guarantees provided by the implementation of the Phase-I deal reached between China and the United States might boost investor and consumer confidence enough for trade in the region to grow by about 1.5 per cent in 2020.

This growth would be felt more in developing economies, which could see a 1.9 per cent and 2.7 per cent growth in exports and imports respectively in 2020. However, country-level forecasts vary widely and uncertainties are high.

In trade in commercial services, the region again outperformed the rest of the world in 2019.

Relatively slower growth is expected in 2020, with transport services, other business services and goods-related services expected to be the most affected sectors.

The mid to long-term prospects for trade in services – in particular ICT and business services – remain bright, supported by technological advances.

Commercial services trade in Asia and the Pacific continue to be dominated by a relatively small number of economies, namely China, Japan, India, Singapore, Republic of Korea and Hong Kong, China – accounting for over 70 per cent of total commercial services trade in the region.

Increasing business opportunities associated with digital technologies may lead to a further concentration of trade opportunities in those economies.

The ESCAP trade briefs serve as a complement to the Asia-Pacific Trade and Investment Report 2019. They provide in-depth analysis of performance and trends in 2018-2019, and the outlook for 2020 at regional and country levels, with a special emphasis on the impact of escalating trade tensions within and outside the region.

Read the Asia-Pacific Trade in Goods Trends and Outlooks: https://www.unescap.org/resources/trade-goods-outlook-asia-and-pacific-20192020

Read the Asia-Pacific Trade in Services Trends and Outlooks: https://www.unescap.org/resources/trade-commercial-services-outlook-asia-and-pacific-20192020

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