The US is a major market for Thai exports, constituting 9.85 percent of our total shipments to the globe. The US economic situation has thus affected our exports and overall trade. During 1H10, Thai exports to the US grew 24.7 percent YoY, falling short of the 36.6-percent over-year growth of our total exports. During 2H10, Thai exports to the US market are expected to decelerate further due to expected slowdown in the US economy after it recorded an annualized growth rate of only 2.4 percent in 2Q10 and 3.7 percent in 1Q10.
Nonetheless, GSP (Generalized System of Preferences) privileges granted by the US may prove to be helpful toward Thai shipments to the US in 2H10, thanks to our price competitiveness. Currently, more than 5,000 product items can be exported duty-free into the US using GSP privileges as granted to 174 designated beneficiary countries, including Thailand.
KASIKORN RESEARCH CENTER (KResearch) holds the view that the US 2010 annual GSP review –wherein the changes made came into effect on July 1 –should be favorable to Thai exports to the US. This time, additional product items, including frozen beans and vegetables, are allowed preferential duty-free entry into the US market. Previously, they were subject to import duties of 11.2 percent and 14.0 percent, respectively. In addition, GSP privileges on other products remained intact. They included silver jewelry, which is on the CNL waiver list, as well as other products, e.g., fresh orchids, fresh durian, dried papaya, dried tamarind, processed sweet corn, processed papaya, mixed condiments, buffalo leather and porcelain products - all in their de minimis waiver list.
Nonetheless, Thai-made products whose GSP privileges were withdrawn or were not reinstated – which are currently subject to normal tariff rates – may be confronted with high competition in the US market. Emphasis should thus be placed on production quality in order to boost our competitive potential. Among the products that will ‘graduate' from GSP privileges are prepared shrimp and passenger car radial tires that are now subject to tariff rates of 5 percent and 4 percent, respectively.
Meanwhile, GSP privileges of prepared mackerel and flat-panel color TV were not reinstated, because they have garnered a substantial market share in the US market. As a result, prepared mackerel and flat-panel color TVs are subject to tariff rates of 3.0 percent and 3.9 percent, which are nevertheless regarded as rather low. Other affected products include cereals, plastic pellets and floor/wall tiles, which are now subject to high tariff rates of 6.5-12.8 percent. These products are therefore likely to compete head-on with counterparts from elsewhere, especially those from countries with lower production costs than ours, being Vietnam, India, China and Indonesia, etc.
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