Intellectual property protection is a key criterion for the US in their review of their Generalized System of Preferences (GSP) to designated beneficiary developing or least-developed countries globally, including Thailand. It is possible that Thailand will be downgraded from the Watch List (WL) to Priority Watch List (PWL) at the end of April − reflecting the country's rampant violations of intellectual property rights – may affect the review of our GSP privileges on Thai exports to the US market. On July 1, 2007, the US is scheduled to review their list of goods to be entitled to the GSP program for various countries. In 2006, Thai exports under the US GSP program totaled USD4.252 billion, up 19 percent over the USD3.575 billion in the year before, and accounting for some 20 percent of the total Thai exports to the US market. Among beneficiary countries, Thailand's GSP export value came in third, behind Angola and India.
Thai gems and precious metal-based jewelry are likely to be removed from the GSP beneficiary product list during this year's review due to 1) gems and precious metal-based jewelry from Thailand has been categorized as a Competitive Need Limit Waiver (CNL Waiver) product for over five years, or since 1995; 2) imports of Thai gems and precious metal-based jewelry into the US market totaled USD700 million in 2006, exceeding the import limit established by the US authorities at USD187.5 million in 2006. If the US cuts the GSP privilege on Thai gems and precious metal-based jewelry, this will result in Thai exports to the US falling to the MFN (Most-Favored Nation) rate of 5.5 percent, from formerly duty-free status.
However it is projected that if the GSP on Thai gems and precious metal-based jewelry is really canceled, the impact toward the industry will not be that serious if the GSP of India, which is Thailand's key rival in gems and precious metal-based jewelry exports to the US (where they are top ranked), is also cancelled (as India also meets the criteria for GSP suspension on this category as does Thailand). That would result in India's exports of gems and precious metal-based jewelry to the US becoming subject to the same tariff collections as Thailand. So, exports of Thai gems and precious metal-based jewelry to the US would likely not lose much of an advantage to rivals. The other competitor that is also worth watching is China. Although, at present, China does not have GSP privileges on this category from the US, their gems and jewelry have occupied the number 2 spot in market share in the US, after India. Therefore, China will definitely be given an advantage if the GSPs of Thailand and India for gems and jewelry are abolished this year.
The possibility that the US may cut the GSP privilege on imports of Thai gems and precious metal-based jewelry is an important obstacle for Thai exporters because the US is a major market for Thai gems and jewelry, accounting for around 25 percent of all Thailand's gem and jewelry exports. However, if we take Thailand's total export value to the US of around USD19,450 million into consideration, one can see that Thailand's total exports of gems and jewelry totaling USD925 million is not very large in proportion, accounting for 4.7 percent of Thailand's total export value to the US, and it is also less than 1 percent of Thailand's aggregate exports. Therefore, it is projected that if the GSP status that the US gives to Thai gems and precious metal-based jewelry is abolished, Thailand's overall exports there this year will not be much impacted.
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