The Democrat-dominated US Congress has changed the face of US trade liberalization policies. The Democrat Party recently announced that they would review US trade policy, focusing on job creation and more stringent standards for labor and environmental protection. Given this, exports from US trade partners, including Thailand to the US market may face an uphill task.
Worse, the fact that the US President's fast track negotiating authority expired on June 30, 2007 – and is unlikely to be renewed – may put on hold the process of trade liberalization negotiations between the US and other countries, including Thailand. This is regarded as a negative blow to Thai exports to the US, though the Thailand-US FTA pact was expected to a boon to Thai exports with inherent import tariff reductions. Moreover, there could also be other negative impacts that Thai exporters to the US may have to face, including the US having already cut GSP privileges to 3 Thai goods categories since July 1, 2007, being 1.) gold jewelry; 2.) polyethylene terephthalate pellets; and, 3.) flat screen color TVs. This has resulted in these categories losing some price competitiveness in the US market because they are now subject to import tariffs of 5.5 percent, 6.5 percent and 3.9 percent, respectively.
It is recommended that Thai businesses reduce their dependence on exports to the US market, and turn to other new markets, particularly countries that Thailand has entered into Free Trade Agreement (FTA)s with and where these agreements have already entered into enforcement, i.e., Australia, New Zealand, China, India and Japan – especially the JTEPA that will be effective in October 2007. Thailand's exports to these countries will be eligible for tariff reductions. In addition, Thailand should seek export channels to new markets with high economic growth, e.g., Middle Eastern countries whose economies are growing healthily, benefiting from soaring oil prices in the global market.
Moreover, Thai entrepreneurs and exporters to the US market should modernize their production to attain standards that will meet stricter labor and environmental regulations. Improved quality standards will be a way to reduce the impact of the trade barriers of US and other developed countries such as the EU, Japan and Australia, which have high labor and environmental standards.
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