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Trade chief suggests alternatives after EU cuts tariff privileges

Dec 21. 2014
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WITH THE LOSS of tariff privileges from the European Union, the Foreign Trade Department has said exporters should try to reap other benefits, such as temporary tax exemptions and use of bonded warehouses and rules of origin to save costs and gain access
Duangporn Rodphaya, director-general of the department, said last week that exporters and manufacturers could find some method to reduce their cost of shipping after the withdrawal of the generalised scheme of preferences (GSP) on January 1 for more than 6,200 Thai products.
The department and Thai Trade Office in Brussels have found some ways, such as asking EU importers to propose to their governments a temporary waiver of tariffs for agricultural and industrial products, or a quota for imports. 
To get this, a product needs to be a raw or rare material used in manufacturing. Products should not be for end users or finished goods. The products should not face any anti-dumping or countervailing duty or a ban by CITES (the Convention on International Trade in Endangered Species of Wild Fauna and Flora).
Thai exporters can store products imported from neighbouring countries that benefit from the rules of origin in bonded warehouses or free zones so that they won’t incur a high duty. 
Under this method, exporters should not adapt or change any detail of the goods, but only keep products in good condition for sending to the EU market.
A bonded warehouse is a building or secured area where dutiable goods may be stored, manipulated or undergo manufacturing without payment of duty.
Exporters could also ask for a temporarily duty waiver for raw materials or parts of products for use in the passenger aircraft industry, which has come under the EU Council Regulation No 1147/2002 since June 2002.
Exporters should closely monitor the EU market’s rules and regulations so that they won’t face other obstructions for shipping to the EU after the tax privileges end. THAI also followed those methods to reduce some duties and relieve some burden temporarily.
However, in the long run, enterprises should adjust their production to ensure access to the EU market and commit to the EU’s import standards so that they could ensure they are competitive in the EU market, despite having no GSP.
The department reported that starting next month, many products exported from Thailand to the EU will lose tariff privileges as the GSP system is reformed. Those products include meat, fish, precious stones, pearls, tuna, shrimp and rubber products. 
For instance, in 2015, the duty on frozen shrimp will increase from 4.2 per cent to 7.12-12 per cent, for tuna from 18.5 per cent to 22 per cent and for women’s cotton overcoats from 9.6 per cent to 12 per cent, she added.

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