Thailand GSP Eligibility Restricted; Auto Parts Most Affected
Almost two-thirds of the Thai products that will soon be ineligible for the Generalized System of Preferences benefits program are not currently exported to the U.S., Thailand's director-general of the Department of International Trade Promotion told Thai reporters. Keerati Rushchano said 147 products will be affected, including steering wheels, auto wheels, transmission boxes, plastic glasses frames, chemicals and latex mattresses.
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The Office of the U.S Trade Representative released the full list of products, and its rationale for its decisions on Thailand and other countries.
Thailand was the top GSP beneficiary in 2019, but a third of its products were removed in April (see 1910280044), covering about $1.3 billion worth of exports. Thailand's top export covered by GSP historically, precious metal jewelry, was 24% of products covered by value, and that was in the earlier restriction. Rubber tires and auto parts, which are on the latest list, accounted for 9% of the GSP-eligible exports by value. The changes will take effect Dec. 30.
In all, the goods that will no longer be eligible accounted for $817 million worth of exports. Before the rounds of restrictions began, Thailand had GSP coverage for $4.4 billion worth of exports. According to Census Bureau data, Thailand exported almost $24 billion in goods to the U.S. in the first eight months of 2020.
The reason for this move, announced Oct. 30, was that Thailand doesn't accept U.S. exports of pork. According to Dan Anthony, executive director of the Coalition for GSP, importers saved approximately $170 million in tariffs in 2019 through Thailand's GSP participation.
The USTR said Indonesia can continue to fully participate in GSP because Indonesia addressed U.S. concerns about market access, including agricultural import policies, insurance regulation and digital trade. Indonesia, according to the Coalition for GSP, provided for the third most tariff savings, at about $150 billion. Indonesia makes backpacks and other travel goods, which have higher tariffs than, for instance, auto parts, which are taxed at about 4%.
Georgia and Uzbekistan are also no longer in danger of losing eligibility, as USTR says both have made advances in protecting worker rights. They are small-scale participants in the program. Now USTR will begin a review of whether Eritrea and Zimbabwe should lose eligibility over workers' rights. The agency had been asked to consider adding Laos to the list of eligible countries; it finished its review of the request and is not adding Laos.
All GSP beneficiaries will lose their status on Jan. 1, 2021, if Congress does not renew the program.