Trade Compliance

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U.S. Suspending $1.3 Billion in GSP Preferences for Thailand

Posted October 28, 2019


The Trump administration announced last Friday that it intends to revoke $1.3 billion in trade preferences for Thailand under the Generalized System of Preferences, effective in six months, owing to that country’s continued failure to adequately protect worker rights.

According to a statement released by the Office of the United States Trade Representative, the move was deemed necessary after six years of “engagement” on the issue of labour rights had yet to result in any steps being taken by Thailand to address worker concerns such as guaranteeing protections for freedom of association and collective bargaining.

Trade Tensions


The U.S. government’s enforcement action comes amid increased friction between the two countries over a growing bilateral trade imbalance nearing $20 billion, disputes over Thailand’s complex array of import restrictions limiting market access for American pork exports, and allegations by Washington of currency manipulation.

The move also followed shortly after the Thai government announced a ban on several herbicides including glyphosate (i.e., Bayer-Monsanto’s Roundup®) due to ongoing health-concerns for agricultural workers and others, but which U.S. officials feared could affect the export of $1.7 billion in American farm products to Thailand. Leaked letters from the U.S. Department of Agriculture urging a delay on the ban, claiming the health hazards of the farming chemical had been exaggerated, prompted some groups in the Southeast Asian country to speculate that Washington’s action was retaliation. Both sides, however, denied any connection between the two issues.

Goods Affected


The USTR states the action will impact roughly one-third of Thailand’s GSP trade, which totaled $4.4 billion in 2018 and “is focused on products for which the United States is a relatively important market for Thailand, but where Thailand accounts for a relatively small share of U.S. imports.” A full list of the wide range of different products to be excluded from GSP for Thailand is available here.

Additionally, the eligibility of all Thai seafood products for GSP treatment is also being revoked due to “longstanding worker rights issues in the seafood and shipping industries,” the USTR said. The action comes even despite Thailand having taken steps against fishing industry abuses, which led the EU to earlier this year lift a threatened ban on related Thai products.

Thailand’s Response


Thai Prime Minister Prayuth Chan-ocha stated today that his government will attempt to negotiate the issue before the threatened suspension takes effect in April. In this regard, the USTR has indicated that the GSP market access eligibility review of Thailand will remain open in the meantime.

About the GSP


The Generalized System of Preferences is the largest and oldest U.S. trade preference program. Established in the 1970s, the GSP promotes economic development by eliminating duties on thousands of products when imported from one of 119 designated “least-developed” beneficiary countries and territories. Additional information about the GSP trade preference program can be found in the USTR’s latest Guidebook here.

Need More Information?


Should you have any questions or concerns about this threatened action and how it might impact your company’s import/export transactions, don’t hesitate to contact us – our trade experts are here to help.

 

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