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BBL concerned for future of trade with EU

The Nation, Bangkok

BBL concerned for future of trade with EU

By Sucheera Pinijparakarn

19 November 19 2012

Bangkok Bank is urging the government to put the negotiations for a Thai-European Union free trade agreement on the fast track in case the EU ends its tax cuts for imports from Thailand.

The EU’s generalised system |of preferences (GSP) means more to the private sector than the Trans-Pacific Partnership with the US, Chansak Fuangfu, senior executive vice president, said last week.

If the EU fails to extend the privileges when the GSP expires in two years, fresh frozen products - shrimp in particular - garments and textiles, and pharmaceuticals will be hurt.

Bangkok Bank, whose loan portfolio is 90-per-cent corporate credits, envisions customers in some industries suffering from higher effective prices and losing their share of the European market.

The Thai Bankers’ Association would express its serious concern through the Joint Standing Committee on Commerce, Industry and Banking, which meets regularly with top government officials.

Developed countries use the GSP to grant preferential treatment to eligible products imported from developing countries |so that the products would be competitive in their domestic markets.

The World Bank in 2011 ranked Thailand as an upper middle-income country - a status that suggests it is abusing some incentives from developed economies.

Bangkok Bank has suggested to its customers to improve their production processes to comply with European standards. They are offered credit lines to finance the upgrades.

Garment and textile customers have been recommended to move their production bases to Indonesia or Vietnam to avail of the lower costs.

"The World Trade Organisa-tion cannot find solutions to |assist all countries. Each country must help itself through bilateral agreements. If Thailand cannot maintain GSP privileges, we |have to look forward to the FTA with the European Union," he said.

Banluesak Pussarangsi, executive vice president of CIMB Thai Bank, said the chances that Thailand would continue to enjoy GSP breaks with the European Union are remote because it is no longer an underdeveloped country like in the past.

Thailand has become a medium developing country, so the government should hold talks with the EU on the free trade agreement to facilitate Thai exports.

Bargaining with the EU is easier than with the US because the EU has no negative risk requirement as the US does. Some industries that used to enjoy GSP promotions might migrate their operations to Vietnam, as that emerging country will continue to be covered by the EU’s GSP, he added.