Yingluck warns of trade woes

Caretaker Prime Minister Yingluck Shinawatra has urged all parties to "step over" the political conflict and cooperate so the country can move forward and avoid economic disaster.

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The caretaker premier posted on her Facebook today that the free-trade talks between Thailand and the European Union have been suspended after the latest round of political conflicts broke out.

Thailand had counted on the deal to replace the tax privileges the country enjoyed under the EU's generalised system of preferences (GSP), Ms Yingluck wrote.

In 2015, the EU will scrap trade privileges to countries in the upper-middle income group to which Thailand belongs.

Thai products currently enjoying the GSP include processed shrimp, canned pineapple, canned pineapple juice, dog food and cat food. They command the biggest market share in Europe. Other products receiving the privileges are motorcycles, rubber gloves, rubber auto parts, air-conditioners and lenses.

These products are worth US$9 billion (290 billion baht) a year, or 60% of all Thai exports to the EU, according to the caretaker premier.

Next year, the products will be subjected to normal import duty rates, while rival products from Vietnam, Indonesia and India still enjoy the GSP because they belong to the lower- middle income group.

Malaysia lost the GSP privileges but struck an FTA accord with EU in time so the import duty remains at zero.

Now that the Thailand-EU FTA talks are unlikely to materialise in time for the expiry of the GSP, Thai products will be less competitive. Multinational companies may also move production bases from Thailand, Ms Yingluck warned. 

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