February 14, 2005

 

 

Most Thai shrimp exporters will not benefit from EU tariff cut

 

Most shrimp exporters in Thailand will be unable to take advantage of the European Union's preferential import tariff unless they improve the quality of their products.

 

In response to the tsunami disaster, the European Commission in Brussels had agreed on Thursday to accelerate a new EU preferential trade regime for developing countries. The tariff, part of the EU's Generalized System of Preferences, will now come into effect on April 1, 90 days earlier than planned.

 

The regime will focus on developing countries such as the Maldives, Sri Lanka, Thailand and Indonesia that were hit by the tidal waves. The GSP extends tariff concessions to various sectors, especially the clothing and fishery sectors.

 

Through tariff concessions the regime will create about 3 billion euro (147 billion baht) in new trade flows for those countries.

 

For Thailand, the EU agreed to restore tax privileges for frozen shrimp exports and shoes. Tariffs for Thai shrimp will fall from 12% (most favored nation rate) to 4.2%.

 

The EU dropped those Thai products from its GSP programme more than five years ago after they won a big market share in the European market. Without tariff privileges, shipments of both products fell sharply. The higher import tariff resulted in the value of fresh shrimp exported to the EU falling from 2.5 billion baht in 1999 to 308 million baht last year.

 

Panissuan Jamnarnwej, president of the Thai Frozen Foods Association, said in the glory days of Thai shrimp exports, only a few large-scale exporters could deliver shrimp to the EU market. Europe demanded high quality products, such as unprocessed shrimps, frozen immediately after they are taken from breeding ponds.

 

Only exporters with cold storage close to farms could meet such a requirement. Most shrimp exports from Thailand had to be processed, which for some European buyers raised concerns about hygiene standards, he said.

 

He suggested small farmers form cooperatives and invest in cold storage if they wanted to export to the EU market.

 

The Thai Shrimp Association said the tsunami had caused 22 billion baht of damage to the industry.