Cablegate: Eu Grants Gsp to Thai Shrimp Imports

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS BANGKOK 005671

SIPDIS

DEPARTMENT PASS USTR FOR BWEISEL AND LCOEN
COMMERCE FOR ITA JBENDER AND JKELLY
GENEVA FOR USTR
DEPARTMENT PASS INTERNATIONAL TRADE COMMISSION

E.O. 12958: N/A
TAGS: EAGR ETRD TH
SUBJECT: EU GRANTS GSP TO THAI SHRIMP IMPORTS

1. Summary: The EU,s reinstatement of Generalized System
of Preferences (GSP) benefits for shrimp imports should be a
high note for an otherwise hard-hit Thai shrimp industry this
year. The reduction in duties for Thai shrimp broadens a
previously small market for exporters, but supply issues and
the time necessary to reenter the European market in strength
means the windfall from duty reduction will not be felt for
the near future. End Summary.

2. In a potential boon to Thai shrimp exporters, the
European Union announced September 1 that it would
temporarily grant GSP treatment for shrimp imports, to become
permanent at the end of the year. The EU had promised
earlier this year to renew GSP treatment for shrimp imports
by April 2005, but then postponed the implementation. The
duty on shrimp will be reduced from 12 percent to 4.2 percent
for fresh shrimp and from 20 percent to 7 percent for
prepared shrimp (Thailand is a major exporter of fresh
shrimp). The EU will apply the new duties retroactively to
August 1.

3. Somsak Paneetatyasai, President of the Thai Shrimp
Association, said he was optimistic that Thai shrimp
exporters will be able to regain their former market share in
Europe with the lower duties. Before 1997, when GSP benefits
were halved, later to be eliminated completely in 1999, Thai
exporters controlled nearly 10% of the European market,
exporting 33,000 metric tons of shrimp to the EU annually.
The loss of GSP benefits slashed imports from Thailand; the
export figure for 2004 was only 7,688 metric tons, barely one
percent of the EU market. Regaining a 10% market share in
Europe would translate into exports of over 70,000 metric
tons, approximately 20% of Thailand,s current worldwide
shrimp exports.

4. Somsak qualified his prediction of a regained market
share, saying that since the EU had been such a minor market
for Thai exporters the past six years, the industry would
need approximately a year to carry out research and
additional marketing before it could rapidly increase
exports. Despite this, however, he predicted that exports to
the EU would likely double for the rest of 2005 compared to
2004. Somsak was also confident that earlier hygiene
difficulties involving antibiotics in shrimp were no longer
an obstacle for exports to Europe. Nevertheless, some shrimp
exporters were still wary of Europe,s hygiene standards.

5. Shrimp exporters had cited the EU postponement of the
reintroduction of GSP benefits as a notable hardship. EU
promises to apply GSP in April had led to a stockpiling of
inventory among Thai shrimp exporters in anticipation of
lower duties. When the GSP benefits failed to materialize,
exporters were forced to sell the excess inventory on the
U.S. market at reduced prices. Shrimp exporters told Econoff
that the continued high EU duties were a significant factor
in the reduction in Thai shrimp production for 2005.

6. Shrimp exporters predicted a slight increase in shrimp
prices as a result of the reduced duties. Due to predicted
continued declines in shrimp production for the rest of 2005,
increased demand in Europe will likely result in an upward
tick in export prices.
ARVIZU

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