Thailand Loses Trade Preferences

OMAHA (DTN) -- In an attempt to level pork trade with Thailand, the Trump administration this week suspended about $817 million in trade preferences for Thailand that were causing billions of dollars in trade deficits for producers in the United States.

The decision announced by the U.S. Trade Representative was made under the generalized system of preferences program (GSP). The program gave duty-free treatment to pork exports from Thailand.

The National Pork Producers Council filed a petition with USTR in 2018, asking for the suspension of the trade preferences.

The United States is Thailand's number one export market with about $4 billion of a variety of products sent to the U.S. each year.

However, Thailand has maintained a near ban on U.S. pork imports through tariffs and several non-tariff barriers. For example, Thailand does not accept uncooked pork and pork offal from the U.S.

Even when Thailand grants import licenses to U.S. companies, those companies are charged large fees.

"For years, Thailand has taken full advantage of special U.S. trade benefits, while imposing a completely unjustified de facto ban on U.S. pork. This is hardly a reciprocal trading relationship," NPPC President Howard "AV" Roth, a hog farmer from Wauzeka, Wisconsin, said in a statement.

"We thank the administration for taking this action and hope it results in fair access to the Thai market for U.S. hog farmers."

NPPC outlined in its petition what is a significant trade imbalance for U.S. pork producers with Thailand.

"Although the United States is the top global exporter of pork, shipping 2.4 million metric tons (mmt) -- $6.48 billion -- in product to more than 100 nations in 2017," the group said, "Thailand, a nation of 66 million that consumes nearly 726,000 metric tons (mt) of pork annually, imported only 31 mt of pork from the United States in 2017, valued at $127,000. By way of comparison, the United States exported more pork to the tiny island nation of Tonga, with a population of 107,000, than it did to Thailand in 2017."

Thailand is the second largest recipient of trade benefits through the program.

U.S. imports from Thailand in the program were $4.2 billion in 2017, or about 13.5% of total U.S. imports in the program. The U.S. program has contributed to an overall Thailand surplus of $617 million in agricultural trade with the U.S.

The United States had an overall trade deficit of $20.35 billion with Thailand in 2017.

The generalized system of preferences program passed by Congress, requires reciprocal trade relationships for those countries in the program.

"In presenting the original GSP bill, the Senate Finance Committee emphasized the importance of market access for U.S. goods as a precondition for GSP eligibility," NPPC said in its petition, "stating in its report that 'the committee feels strongly that the beneficiary developing countries should reduce and eliminate their own barriers to U.S. commerce before they should be granted preferential treatment in the U.S. market.'"

One of the primary reasons for congressional support of the program was the opportunity to expand U.S. exports.

"It is abundantly clear, as outlined above, that Thailand has willfully denied the equitable access to its market for U.S. products envisioned by Congress as a prerequisite for eligibility for preferential treatment for its products in the U.S. market under the GSP program," NPPC said in the petition.

"Thailand's effective ban on pork imports from the United States makes it impossible for the United States to ship pork products to what would otherwise be a lucrative pork market."

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @toddneeleyDTN

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