Trade GSP can’t turn profits yet
Industry experts say goods on the US Generalised System of Preferences export scheme will not see a rapid turnaround in profits as the preferential tariffs start this month.
SOME 5000 goods from Myanmar have been granted classification under the United States Generalised System of Preferences export scheme, however this will not see a rapid turnaround in profits, say industry figures.
The United States trade representative body announced on its official website that preferential tariffs under the Generalised System of Preferences scheme were to be reinstated. This took effect on November 13, after a 27-year suspension.
The Ministry of Commerce said that goods included under the new GSP protocol include rattan and rattan furniture, wooden furniture, as well as luggage and backpacks.
One local timber exporter observed that, so far, there are no direct US buyers for Myanmar’s wooden products. The majority of these products make their way onto the US market through third countries like Singapore, Hong Kong, Thailand and Malaysia, he said. A lack of availability of international banking services is hampering wouldbe exporters, he said, noting that it is all but impossible for Myanmar producers to reap any real benefits under the GSP at present.
“I went to the US last April to try to make connections with direct buyers there,” timber exporter Sein Win told The Myanmar Times. “But, at the moment, we have to trade through indirect markets – though we can seek direct buyers later. I was granted permission for exporting timber finished products to US about two years ago,” he said.
“Now timber products are on the list of goods granted preferential tariffs. But we have yet to get direct buyers and it is more convenient to link with reliable buyers through indirect markets,” he said.
Likewise, it is unlikely that the preferential tariffs scheme will see any major changes for rice producers. This, Myanmar Rice Federation vice chair Soe Tun explains, is probably due to a lack of demand.
“America is not a country where its citizens are eating rice. So, the market is not large. Currently there is no rice export to America and that’s why there is not any special concession for the rice sector,” he said.
Sources within the Myanmar Rice Federation indicate that, although one Myanmar rice exporter sent about 10,000 tonnes of Paw San Mway rice to the US, it had been found to be a less profitable venture than other overseas markets. Similarly, it seems unlikely the regulatory shake-up will impact the marine products sector significantly.
“The marine products sector already has tax relief from the US,” said Toe Nandar Tin, a marine products exporter. However, Directorate of Investment and Company deputy director general U Than Aung Kyaw says there is reason to be optimistic. Addressing the media on November 15, he said he believes exports to the US market will be on the increase in light of the changes to the GSP.
However, he noted, Myanmar may have some catching up to do in terms of meeting international standards.
“They define the quality of the products which will be exported. Only once we can follow these norms, we will get this chance,” U Than Aung Kyaw said. The Ministry of Commerce has announced that Myanmar-American trade is set to increase. During the 201516 fiscal year, trade between the US and Myanmar was worth more than US$88 million in exports and over $187 million for imports.
A farmer prepares a rice paddy field for harvest.