Exporters yesterday welcomed the US Congress decision to renew tax benefits for two more years, saying it would help keep their products competitive with rival countries.

Pornchai Chuenchomlada, president of the Thai Gem and Jewellery Traders Association, hailed the decision to maintain the generalised system of preferences (GSP) as "very positive news".

"It should help jewellery exports grow at least 15 per cent compared to the earlier forecast that we might see flat growth if the US ended the GSP this year," he said.

Thailand might lose out to China without the tax privileges, he said.

The US imports US$600 million (Bt21 billion) worth of Thai jewellery a year.

Pornchai said the two-year timeframe should let exporters adjust to the eventual withdrawal of the tax breaks.

On Saturday, Congress approved the extension of the preferential programme for two years, according to a release from the US Embassy. The GSP for Thai exports was set to expire on December 31.

The US had earlier put Thailand on the list of countries subject to possible GSP cuts. The federal programme allows Thailand to export specific goods duty-free to the US market. Somsak Borisuthanakul, chairman of Plastic Club at the Federation of Thai Industries, said the decision was a relief for Thai exporters, especially in farm products.

"US importers will have more confidence in buying from Thailand after they were waiting for the ruling on whether the GSP would be renewed," he said.

Plastic products are subject to anti-dumping duties. If the US had let the GSP run out, the tax would have been 6 per cent, which would have been too high.

He said other products such as electric appliances would appreciate the favourable development.

The US Senate passed the bill by a 79-9 vote as part of a larger legislative package. Earlier, the House of Representatives passed separate pieces of legislation with identical provisions. The bill must be signed by the president to become law.

US Trade Representative Susan Schwab applauded the Congress approval of the legislation.

"I also welcome the Senate's solid bipartisan support for extending key trade preference programmes that have promoted market-based development, allowing developing countries around the world to sell their products in the US and enabling US consumers to enjoy a wide selection of agricultural and manufactured products," she said.

Congress passed the GSP as part of the Trade Act of 1974 to create economic opportunities in developing countries, while expanding the choices of American industry and consumers.

The GSP provides duty-free treatment for 3,400 products from 133 designated beneficiary developing countries and territories. Least-developed beneficiary developing countries - currently 42 of the GSP beneficiaries - can export an additional 1,400 articles to the US duty-free.

The US imported over $3.5 billion of products from Thailand under the GSP in 2005. From January to September this year, the US imported $3.1 billion in GSP-eligible products from Thailand, reflecting a 24.6-per-cent increase over GSP imports during the same period in 2005.

US imports under GSP have comprised nearly 19 per cent of total US imports from Thailand so far this year.

Petchanet Pratruangkrai,

Jeerawat Na Thalang

The Nation