Feb 2011 As of 1 January 2011, the European Union ("EU") has adopted the new rules of origin under the generalised system of preferences ("GSP") scheme. The EU GSP scheme allows exporters / manufacturers in beneficiary countries to import their products with a lower duty rate if their products qualify as "originating". Thailand is a beneficiary country to this scheme, and therefore Thai exporters could import their products into the EU with lower import duty rates as long as their products are Thai originating under the GSP rules of origin.
One of the major changes to the EU GSP rules of origin relates to the acceptance of using average prices where the rule of origin provides that the value of imported materials must not exceed a certain percentage of the ex-works price of the finished product. This new rule under the EU GSP would allow Thai manufacturers / exporters to use average prices of their imported materials as well as ex-works price of the preceding fiscal year to calculate the value of imported materials as a percentage of the ex-works price. Using average prices would overcome issues with fluctuations in materials costs and changes in currency exchanges rates.
Moreover, the threshold percentages for various products have been reduced which may make it easier for companies to meet the qualifying rules of origin. Also, the general "tolerance rule" (i.e. the general share of non-originating materials permitted) has been increased from 10% to 15% of the ex-works price of the final product which should in general make it easier for companies to qualify where they have used imported materials in the production of their finished products and the relevant rule of origin is the "change in tariff classification" rule of origin.
Given these relaxations, Thai manufacturers / exporters may wish to consider revisiting whether these changes have an impact on their exports to the EU. This is especially the case for Thai exporters who were previously not able to claim the preferential duty rate in the EU (e.g. not meeting the threshold percentage), but could now potentially claim the duty rate for their imports into the EU under the new "relaxed" rules.
