Thailand's exporters should pay more attention to growing trade protectionism in the light of the global crisis, as the trend will not only damage their business, but also raise operating costs, businessmen said yesterday.

There are increasing signs of protectionism, including non-tariff barriers in the European Union, which has imposed a tighter standard for Thai rice, said Charoen Laothamatas, managing director of Uthai Produce, one of the country's leading exporters of jasmine rice.

He said Thai rice exports were also facing tighter environmental standards in the United States, as well as tougher international standards elsewhere.

For sales to the UK market, all food products, including rice, are required to show the place of origin and provide traceability.

"Keeping up with regulatory controls will raise the costs of Thai exporters," Charoen said.

Earlier, the US passed a farm bill requiring the traceability of major products like furniture, products made by small operators and toys. In the US rescue-package bill, a clause stipulates steel used in economic-stimulus projects must be locally sourced.

Wallop Witanakorn, secretary-general of the Thai Garment Manufacturers Association, said Thai textile exporters also had to comply with labour and environmental standards, which include limits on waste created in the manufacturing process.

"Protectionism is one of three factors that all food and other exporters must be concerned about, aside from the global economic downturn and the financial crisis," Wallop said.

Bangkok Rice managing director Suwimol Jungpanich said the number of non-tariff barriers was expected to multiply during the economic downturn, as each country wanted to protect its market from a trade deficit and business shutdowns.

Examples of other non-tariff barriers imposed by importing countries are labour standards prohibiting the hiring of child or female labour and environmental standards under which manufacturers and exporters must declare how much waste they produce each year.

Rice exporters in particular have complained they faced difficulties with their foreign sales, especially in the United Kingdom. Charoen of Uthai Produce said firms were facing higher operating costs, as retailers had added to the requirements for imported food.

"This is one kind of non-tariff barrier for exporters, as the requirement is beyond the normal standard requested by the European Union. It will lead to a major burden for rice exporters, as we must invest a huge budget to adapt ourselves to meet the requirements of each importing country," said Charoen.

The British Retail Consortium, meanwhile, has introduced the BRC food technical standard, which stipulates a traceability system. In this process, rice suppliers must provide more information about their goods, such as origin details, to retailers. As a result, retailers can guarantee product quality to consumers and trace back to the point of origin whenever a problem occurs.

"The BRC requirement is a private safety demand. In addition, it forces Thai exporters to face a double standard, as we must meet the requirements of importers to ensure our products can sell in retail shops," said Charoen.

In order to meet the BRC standard, rice exporters must shoulder a higher cost by spending several hundred thousand baht each on hiring technicians and more staff to set up a traceability system.

Exporters must also pay for a rice surveyor to inspect the firm and issue a certificate for their exports to the United Kingdom.

Suwimol said due to compliance with such requirements, operating costs would rise, particularly for smaller orders.

Source: The Nation