Exporters will lose half their relief on a range of goods by November, and all of it by May next year Mainland and Hong Kong exporters have expressed concern in the wake of a European Union decision to remove tariff benefits for a range of Chinese products, including televisions and electrical appliances. From November 1, the EU will halve the tariff concession - ranging from 3 per cent to 20 per cent - for several categories of mainland products under its Generalised System of Preferences (GSP) scheme. The remaining advantage - for televisions, consumer electronics, eyewear, clocks, edible products of animal origin, plastics and rubber - will be removed in May next year. Sichuan Changhong Electric, the mainland's largest television maker, said yesterday the removal of the tariff preferences would increase the overall cost to the consumer of the products it exported to the EU. GSP, first introduced by the EU in 1971, is a scheme aimed at giving developing countries better access to the markets of developed economies. Under the regime, EU members grant reduced tariffs to finished and half-finished industrial products from developing countries. A Hong Kong Trade and Industry Department spokesman said regular EU updates of the list of goods covered were based on factors such as trade volume and competitiveness. Two weeks ago, EU trade commissioner Pascal Lamy said in Beijing that the preferences for certain products would be gradually removed as Chinese products were no longer sensitive to changes in tariff rates. He said the decision had not been prompted by the growing EU trade deficit with China, which has been exacerbated by the euro's recent appreciation. China had a trade surplus of US$9.7 billion with the EU last year. The Changhong spokesman said the move had been spurred by European concerns over the declining competitiveness of its industries. Hong Kong Trade Development Council economist Daniel Poon said the change in the tariff scheme would be a blow to Hong Kong and mainland exporters. But he said it was good news that the mainland would continue to be a beneficiary country under GSP for many export items. Hong Kong has been excluded from GSP since May 1998. Last year, China's exports to the EU reached US$48.21 billion, accounting for 14.8 per cent of its total exports. Re-exports of Chinese-origin goods to the EU through Hong Kong amounted to HK$170 billion. The mainland's third-largest television maker, Skyworth Digital Holdings, said it would 'try to export as many sets as possible to the EU before it scraps GSP'. Some Hong Kong exporters with mainland production bases said the impact on their businesses would be indirect as their goods were sent free on board, meaning that the European customers were responsible for the tariff costs. 'However, the change in tariff will increase clients' overall costs and that could indirectly hit their buying orders,' said Desmond Lee, an executive director of Arts Optical International Holdings. Stanley Lau, chairman of the Federation of Hong Kong Industries' watch and clock council, said consumers might need to pay a higher price for a 'made in China' watch in Europe as traders would pass on the tariff cost. That would eventually affect the competitiveness of mainland and Hong Kong products.