Indonesia's wood products entering EU countries will get a tax cut from Jan. 1, 2009, until the end of 2011, the European Commission (EC) says.

Tax on wood products, such as sheets, will no longer be subject to the current tax of between 3 percent and 6 percent, while tax on plywood and boards will be reduced by 3.5 percent from the current tax of between 7 percent and 10 percent, the EC said in a statement Tuesday.

The decision was made after the EU member states adopted on July 22 a new regulation proposed by the EC, amending the preferential import tariff scheme to the EU called the Generalized System of Preferences (GSP).

"GSP is a vital tool for our pro-development EU trade policy. The continuation of GSP will ensure stability and predictability for beneficiaries and traders in the EU and developing countries," EU trade commissioner Peter Mandelson said in the statement.

Preferential tariffs are either suspended or re-established whenever an individual country's performance on the EU market over a three-year period exceeds or falls below a set level, the commission said.

According to the commission, the decision will allow continued preferential access for 176 developing countries to the EU market.

Indonesia will be granted increased preferential access for wood and wood byproducts under the new GSP scheme. Last year, more than US$4.9 billion worth of EU imports of Indonesian products were eligible for preferential tariffs from the EU.

In 2007, developing countries exported 57 billion euro worth of goods under the GSP, with a nominal duty loss for the EU of 2.5 billion euro.

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