US Extends GSP Facility for Indonesia
Date 1 November 2020
The US Government through United States Trade Representative (USTR) has extended the United States’ Generalized System of Preferences (GSP) facility for Indonesia, following the recent visit of the US Secretary of State Mike Pompeo to Jakarta few days ago.
Indonesian Minister of Foreign Affairs Retno Marsudi said that the extension of GSP facility for Indonesia is expected to increase the economic cooperation between the two countries.
During the meeting with Mike Pompeo, Retno also raised the issue of the GSP, stating that the completion of the GSP review was the result of a series of diplomacy that has been intensively carried out by the Indonesian Government in recent times.
“The GSP facilities is a concrete form of a strategic partnership between the two countries which brings positive benefits not only to Indonesia, but also to business in the US,” she said.
Meanwhile, the Indonesian Ambassador to the US Muhammad Lutfi said that the extension of the GSP facility shows the high confidence of the US Government in various improvements to domestic regulations carried out by the Indonesian Government in order to create a more conducive business and investment climate in the country.
“After the USTR announcement, we will immediately design a road plan to optimize import duty relief facilities for Indonesian products in the US market,” said Lutfi.
In recent years, the granting of extension of GSP facilities by the US has been relatively rare. The US even terminated the facility for a number of its trading partner countries, such as India and Turkey, last year.
Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan stated that amid the decline in international trade due to the COVID-19 pandemic, the GSP facility will help improve the performance of Indonesia’s exports to the US. He added that in order to reaffirm the commitment of the Indonesian Government to continue optimizing the economic and trade cooperation of the two countries, Indonesia will propose a Limited Trade Deal (LTD) negotiation or a limited trade agreement between Indonesia and US.
“The LTD, which will cover trade cooperation and investment in informatics, communication and technology sectors, is expected to boost two-way trade between Indonesia and the US to reach US$60 billion by 2024,” he said.
The high intensity of cooperation in the trade sector between the two countries is also an effective catalyst for increasing investment flows between the two parties, including from the US to Indonesia.
For the record, GSP is a trade facility in the form of exemption of import duty tariffs, which have been given unilaterally by the US Government to developing countries since 1974. Indonesia first received GSP facilities from the US in 1980.
Based on statistical data from the United States International Trade Commission (USITC), in 2019, Indonesia’s exports using GSP reached US$2.61 billion. This figure is equivalent to 13.1 percent of Indonesia’s total exports to the US or amounting to US$20.1 billion.
Indonesia’s GSP exports in 2019 consisted of 729 goods tariff posts from a total of 3,572 goods tariff posts that received GSP tariff preferences.
Until August 2020, the export value of Indonesian GSP to the US was recorded at US$1.87 billion, increasing by 10.6 percent over the same period in the previous year. Indonesia is currently the 2nd largest GSP exporting country in the US after Thailand (US$2.6 billion). (Ministry of Foreign Affairs / UN)
Translated by: Estu Widyamurti
Reviewed by: Lulu Wuliarti