JAKARTA, KOMPAS.com – The US government recently approved a Generalized System of Preferences (GSP) facility extension for Indonesia, and hopes are high that bilateral trade will improve.
Indonesia’s Coordinating Minister for Maritime Affairs and Investment Luhut Pandjaitan said the GSP facility for Indonesia will help to bolster Indonesian exports to the USA amid a global slowdown in international trade.
To further both countries’ commitment to improving economic and trade relations, the Indonesian government will propose a Limited Trade Deal (LTD) with the US government.
“The LTD covers the scope of trade, investment as well as information, communication, and technology. The objective with it is to increase bilateral trade to up to $60 billion by 2024.”
The announcement of the US Trade Representative’s GSP extension for Indonesia came a few days after US Secretary of State Mike Pompeo sat down with Indonesian President Joko ‘Jokowi’ Widodo on October 29.
Indonesia’s Foreign Minister Retno Marsudi said that the GSP facility for Indonesia was part of several intensive diplomatic discussions that the Indonesian government had recently conducted.
“Indonesia’s GSP facility is just one proof of the strong partnership between the US and Indonesia which will have a positive impact on the business sector of both nations.”
The GSP facility was unilaterally implemented by the US government in 1974 and removes duties on a wide range of goods sourced from developing countries.
Indonesia first obtained its GSP status in 1980. According to the US International Trade Commission, Indonesian exports to the USA using the GSP facility in 2019 totaled $2.61 billion encompassing 13.1 percent of Indonesia’s total exports to the US valued at $20.1 billion.
The GSP facility was used on 729 types of goods out of the 3,572 goods subject to GSP preferential tariffs.
From January to August 2020, Indonesian exports to the USA using the GSP facility amounted to $1.87 billion, up 10.6 percent year on year.
Currently, Indonesian exports to the USA using the GSP facility ranks second in the US after Thailand with $2.6 billion in GSP exports.
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