Indonesia and US To Meet Soon

KOMPAS/RIZA FATHONI

Ratangga MRT train passes before entering ASEAN Station, South Jakarta, Monday (17/2/2020).

The government has assured that the revocation of Indonesia’s developing country status will not affect the Generalized System of Preference (GSP) facilities provided by the United States.

JAKARTA, KOMPAS —The revocation of Indonesia’s developing country status by the United States Trade Representative (USTR) will not affect the Generalized System of Preference (GSP) facilities from the US.

The assurance was made by Maritime and Investment Coordinating Minister Luhut Binsar Pandjaitan in Jakarta on Tuesday (25/2/2020). Luhut explained that during last week’s visit to the US, the Indonesian delegation spoke with USTR chief Robert Lighthizer regarding the GSP facilities, and that it was decided during the meeting that Indonesia would continue to receive the GSP facilities.

The USTR team will meet with officials from Agriculture Ministry and the Trade Ministry on March 2, 2020 to finalize the details of the GSP facilities. "We can get about US$2.4 billion in [import tariff] facilities, and this will make us competitive," said Luhut.

In addition to Indonesia, 126 other countries, including Malaysia, Vietnam and India, have lost their developing country status as of Feb. 10, 2020. According to Luhut, Indonesia losing its developing country status and the GSP were different issues. "The GSP is based on a different agreement. It is different from the change in status," he said.

KOMPAS/LASTI KURNIA

Trucks are parked besides stacked containers at Operation Terminal 3, Tanjung Priok Port, Jakarta, Thursday (20/2/2020).

The change in Indonesia’s status was related to antidumping investigations to protect the US’s domestic industries, while the GSP was an import incentive the US provided.

Luhut added that the government even planned to elevate the GSP to a limited free trade agreement, but not a free trade agreement.

Vulnerable to blame

Under its developed country status in the US, Indonesia is vulnerable to accusations over using subsidies to boost exports. However, Indonesian exporters are confident that they will not be targeted by such charges because they had never received government subsidies.

According to Statistics Indonesia (BPS), Indonesia\'s exports to the US reached $1.61 billion in January 2020, a year-on-year increase of 7.05 percent from January 2019. Commodities that dominated Indonesian exports to the US were rubber products, wooden furniture, athletic footwear, coffee, cocoa, textile products and jewelry.

Indonesian Rubber Association (Gapkindo) chairman Moenardji Soedargo stressed that the rubber industry did not receive government subsidies. "Absolutely not. The Indonesian rubber industry employs the free market principle," he said

KOMPAS/RONY ARIYANTO NUGROHO

Vehicles jam the city toll road along Jl. Gatot Subroto in Cawang, Jakarta, during work hours on Tuesday (25/2/2020).

Meanwhile, Indonesian biodiesel is still affected by subsidy allegations from the US, so Indonesia did not export biodiesel to the US in 2019. Indonesian Association of Biofuel Producers chairman Paulus Tjakrawan said that the US filed the allegations in 2017. The case was still being heard at the US Court of International Trade. "Lawyers [representing] businesses and the government are working hard to win the case. I am optimistic because the US allegations are motivated by protectionist interests,” he said. (LKT/JU