U.S. extends Generalized System of Preferences facility for Indonesia

Jakarta (Indonesia Window) – The United States government, through the United States Trade Representative (USTR) has officially issued a decision to extend the Generalized System of Preferences (GSP) facility for Indonesia.

In a statement received here on Sunday, Indonesian Coordinating Minister for Maritime Affairs and Investment Luhut B. Pandjaitan said amid the international trade decline due to the COVID-19 pandemic, the GSP facility will help improve Indonesia’s export performance to the U.S.

The announcement on the GSP extension was made just a day after President Joko Widodo’s meeting with U.S. Secretary of State Mike Pompeo in Jakarta on October 29, 2020.

When meeting with his U.S. counterpart, Indonesian Foreign Minister Retno Marsudi also specifically raised the issue on GSP.

Retno stated that the completion of the GSP review was the result of intensive diplomacies of the Indonesian government recently.

“The extension of GSP facility is a concrete action of strategic partnership between the two countries which not only brings positive benefits to Indonesia, but also business in the U.S.,” Retno added.

Meanwhile, according to Indonesian Ambassador to the U.S. Muhammad Lutfi the extension of GSP facility shows the high confidence of the U.S. government on improvements of Indonesia’s regulations in order to create a more conducive business and investment climate in the archipelagic country.

“After the announcement of the USTR, we will work on road plan to optimize the import duty relief facilities for Indonesian export products to the U.S. market,” said Ambassador Lutfi, who previously served as Minister of Trade and Head of BKPM (Investment Coordinating Board).

In recent years, the extension of GSP facility by the U.S. has been relatively rare.

In fact, in 2019 the GSP facility for a number of U.S.’ trading partner countries, such as India and Turkey, was stopped.

GSP is a trade facility of import duty tariff exemption that has been given unilaterally by the U.S. Government to developing countries around the world since 1974.

Indonesia first received the U.S.’ GSP facility in 1980.

Based on statistical data from the United States International Trade Commission (USITC), in 2019 Indonesia’s exports under GSP reached 2.61 billion U.S. dollars.

That figure is equivalent to 13.1 percent of Indonesia’s total exports to the U.S. valued at 20.1 billion U.S. dollars.

Indonesia’s exports with GSP facility in 2019 came from 729 products from a total of 3,572 products that received GSP tariff preferences.

Until August 2020, the export value of Indonesia’s GSP to the U.S. was recorded at 1.87 billion U.S. dollars, an increase of 10.6 percent compared to that in the same period last year.

Indonesia is currently the second largest GSP exporting country in the U.S. after Thailand (2.6 billion U.S. dollars).

Reporting by Indonesia Window