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Tuesday, 24 July 2018 00:00

Indonesia and the USA need each other

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Minister of Trade, Enggartiasto Lukita is in the United States to meet with US Trade Minister -Wilbur Ross, the United States Trade Representative (USTR), and the US Chamber of Commerce. During his visit, Minister Enggartiasto is accompanied by representatives from the Chamber of Commerce and Industry (Kadin), the Indonesian Exporter Companies Association (GPEI), the Indonesian Importers Association (GINSI), the Indonesian Palm Oil Entrepreneurs Association (Gapki), Indonesian Association of Biofuel Producers (Aprobi), Indonesian Textile Association (API), and producers of automobile tires, palm oil, marine catering, steel, aluminum and beverage food.

The visit of the Indonesian Trade Minister's entourage from 23 to 27 July is closely linked with the US government's plan to review the Generalized System of Preferences -GSP facilities, which Indonesia has received so far. The GSP is a tariff exemption program on imports of certain goods from developing countries. This policy has been in operation since 1976, but was suspended in 2013 before being reinstated in June 2015. Last year, Indonesia's export products to the US receiving GSP benefits were worth $1.95 billion dollars. Based on data from Indonesian Central Bureau of Statistics –BPS, the value of exports to the USA reached $17.79 billion dollars and imports $8.12 billion dollars. Indonesia surplus to US was worth $9.67 billion dollars. Indonesia's main exports to the US include shrimp, natural rubber, footwear, vehicle tires, and garments. While Indonesia's main imports from the US include soybeans, cotton, wheat flour, cornstarch, and animal feed.

This visit is aimed at negotiating and explaining the position of Indonesia. So, Indonesia is not excluded from the GSP facilities. The Indonesian government's move is much better than retaliation to the United States, for example raising tariffs on the entry of US goods to Indonesia. Because in fact, the USA and Indonesia are not currently at trade war as happens to the USA and China nowadays.

Actually, the grant of GSP benefits the US businesspeople, because business practices in Indonesia are conducted under the Free On-Board (FOB) scheme. Through the scheme, Indonesian businesspeople are not responsible for any duties or taxes imposed on goods exported through ports. This practice is also done when Indonesian businesspeople import goods from the USA. So, all tariffs imposed by the US government on Indonesian exports are paid by buyers and importers from the USA.

The essence is that the US consumers and employers are the main beneficiaries of the GSP scheme. The amount is estimated to reach $1.95 billion dollars. This reflects the amount of money that the US businesspeople have to spend in the future when the scheme is revoked. This can be viewed that the nature of trade relations between the United States and Indonesia has been complementary so far and they need each other. The USA will certainly not be hurried up to stop the GSP facility for Indonesia if this will ultimately make the USA be disadvantageous.

Read 1256 times Last modified on Friday, 03 August 2018 09:32