US Secretary of Commerce's Visit May Spell Happy Ending for Indonesia's GSP Review

Jakarta. The United States Secretary of Commerce Wilbur Ross visited Jakarta on Wednesday to discuss bilateral trade issues including a review on Indonesia's eligibility for a duty reduction scheme from the US government that still has not been completed after a year.

Ross met Indonesia's Coordinating Minister for Maritime Affairs Luhut Binsar Panjaitan, Energy and Mineral Minister Arifin Tasrif and Deputy Foreign Minister Mahendra Siregar before meeting Coordinating Minister for Economic Affairs Airlangga Hartanto and President Joko "Jokowi" Widodo later in the day.

"Our meeting went well. [The Secretary] appreciated our openness and how quickly we've responded to his approaches. We hope the GSP [Generalized System of Preferences] review will be completed soon without any troubles," Luhut said.

Mahendra, under instruction from the president to increase trade with the US within a year, said two issues remained in the final phase of the GSP review but mentioned no details about them. 

"[The Secretary] said some countries had been removed from the list for poor attitude, lack of intensity and focus or being indecisive. But the level of trust between us [Indonesia and the US] is good, that's why we've got through to the final phase," the former ambassador to the US said.

Ross brought representatives from US companies Honeywell, Qualcomm, Citibank and Boeing to the meeting with Luhut, Arifin and Mahendra.

"Tesla, Volkswagen, BMW and Mercedes also attended the meeting, during which we encouraged them to invest in [electric car] batteries," Luhut said.

Ross said there might be more investment opportunities in Indonesia that US companies have yet to explore.

"I think we’ll see far more investment from American companies and far more bilateral trade between our countries than what exists right now," Ross told Reuters.

Ross visited Indonesia after attending the Asean Summit in Bangkok as part of his Indo-Pacific tour.

What is GSP?

The GSP is a trade preference program from the US government that reduces duties on selected export products.

The United States Trade Representative (USTR) has been reviewing Indonesia's eligibility for the program since last year. 

In the meantime, Indonesia has been excluded from the GSP.

As part of its assessment, the USTR would remove products that exceed "competitive needs limitations" (CNL) from a country's export list.

Steric acid-derived products were removed from Indonesia's GSP list since they were deemed too competitive against their Made in USA counterparts.

On Oct. 30, five Made in Indonesia products were returned to the GSP list: laminated bamboo plywood, 66 millimeter-thick or less plywood, dried onions, sugar syrup, artificial honey and caramel and special rattan handicraft goods.

Currently, Indonesia exports only 836 out of over three thousand products eligible for the GSP. The government is pushing to export more products to take advantage of the scheme.

Indonesia's biggest exports to the US through the GSP scheme are car tires, gold necklaces, fatty acids, leather handbags and jewelry accessories.

In 2018, Indonesia's total exports to the US were worth $18 billion, over $2 billion of which went through the GSP program.