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US Removes Indonesia from Developing Countries Lists

For Anti-Subsidy Rules

The United States Trade Representative (USTR) decided Indonesia is no longer in the list of developing country - Photo by Trade Ministry Office

JAKARTA (TheInsiderStories) – The United States Trade Representative (USTR) decided Indonesia is no longer in the list of developing country. The new policy has been published on Feb. 10, said the trade ministry office, today (02/25).

The country has tightened the criteria of developing countries that are entitled to exempt de minimis and negligible import volumes for the imposition of anti-subsidy or countervailing duty (CVD) tariffs.

“The exclusion of Indonesia in the category means that the competitiveness of our products must be improved so that we can continue to win the Indonesian export market,” said trade minister Agus Suparmanto, by adding the country’ status as a recipient country of the Generalized System of Preferences facility (GSP) is not affected.

According to USTR, three new criteria applied by the US to developing countries are based on Gross National Income according to the World Bank version (more than US$12,375 a year), the total share of world trade above 0.5 percent (previously 2 percent), and developing countries which are member of the European Union, OECD and G20.

Beside Indonesia, USTR issued a list of developing countries from CVD de minimis exceptions, for Argentina, Brazil, India, Malaysia, Thailand and Vietnam. Indonesia is excluded from the exception because of the nation membership in the G20 and has a total share of world trade 0.9 percent.

Suparmanto stated, currently both countries hold the consultations on the GSP program. The status of developing countries receiving GSP facilities themselves is regulated in a different statute under the 1974 Trade Act.

“Indonesia is currently coordinating closely with the US to ensure our status as GSP recipient. So far, the development of bilateral discussions has been quite positive and it is hoped that the US can inform the results of the review soon,” he noted.

Two week ago, Suparmanto meet the USTR secretary, Robert Lighthizer and other government officials. At the meeting, he proposed that the two countries creates a road map, which emphasizes a practical approach to enabling trade flows, both goods and services, and the best investment.

“Hopefully, in this visit the remaining issues that are still incomplete related to reinsurance and horticultural product imports can be harmonized immediately and Indonesia can regain preferential tariff facilities that can continue to drive Indonesian exports,” said the minister on Feb. 13.

In 2018, the value of Indonesia’ exports that received GSP facilities rose 10 percent from US$1.9 billion to $2.2 billion. While in the January – November 2019 period, the value exports with the GSP facility rose by 20 percent from $2 billion to $2.5 billion compared to the same period the previous year.

He is optimistic that the negotiations regarding the GSP will soon be over. This is considering the preference tariff facility also provides benefits for the US as an importer, who will get quality goods at a cheaper price.

In order to realize the increasing the value of trade between Indonesia and the US worth of $60 billion in the next five years, Suparmanto also plans to hold a number of meetings with US’ businessmen. The minister will also open an opportunities for greater collaboration with the US’ desire to reduce the trade deficit with Indonesia.

“Indonesia sees that trade must be fair and balanced. This can be achieved with intensify collaboration and offer a wide range of products and services with a competitive prices,” he noted.

In 2019, total trade values of the two countries recorded $26.97 billion or decreased by 5.73 percent from the previous year, which was valued at $28.6 billion, with Indonesia’ exports amounting to $17.72 billion and imports $9.25 billion. Thus, Indonesia has a surplus of $8.46 billion.

Indonesia’ main exports to the US include fresh crustaceans, natural rubber, footwear, jerseys, women’s and girl’s clothing, and new pneumatic tires. While, Indonesia’ main import products from the US such as soybean, cotton, wheat, starch flour residues, and non-consumption flour.

Otherwise, total value of US investments in Indonesia in 2019 was recorded at $989.3 million consisting of 788 projects dominated by the mining sector (78 percent). Other sectors electricity, gas and water industry, service industries and others.

Total value of trade between the two countries in 2019 is $26.9 billion with a growth trend of 4.5 percent. Indonesia’ exports to the US in 2019 were recorded at $17.7 billion and raised a surplus of around $9.2 billion.

Written by Staff Editor, Email: theinsiderstories@gmail.com