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Explainer: What the US GSP program means for Indonesia
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Indonesia has recently secured its beneficiary status in the United States’ general system of preferences (GSP) program, which is expected to help Indonesia increase its exports to – and overall trade with – the world’s largest economy. (AFP/Indonesian Foreign Ministry )
I
ndonesia has recently secured its beneficiary status in the United States’ general system of preferences (GSP) program, which is expected to help Indonesia increase its exports to – and overall trade with – the world’s largest economy.
The GSP, first established in 1974, is the US’ largest and oldest trade preference program. It aims to promote the growth of developing economies through trade by eliminating duties on thousands of products. The program currently has 119 beneficiary states.
The US granted the preferential status to Indonesia in 1980. Under the program, Indonesia can export 3,572 types of products to the US without tariffs. So far, the country has only exported 729 of those preferred products.
Despite the limited use of the program, the Indonesian government made a concerted effort to secure the extension of the country’s preferred status, partly because the US is Indonesia’s second-largest trading partner.
The nations exchanged US$19.72 billion worth of goods between January and September of this year, an 1.85 percent drop year-on-year (yoy) from the same period last year, according to Trade Ministry data. Indonesia has maintained a trade surplus over the years, with $13.5 billion in exports to the US this year as of September, up 2.64 percent from the same period last year.
More than two years in review
The recent extension followed an eligibility review that lasted for more than two years. The US Trade Representative (USTR) Office launched the review in April 2018, citing concerns related to trade and investment barriers. The US also withheld the preferred status from Indonesia from 2013 to 2015.
