Indeed, the Biden administration has been focused on domestic priorities, including completing the vaccination program to check the COVID-19 pandemic, restoring employment and growth in the American economy, and passing infrastructure and industrial policy legislation, with a focus on supply chain security for key technologies and manufacturing capacity.

Meanwhile, now that the new US Trade Representative Katherine Tai is in place, the process of assembling a Biden trade agenda will move forward, as will the review of the trade policies left behind by president Trump. Once work on domestic legislative priorities is completed later this year, we can expect the administration will begin to address pending trade issues and initiate some new initiatives.  

With regard to the Indo-Pacific region, the administration has sent signals it intends to increase its engagement to counter the economic and security threats it sees posed by China. The first foreign visit by new Secretary of State Tony Blinken and Secretary of Defense Lloyd Austin were to two key regional allies, Japan and South Korea, with Austin also going on to a meeting in India. The regional message is being underscored with President Joe Biden invitation to Japan’s Prime Minister Yoshihide Suga to be the first foreign leader to meet with him at the White House.

On trade with the region, President Biden does not intend to rejoin the Trans-Pacific Partnership trade pact, at least not anytime soon.  As a default option, the Biden administration may end up pursuing bilateral trade initiatives with countries in Asia, the approach preferred by the Trump administration. 

Of course, there is a list of trade concerns still pending with China, unfinished negotiations with Japan and India, and a ballooning bilateral deficit with Vietnam that demands action sooner or later under the cloud of Section 301 unfair trade practice investigations launched by the Trump administration. 

As the Biden administration builds a trade agenda for the region, there is every reason why expanded trade with Indonesia should be a priority. Indeed, if Indonesia was inclined there are probably near term opportunities for a series of phased bilateral trade deals, rather than a single undertaking of a comprehensive free trade agreement. Thus far, Indonesia has seemed cautious to push on what we think would be an open door.

At the same time, Indonesia did score a success in negotiating with the Trump administration to protect its eligibility under the Generalized System of Preferences (GSP) program. GSP allows Indonesian exports in hundreds of categories to enter duty-free into the US market, and Indonesia’s US$2.7 billion in qualified exports under the US GSP program in 2019 ranked second in the world.  Still, Indonesia underperforms in taking advantage of GSP benefits compared to, say, neighboring Thailand, which sent $4.8 billion in GSP duty-free exports to the US market in 2019. 

Moreover, while the Indonesian economy comprises more than 30 percent of ASEAN’s gross domestic product, its exports to the US are only $20 billion out of some $206 billion in ASEAN goods exports to the US in 2019, barely 10 percent of the region’s total.  

Indonesia now has an unusual opportunity to seek additional access under the US GSP program, which expired at the end of 2020, and is in the process of being prepared for reauthorization in the Congress.

Leaders in both parties in Congress have vowed the program will be renewed in 2021, and the prospects remain good.  One way for Indonesia to increase its exports to the US would be to engage the details of the GSP renewal legislation that will be drafted this year.  

The line-up of top GSP beneficiaries has recently undergone a major transition, based on decisions by the Trump administration to remove Turkey and India from the program totally in 2019 and reduce Thailand’s GSP eligibility in 2020.  With the ongoing military takeover in Myanmar, that country’s continued eligibility under the program is in serious question.  Indonesia is now the most prominent GSP beneficiary country, and certainly the most important in ASEAN.

The GSP program has shown that it can benefit Indonesia, even more so as Indonesia’s continued position as a beneficiary country becomes a more exclusive designation. For example, Indonesia has benefited significantly from the inclusion of travel goods under the GSP program in 2017, and could also be a major beneficiary if certain categories of footwear are made eligible for the GSP program this year, as is currently being considered in the Congress. 

The US GSP program will almost certainly not be extended to include apparel, but there are other strategies that could be employed to improve Indonesia’s access in that sector. 

Again, the timing for an Indonesian trade initiative with the US has never been better.  The steady move of sourcing away from China continues due to the US-China trade war and the parallel concerns about Xinjiang and Hong Kong. This has resulted in many American, Japanese and European companies looking to restructure their global supply chains to reduce dependency on China and to build resiliency and redundancy by establishing production bases elsewhere. 

For ASEAN’s largest economy the confluence of events is a perfect opportunity.  The Jokowi administration has moved to capitalize on supply chain restructuring and the movement of investment out of China with the energetic launch of its Indonesia 4.0 program to attract global investment into the country. 

Closely engaging the GSP reauthorization process to make sure it is of maximum potential benefit to Indonesia, on products such as travel goods, footwear, bicycles and other sectors, would be well-advised. So would an initiative from Indonesia for some phased sectoral trade agreements with the US.

The passage of an expanded and long-term GSP authorization by Congress together with tabling proposals for targeted bilateral trade deals could help drive the success of Indonesia 4.0, and the country could position itself to offer the most attractive sourcing option of any country in Asia.

Many may think that the trade agenda in Washington will remain relatively quiet in 2021, but the GSP legislation and the opportunity to offer new initiatives early in the Biden administration is exactly the right moment for Indonesia to establish itself at the forefront of the American trade agenda in Asia. 

With the Biden administration’s priorities on promoting democratic values and a focus on the Indo-Pacific region, the time to press Indonesia’s advantages has never been better.

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Andrew Samet is a principal in the trade advisory firm of Sorini Samet & Associates LLC and David Gossack is a senior advisor at Sorini Samet & Associates, and a former vice president for Asia at the US Chamber of Commerce and commercial counselor at the US Embassy in Jakarta.