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Envoy says Indonesia-US economic ties still thrive even without GSP

Jakarta Globe - June 12, 2024

Jayanty Nada Shofa, Jakarta – An American diplomat said Tuesday that the lack of the trade preference scheme Generalized System of Preferences (GSP) had little impact on Indonesia's economic ties with Washington.

Washington's economic engagements with Jakarta are currently at full throttle, according to Michael F Kleine, the Charge d'Affaires ad interim of the US Mission to Indonesia. And the ball is in the US Congress's court on whether to revive the GSP facility which already expired at the end of 2020.

"The [bilateral] economic and trade relationships are thriving right now, even without the GSP, which is really in the ballpark of the Congress at this point. ... But we are going full steam ahead in terms of the commercial engagements," Kleine told reporters on the sidelines of the Fourth of July celebrations in Jakarta.

Kleine also talked about the recent rush of American business leaders visiting Jakarta for investment talks, saying that their visits proved the aforementioned robust economic engagements.

Apple's chief executive officer Tim Cook met President Joko "Jokowi" Widodo at the State Palace in Jakarta in April. Cook said that he was looking at building a manufacturing plant in Indonesia.

Microsoft boss Satya Nadella also came to Jakarta and announced that his company would invest $1.7 billion in Indonesia's new cloud and digital infrastructure over the next four years. American business magnate Elon Musk made headlines for launching his Starlink internet services in Indonesia.

"These are huge, huge corporations that see opportunities in Indonesia, as well as in the Indonesia-US partnership," Kleine said.

As many as 119 countries got to enjoy the GSP scheme before it expired in end-2020. The GSP grants Indonesian goods duty-free treatment when they enter the US market. Since the GSP expiration, Indonesian imports have been subject to US tariffs.

The total value of Indonesia's trade with the US amounted to $34.5 billion in 2023, government data showed. Indonesia enjoyed a massive surplus worth almost $12 billion in its trade with the US. Bilateral trade already hit $11.7 billion throughout the first four months of 2024 with Indonesia booking a $4.4 billion surplus.

When meeting his American counterpart Joe Biden at the White House last November, Jokowi tried to nudge the US into renewing the GSP facility soon. The Indonesian leader said at the time a GSP reauthorization could help the US cut its reliance on Chinese imported goods amidst the trade war between the two major economies.

Indonesia and the US at the time also upgraded their diplomatic relations to a "comprehensive strategic partnership", which is the highest possible status of cooperation.

There are efforts to revive the GSP trade preferences in the US Congress, according to media reports. American senators are also eyeing the GSP as a solution to reduce dependency on Chinese suppliers.

Source: https://jakartaglobe.id/business/envoy-says-indonesiaus-economic-ties-still-thrive-even-without-gs