Indonesia lobbies U.S. to maintain special tariff treatment

JAKARTA (Reuters) – Indonesia lobbied visiting U.S. Secretary of State Mike Pompeo to keep the Southeast Asian nation on a list of countries that receive preferential trade terms, its foreign and trade ministers said on Sunday.

“President Joko Widodo has delivered Indonesia’s hope that the U.S. will maintain the country’s GSP (Generalized System of Preferences) facility,” Foreign Minister Retno Marsudi told reporters after meeting Pompeo.

In April, the U.S. Trade Representative’s Office said it was reviewing the eligibility of Indonesia, along with India and Kazakhstan, for the GSP, based on concerns over compliance with services and investment criteria.

“Around 53 percent of the goods covered by the GSP are commodities with links to products the U.S. exports, while 35 percent are related to the production process of U.S. products,” Marsudi said.

Under the GSP, Indonesia gets reduced tariffs on about $2 billion worth of exports to the United States, including some agricultural, textile and timber products, the Indonesia’s employers association told Reuters in July.

Total exports to the United States were $17.8 billion data in 2017 from Indonesia’s trade ministry showed. Indonesia ran a $9.7 billion trade surplus with the United States last year.

Indonesian Trade Minister Enggartiasto Lukita said Indonesia has asked the United States to exempt its aluminum and steel products.

The minister said he and Marsudi had met U.S. Commerce Secretary Wilbur Ross in Washington in July and agreed to raise the value of annual U.S.-Indonesia trade to $50 billion. Lukita said Pompeo had agreed on the need to increase economic ties and increase the countries’ strategic partnership.

“President Trump wants to trade with Asia, with Indonesia,” Pompeo told Indonesia’s Metro TV, calling the trade between the two “incredibly important.”

The U.S diplomat, who refrained from commenting on the GSP negotiations, said he wanted to ensure Indonesia-U.S. trade was “fair and equivocal” and criticized China’s growing role in Southeast Asia.

“The country that attempts to use its economic power to dominate this region is China, not the United States. We want to be a great partner for Indonesia,” Pompeo said.