October 30, 2019 / 7:47 AM / 14 days ago

U.S. removes tariffs for five Indonesian products

JAKARTA (Reuters) - The United States has removed tariffs for five Indonesian products under a privileged trade facility as part of ongoing trade negotiations between the two countries, Indonesian officials said.

The office of the United States Trade Representative (USTR) has removed tariffs for five Indonesian products: laminated plywood, some thin plywood, dry onion, rattan handicrafts as well as artificial sugar, honey and caramel, Indonesian trade ministry said late on Tuesday.

Those products have now become part of more than 3,500 others that get duty-free treatment under the Generalized System of Preferences, the ministry said, referring to a U.S. trade facility given to poor and developing economies.

The products were previously taken out of a list of goods that get GSP facility because their exports had breached the U.S. “competitive need limitations”, said Iman Pambagyo, who heads the ministry’s department of international trade negotiations.

Since then, Indonesia’s market share for those products had dropped, he said.

“Based on our request, the products were put back into (GSP),” Pambagyo said by text messages.

The USTR last year announced that it was reviewing Indonesia’s eligibility for GSP, due to issues regarding market access for American goods, services and investment.

While GSP negotiations were ongoing, Indonesia has managed to conclude discussions with the U.S. on some products, said Rizal Affandi Lukman, deputy coordinating minister for economic affairs who is involved directly in GSP talks.

Indonesia has lobbied the U.S. extensively to keep the facility, including dropping a plan to force credit card transactions be settled onshore, sources told Reuters, and relaxing rules on data storage.

Jakarta aims to expedite GSP negotiations and resolve differences with Washington within a month, Indonesia’s vice foreign minister said last week, claiming that retaining GSP could have “massive impact” on trade with the United States.

The GSP facility gave reduced tariffs to $2.1 billion of the $18.4 billion Indonesia exported to the United States in 2018, based on Indonesia’s trade ministry data. Top products that received GSP benefits were tyres, gold necklaces, fatty acids and leather handbags, the data showed.

Reporting by Bernadette Christina Munthe and Maikel Jefriando; Additional reporting and writing by Gayatri Suroyo, editing by Louise Heavens

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