Indonesia rejects conditions on GSP
JAKARTA (JP): Coordinating Minister for Economy and Finance Saleh Afiff yesterday challenged the United States over the possible termination of its Generalized System of Preferences to Indonesia in their continued efforts to tie trading privileges to labor issues.
After addressing a one-day seminar organized by the Association of the Indonesian Economists (ISEI), Saleh told reporters that the U.S. currently imposes a number of requirements on Indonesia to qualify for the GSP facility.
"One of the conditions, which I see as strange, requires Indonesia to improve the protection of its worker rights. If the terms of the GSP are too difficult to meet, we are better off forgetting the facility," Afiff said.
Indonesian exports enter the American market duty free under the GSP statute and amount to approximately US$620 million a year.
Last year the U.S. government threatened to revoke trading privilege unless Indonesia improved its labor conditions. Despite its decision last February to suspend its investigations of Indonesian labor policies for six months, the U.S. has yet to make a decision with regards to the GSP.
The Indonesian government has repeatedly stated that it will reject any economic aid or trade privileges which are tied to non-economic issues, such as human rights and environmental issues.
"After all, the proportional role of our exports under GSP to our total exports is very small," Afiff added.
Indonesian total exports last year amounted to US$36.8 billion.
He said that the Indonesian products exported under the GSP statute were generally not competitive on the world market.
As a signatory to the new General Agreement on Tariffs and Trade (GATT), Indonesia should better prepare its export-oriented enterprises to live without the GSP as the condition will be phased out beginning next year regardless.
"Without preferential U.S. treatment and the government's subsidies, I'm sure that Indonesian enterprises will be able to compete better in the global market, provided they improve their efficiency," Saleh said.(rid)