Indonesia rejects conditions on GSP

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)