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Expanding Indonesia’s Exports to the U.S. through the GSP program

Expanding Indonesia’s Exports to the U.S. through the GSP program. Marideth Sandler, Sandler Trade LLC in collaboration with The Office of Indonesia Commercial Attaché Washington, D.C. March 2012. Today’s presentation.

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Expanding Indonesia’s Exports to the U.S. through the GSP program

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  1. Expanding Indonesia’s Exports to the U.S. through the GSP program Marideth Sandler, Sandler Trade LLC in collaboration with The Office of Indonesia Commercial AttachéWashington, D.C. March 2012

  2. Today’s presentation • Indonesia’s exports to the United States, including under the Generalized System of Preferences (GSP) • Qualifying your product to enter the U.S. market • How Indonesia’s exports to the U.S. could increase by using GSP

  3. Indonesia and the U.S.: Important Trading Partners • Indonesia’s exports into the U.S. market totaled $19 billion - nearly 17% higher than in 2010 • U.S. is the third largest buyer of Indonesia’s exports • Only 10.3% of Indonesia’s exports entered the U.S. market free of duty through the GSP program, but Indonesia is the fourth largest user of GSP benefits • Indonesia exported 652 types of products that entered under GSP, totaling just under $2 billion in trade in 2011

  4. GSP Program • Provides duty-free treatment for over 3,400 types of exports from 129 countries, including Indonesia • Gives enhanced access to the U.S. market for developing countries’ products as well as expanded choices for U.S. industries and consumers • Major source of goods: $18.5 billion in eligible products entered the U.S. market under GSP in 2011

  5. Indonesia’s Exports to the U.S. Under GSP in 2011 • 4th top user of GSP benefits: 5.9% increase between 2010 and 2011 • Under GSP: 10.3% of $19 billion total exports to the U.S. (up from 16.7% in 2010) • 652 of approx. 3400 GSP-eligible product types claimed - more diverse than many countries but plenty of opportunity to expand • U.S. importers saved over $72.5 million in duties (average duty foregone 3.7%)

  6. Top GSP exports from Indonesia to the U.S. (by value) in 2011 • New rubber radial tires: $320.9 million (avoided a 4% duty) • Aluminum alloy sheets (in rectangles): $196.5 million (3% duty) • Plywood sheets: $104.8 million (8% duty) • Rubber gloves (not used for medical): $64.7 million (3% duty) • Insulated electric conductors: $40.6 million (2.6% duty) • Aluminum alloy (non-rectangular): $37.3 million (3% duty) • Motor vehicles parts & accessories: $36.8 million (2.5% duty) • Musical instruments (other than keyboards except accordions): $36.6 million (5% duty) • Silver articles or parts of jewelry: $33.9 million (5% duty) • Gold jewelry: $30 million (5.5% duty)

  7. GSP Claimed and Unclaimed from Indonesia for Top Exports in 2011

  8. Top GSP exports by growth in trade between 2010 and 2011 • Cocoa Paste: $22.2 million (+$21.7 million) • 4404% increase over 2010-2011; 0.2 cents/kg duty • Aluminum alloy, profiles (o/than hollow profiles): $2.8 million (+$2.7 million) • 2621% increase over 2010-2011; 5% duty • Outer soles and heels for footwear, of rubber or plastics: $730 thousand (+$684.6 thousand) • 1615% increase over 2010-2011; 3% duty • Parts of windshield wipers for motor vehicles or cycles: $7.3 million (+$6.1 million) • 518% increase over 2010-2011; 3% duty • Other: • Calcium carbide (2% duty saved), turpentine oils (5%) • Laboratory/chemical ceramic wares (6.4%), nickel (3%)

  9. GSP-eligible products that Indonesia did not export in 2011, but provide major opportunities • Garlics, fresh or chilled (0.43 cents/kg duty) • Cassava, fresh, chilled or dried (11% duty) • Fresh or chilled yams (6% duty) • Animal or vegetable fats and oils (8% duty) • Banana pulp (3.4% duty) • Photographic paper (3% duty) • Handles or knobs for furniture, of plastics (6.5% duty) • Ceramic table and kitchenware (10% duty) • Parts and accessories for fishing reels (5% duty) • Buttons of plastics (not covered with textile) – (5% duty) • New pneumatic tires of rubber (3% duty) • Retreaded radial pneumatic tires of rubber (4% duty)

  10. What products are eligible for GSP duty-free treatment? • Eligible: • many manufactured items and inputs • jewelry • many carpets • certain agricultural products • chemicals, marble, and minerals • plastic and rubber items

  11. Products NOT eligible for GSP • Most non-silk blend textile and apparel articles • Most watches • Most footwear, handbags, and luggage • Flat goods (non-silk kitchen and bed linens) • Work gloves • Most apparel of leather • Import-sensitive electronic, steel, and semi-manufactured and manufactured glass products

  12. How can Indonesia’s Exports Qualify for Duty-Free Treatment under GSP? Four Requirements: • Must be a GSP-eligible product • Must be exported into the U.S. directly from Indonesia or pass through another country on a “through bill of landing” (addressed to a U.S. location) • Must be a product of Indonesia, or, if it uses imported input, local content and processing must equal at least 35% of overall price to U.S. importer • U.S. importer must request duty-free treatment for the product by writing an “A” before tariff number on U.S. Customs Entry Form (Form 7501)

  13. Is my product eligible for duty-free treatment under GSP? • The easiest way to find out is to go to: http://dataweb.usitc.gov/scripts/tariff_current.asp • Fill in the blank with: • Any part of a product description. For example, “cocoa” OR • The tariff number (four, six, or eight numbers). For example, 2007, 200799, or 20079925 • Then click on “List Items” • If there is an “A” or “A*” in the row entitled “GSP (Generalized System of Preferences)”, then the product is eligible for duty-free treatment.

  14. Claiming GSP Duty-Free Treatment • U.S. importer MUST REQUEST duty-free treatment for the import • How? Importer writes an “A” before the tariff number on Customs entry form 7501 • If importer forgets: can apply to U.S. Customs for refund • Claims in 2012 for items not claimed in 2011 (when GSP was not yet renewed) must be submitted to U.S. Customs before April 18th, 2012

  15. Make sure importer marks an “A” before the tariff number on the Customs entry form!

  16. Phyto-sanitary and Sanitary Requirements • U.S. Food and Drug Administration (FDA)regulates processed food (except most beef and poultry), cosmetics, biologics, drugs & some electronics. • Product requirements: pure and wholesome; safe to eat; produced under sanitary conditions; informative and truthful labels in English. • Importer files notice and pays a bond to Customs, which contacts FDA: a test may be needed. • Bioterrorism Act: for food exports, producer required to register with the U.S. the food production and processing facilities where the food is produced. • http://www.fda.gov/Food/InternationalActivities/Imports/default.htm

  17. Fresh fruits and vegetables approved for export to the U.S. • The U.S. Animal and Plant Inspection Service (APHIS) must approve any fresh products for export from Indonesia to the United States • http://www.aphis.usda.gov/favir/info.shtml • https://epermits.aphis.usda.gov/manual/index.cfm?action=countrySummCommPI&REGION_ID=196&dspNavBar=1 • Inspection at the port of entry and other requirements apply (click on “OPEN→” before name of product) • Approved fresh exports include: aloe, cannonball fruit, Chinese water chestnut, coconut, corn smut galls, cyperus corm, garlic, ginger, lily, maguey, matsutake, mushroom, palm heart (peeled), pomegranate, shingara nut, St. John’s bread, tamarind, water chestnut. • Mangosteens?

  18. Cumulation within ASEAN • Two or more ASEAN countries (such as Indonesia and Thailand or Indonesia and Vietnam) can work together to produce an export to meet the 35% rule-of-origin. • The item is partially manufactured in one country, then sent to the second country for finishing and export. • For example, in ASEAN, many types of auto parts are produced and exported duty-free.

  19. How to continue increasing exports under GSP • Ensure U.S. Customs entry form is marked by importer to avoid paying duties on what Indonesia is now exporting • Focus on exporting GSP-eligible items: • that have found a strong niche in U.S. market • for which other countries may have lost GSP • for which the duty savings are large • that the Animal and Plant Health Service has approved • that are eligible textiles and apparel • that made by micro and small businesses

  20. Ensure GSP-eligible products get GSP duty-free treatment • $4.1 billion of GSP-eligible exports entered the United States from Indonesia in 2011 • 48% of these exports were claimed and entered duty-free under GSP (2011) • This leaves great opportunities for additional duty savings ($2.1 billion)

  21. Duties paid on… • 884 types of GSP-eligible exports not claimed as GSP-eligible (up to $35.4 million in duties paid unnecessarily) • $169 million in insulated ignition wiring sets and other wiring sets of a kind used in vehicles, aircraft or ships (5% tariff = $8.5 million in duties paid) • $69.6 million in polyethylene terephthalate in primary forms (4.5% tariff = $4.5 million in duties paid) • $96.7 million in new pneumatic radial tires, of rubber (4% tariff = $3.9 million in duties paid) • $30 million in silver articles of jewelry and parts (5% tariff = $1.5 million in duties paid)

  22. Other eligible exports that were not exported by Indonesia to the U.S. • Items with 5% duty or higher: papaya pulp (14%), iron or steel wood screws (12.5%), artificial flowers/leaves/fruit of man-made fibers (9%), plastic clothing (5%), fishing casts (5.6%), hats and headgear of wool (7.9%) • Products with less than 5% duty: fish hooks (4.8%), iron or steel chain (3.9%), vegetable oils (3.2%), dried papayas (1.8%), dried lentils (.015 cents/kg), ground ginger (1 cent/kg)

  23. Many of Indonesia’s major exports are eligible for GSP into the U.S. Market • Cocoa products • Cocoa paste, wholly or partly defatted (avoids 0.2 cents/kg duty) • Cocoa powder, without sweetener (avoids 0.52 cents/kg duty) • Chocolate, not for retail sale (avoids 6% duty) • Shrimp products • Shrimp and prawn products containing fish meat as prepared meals (avoids 5% duty) • Rubber products • Articles of vulcanized synthetic rubber other than hard rubber (avoids 2.5% duty) • Hard rubber, including waste and scrap (avoids 2.7% duty)

  24. Export products for which other countries may have lost GSP eligibility • Cereal flours, mixed together (12.8% duty) • Prepared or preserved mackerel, not minced (3% duty) • Lychees and longans (7% duty) • Sacks and bags (including cones) for the conveyance or packing of goods, of polymers of ethylene (3% duty) • Dried guavas, mangoes, and mangosteens (1.5 cents/kg duty)

  25. Focus on exporting eligible items for which the duty savings are large (creating a strong competitive edge) • 9-9.8% duty: Ceramic household kitchen and tableware (individually and in sets); pulp and other edible parts of fruit; fruit and nut flour, meal and powder; hair nets; artificial flowers/foliage/fruit; line fishing tackle; duck “decoys;” cereal flour • 8-8.5% duty: Preparations of concentrates, extracts, essences; plastic artificial flowers/foliage/fruit; china or porcelain; jewelry of base metal; household/tableware; fruits/nuts preserved by sugar • 6-7% duty: National flags; silk-blend women’s/girls dresses; prepared/dyed foliage and branches; glass jewelry; electrical transformers; guavas/mangos; rattan baskets

  26. Untapped Textile and Apparel Opportunities under GSP • These textile and apparel items offer U.S. importers duty savings of up to 14.6% under GSP: • hats, silk blend headbands, headgear, national flags, wall hangings, sports gloves • silk and silk blend apparel: handmade fabrics, shawls, men’s and women’s apparel, handkerchiefs, kitchen linen • carpets; apparel and accessories of plastic

  27. Seafood Products Eligible for GSP • Crab products containing fish meat; prepared meals of crab (avoids 5% duty) • Crabmeat, prepared or preserved, other than in airtight containers (avoids 5% duty) • Boiled clams in immediate airtight containers (avoids 1% duty) • Tunas and skipjack, not in airtight containers (avoids 6% duty) • Sardines, prepared or preserved, not minced (avoids 3.1% duty) USDA and FDA have strict regulations regarding food imports and will physically examine samples to ensure food safety. Exporters need to pay attention to product content (contaminants like mercury, and bacteria like Salmonella) and import alerts.

  28. Industrial Products Eligible for GSP • Iron or steel screws and bolts, depending on the diameter of the threads (6.2 - 8.6% duty) • Polyvinyl chloride plastic (6.5% duty) • DC motors of an output exceeding 74.6 W (4% duty) • Flexible plastic tubes, pipes and hoses (3.1% duty) • Parts of electrical ignition used for spark- or compression-ignition internal-combustion engines (3% duty)

  29. Export GSP-eligible items made by small businesses and farmers • Cassava, fresh, chilled or dried (11% duty) • Cucumbers, including gherkins (7.7-9.6% duty) • Hats - plaited or made of strips of vegetable fibers or unspun vegetable materials (6% duty) • Wood ornaments, frames, & statuettes (3.2-3.9% duty) • Plastic statues and other ornamental items (5% duty) • Brooms and brushes of twigs or vegetable materials bound together (10% duty) • Baskets of vegetable materials (2.3% duty) • Jewelry (5%-11% duty)

  30. Questions? • Contact the Indonesian Embassy in Washington, D.C. • Ms. Ni Made Ayu MarthiniCommercial AttachéEmbassy of the Republic of Indonesia to the United States2020 Massachusetts Avenue, NW, Washington DC 20036Phone: +1-202-775-5200; Cell: +1-202-413-5872www.embassyofindonesia.org • Contact the Indonesian Chamber of Commerce and Industry (KADIN): • MenaraKadin Indonesia Lt. 29Jalan HR Rasuna Said X-5 kav 2-3, Jakarta 12950 - IndonesiaTelepon   : +62-21-5274484 (hunting) sekretariat@kadin-indonesia.or.id;kadin@kadin-indonesia.or.id • Contact the U.S. Embassy in Jakarta: • Melissa Brown Trade and Investment Unit Chief Jl. Medan Merdeka Selatan No. 3 – 5, Jakarta 10110 TEL: +62-21-3435-9000

  31. For Additional Information Office of the U.S. Trade Representative Website • GSP guidebook, GSP-eligible & ineligible products, notices • http://www.ustr.gov/trade-topics/trade-development/preference-programs/generalized-system-preference-gsp Agricultural Requirements (APHIS and FDA) • Sanitary and PhytosanitaryManagement http://www.aphis.usda.gov/import_export/sanitary_phytosanitary.shtml • USDA Port of Entry procedures http://www.fsis.usda.gov/regulations_&_policies/port_of_entry_procedures/index.asp • Fruits and Vegetables Import Requirements (FAVIR) https://epermits.aphis.usda.gov/manual/index.cfm?ACTION=pubHome • Procedures and Requirements for Importing Food Products http://www.fda.gov/Food/InternationalActivities/Imports/default.htm

  32. For Additional Information Agricultural Concerns • http://www.aphis.usda.gov/import_export/plants/manuals/ports/downloads/miscellane Lacey Act http://www.aphis.usda.gov/plant_health/lacey_act/ous.pdf Consumer Product Safety Act (CPSIA) – lead, flammability • http://www.cpsc.gov/about/cpsia/cpsia.html • http://www.cpsc.gov/businfo/smbus.html Import Alerts • http://www.accessdata.fda.gov/cms_ia/importalert C-TPAT • http://www.cbp.gov/xp/cgov/trade/cargo_security/ctpat/

  33. For Additional Information U.S. Tariff Schedule • http://www.usitc.gov/tata/hts Department of Homeland Security: Customs & Border Protectionhttp://www.customs.gov/xp/cgov/import/ • Customs Entry Form 7501: https://forms.customs.gov/customsrf/getformharness.asp?formName=cf-7501-form.xft • http://www.customs.treas.gov/xp/cgov/toolbox/publications/ Sandler Trade LLC: • http://sandlertrade.comand sandler@sandlertrade.com

  34. Terima kasih!Thank you!

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