Expanding Indonesia

1
Expanding Indonesias 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

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Todays presentation

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

3
Indonesia and the U.S. Important Trading Partners

• Indonesias exports into the U.S. market totaled
  19 billion - nearly 17 higher than in 2010
• U.S. is the third largest buyer of Indonesias
  exports
• Only 10.3 of Indonesias 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

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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

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Indonesias 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)

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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)

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GSP Claimed and Unclaimed from Indonesia for Top
Exports in 2011
Article and Tariff Claimed Unclaimed Unclaimed Money Lost
Rubber radial tires 4 320.9m 96.7m 30.1 3.9m
Aluminum alloy (rectangular) 3 196.5m .32m 0.2 975,000
Plywood sheets 8 104.8m 3.1m 2.9 246,000
Rubber gloves (not medical) 3 64.7m 5.6m 8.6 166,700
Insulated elect. conductors 2.6 40.6m 5.4m 13.4 141,000
Aluminum alloy (non-rectangular) 3 37.3m - 0.0 0!
Motor vehicle parts and accessories 2.5 36.8m 2.6m 7.1 65,100
Musical instruments (no key-boards except accordions) 5 36.6m 2.5m 6.9 27,000
Silver jewelry parts 5.5 33.9m 30.2m 89.3 1.5m
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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)

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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)

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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

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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

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How can Indonesias 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)

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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.as
  p
• 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.

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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

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Make sure importer marks an A before the tariff
number on the Customs entry form!
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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/Im
  ports/default.htm

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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?a
  ctioncountrySummCommPIREGION_ID196dspNavBar1
• 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. Johns bread,
  tamarind, water chestnut.
• Mangosteens?

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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.

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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

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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)

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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)

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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)

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Many of Indonesias 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)

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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)

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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
  womens/girls dresses prepared/dyed foliage and
  branches glass jewelry electrical transformers
  guavas/mangos rattan baskets

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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, mens and womens apparel, handkerchiefs,
  kitchen linen
• carpets apparel and accessories of plastic

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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.
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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)

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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)

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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 [phone]
  Cell 1-202-413-5872www.embassyofindonesia.org
• Contact the Indonesian Chamber of Commerce and
  Industry (KADIN)
• Menara Kadin Indonesia Lt. 29Jalan HR Rasuna
  Said X-5 kav 2-3, Jakarta 12950 -
  IndonesiaTelepon    62-21-5274484 (hunting)
• sekretariat_at_kadin-indonesia.or.id kadin_at_kadi
  n-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 [phone]

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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 Phytosanitary Management
• http//www.aphis.usda.gov/import_export/sanitary_p
  hytosanitary.shtml
• USDA Port of Entry procedures
• http//www.fsis.usda.gov/regulations__policies/po
  rt_of_entry_procedures/index.asp
• Fruits and Vegetables Import Requirements (FAVIR)
• https//epermits.aphis.usda.gov/manual/index.cfm?A
  CTIONpubHome
• Procedures and Requirements for Importing Food
  Products
• http//www.fda.gov/Food/InternationalActivities/Im
  ports/default.htm

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For Additional Information

• Agricultural Concerns
• http//www.aphis.usda.gov/import_export/plants/man
  uals/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/ct
  pat/

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For Additional Information

• U.S. Tariff Schedule
• http//www.usitc.gov/tata/hts
• Department of Homeland Security Customs Border
  Protection http//www.customs.gov/xp/cgov/import/
  
• Customs Entry Form 7501 https//forms.customs.gov
  /customsrf/getformharness.asp?formNamecf-7501-for
  m.xft
• http//www.customs.treas.gov/xp/cgov/toolbox/
  publications/
• Sandler Trade LLC
• http//sandlertrade.com and sandler_at_sandlertrade.c
  om

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Terima kasih!Thank you!