Indonesian tyre producers have demanded the government continue lobbying the US administration for an extension of the tariff reduction on tyre exports.
Chairman of the Indonesian Tire Producers Association (APBI), Azis Pane, said Thursday that domestic tyre producers still needed the duty cut to compete against other producing countries supplying the US market, a major destination for Indonesian tyre exporters.
Indonesia benefited from the US’ generalized system of preferences (GSP) for 37 years, but it expired last year. The government has requested an extension but discussions are still under way and subject to approval by the US Congress.
“We deserve the lower duty provided by the GSP; without it, we will lose our competitive edge,” Azis said.
Indonesia has been among the 127 beneficiary countries of the GSP, with 3,400 products covered by the facility. About 10.3 percent of US$19.65 billion worth of Indonesian exports used the GSP facility in 2011, according to the latest data available.
Rubber radial tyre exports, which accounted for $320.9 million, were among the top-five exports to the US that benefited from the GSP facility. The four others were rectangular aluminum alloy ($196.5 million), plywood ($104.8 million), rubber gloves ($64.7 million) and insulated electric conductors ($37.3 million).
The local tyre industry sourced natural rubber from smallholders and the GSP facility contributed to the creation of jobs in Indonesia, according to Azis.
The facility is intended to contribute to growth in developing countries by reducing import duties for up to 5,000 products shipped to the US. Lower-cost imported raw materials and components also help manufacturers in the world’s largest economy to remain competitive against imported finished products, as well as its export markets.
Former US trade representative Michael Froman announced last year that passenger car tyres from Indonesia would no longer be eligible for duty-free treatment under the GSP program, starting from last July. Indonesian-made tyres were considered “sufficiently competitive” and had surpassed competitive-need limitations for the product.
Indonesia and Thailand, which manufactures similar products, had been the leading suppliers of radial tyres under the GSP in the US.
Since the GSP was terminated, local tyres had been charged 5 percent duty upon shipment to the US, and this had already eroded the competitiveness of local manufacturers against those from China and India, according to Azis.
Indonesia, the world’s second-largest supplier of natural rubber, the key raw material in tyres, saw its tyre exports decline by 16.3 percent to $1.08 billion last year from a year earlier. In terms of volume, exports also dropped by 5.2 percent to 30.42 million tyres.
The APBI estimated that exports could increase significantly to $1.5 billion worth this year, particularly on the back of the global economic recovery, which could fuel growth in the automotive sector in major buyers’ markets, including China.
Source: The Jakarta post
Published: 28 Mar 2014