US withdrawal from TPP likely to benefit Indonesian textile industry

President Donald Trump decision to withdraw from the Trans Pacific Partnership trade pact, Indonesian textile and garment producers are now looking forward to a level playing field in the the United States.

Indonesian Textile Association or API Chairman Ade Sudrajat said that the US’ decision to quit the Trans Pacific Partnership pact will benefit their textile industry. They can now compete at the same price point as the other textile exporters.

Ade further said that the neighboring countries such as Vietnam and Malaysia used to enjoy an import duty leeway for being a TPP member country, while Indonesian textile products are subjected to a 10 percent import duty when entering the US market. President Trump’s decision to withdraw from the TPP should work in their favor. They can now compete on a level playing field.

According to the Indonesian Textile Association, or API, the Southeast Asia nation now expects to export $4.8 billion worth of textiles and garments to the US this year, accounting for 39 percent of the archipelago’s total textile and garment exports, compared to last year the US market accounted for only 36 percent of the country’s textile and garment exports.

Signs for increase in US textile orders have already surfaced with local producers reporting more US buyers have inquired about products and pricing. In terms of enthusiasm, things are already a lot better than last year.

US market picking up should also help counter the drawback Indonesian textile producers are experiencing in the European Union markets.
Indonesia are now negotiating with the EU on a bilateral trade agreement that will address import duty issue. They expect negotiations with the EU could be completed quite quickly, Ade said.

Indonesia, as a member of the Group of 20, is no longer deemed as a middle income country and has to pay a 12.5 percent import duty due to which they have to face stiff competition from Vietnam, which gets an import duty of 0 percent under EU’s preferential treatment for its low and lower middle income partners.