Washington - The United States and Indonesia have agreed to cooperate in preventing illegal transshipments of textiles and apparel through Indonesia to the United States.

U.S. Trade Representative (USTR) Susan Schwab and Indonesian Trade Minister Mari Pangestu signed a memorandum of understanding (MOU) September 26, according to an announcement from the USTR's office.  The agreement authorizes customs cooperation, identification of textile and apparel manufacturers and joint verification visits, and is expected to help the two countries deter merchandise shipments that violate trade rules. 

"This MOU establishes a formal mechanism to help safeguard legitimate textile trade between our two countries, while stopping illegal textile transshipments," Schwab said.  "Today's agreement demonstrates a commitment by the United States and Indonesia to work together to strengthen our trading relationship." 

Indonesia is the United States' fifth-largest supplier of textiles and apparel, with exports valued at about $3 billion in 2005. 

Illegal transshipment - changing products' actual country of origin - is one of many tactics used to evade customs duties or import quotas, according to U.S. Customs and Border Protection (CBP), the unified border agency within the U.S. Department of Homeland Security.   

The U.S. government designated commerce in textiles and apparel a priority trade issue in 2006 and has been increasing its efforts to restrict illegal transshipments into the United States.  Duties on textiles account for about 43 percent of all customs revenue collected, CBP reports.  

The United States already has concluded MOUs with the Hong Kong and Macau Special Administrative Regions of China and with the Philippines.  (See related article.)

U.S. officials currently are negotiating with Taiwan, and the issue is also on the agenda in the United States' bilateral free-trade agreement negotiations with Malaysia and South Korea. 

EXPANDING U.S.-INDONESIAN ECONOMIC TIES

The U.S.-Indonesian MOU builds on accomplishments of a 10-year-old trade and investment framework agreement between the two countries, the USTR's office said.  Two-way trade between the countries is about $16.5 billion per year.    

According to USTR, Schwab met with Pangestu and Indonesian Vice President Jusuf Kalla to discuss trade relations and ways to expand bilateral economic ties.  The officials discussed a range of issues, including enforcement of intellectual property rights, removal of barriers on U.S. fruit exports and efforts to restart the World Trade Organization's Doha round of negotiations.

The full text of the USTR announcement can be found at the office's Web site.   

For additional information on U.S. economic policy, see Trade and Economics.