WASHINGTON – U.S. Trade Representative Susan C. Schwab and Indonesia’s Trade Minister Mari Pangestu today signed a Memorandum of Understanding (MOU) on cooperation to prevent illegal transshipment of textiles and apparel through Indonesia to the United States.

The ceremony followed a meeting between Ambassador Schwab, Trade Minister Pangestu and Indonesian Vice President Jusuf Kalla that focused on the bilateral trade relationship and opportunities to expand economic ties between the United States and Indonesia, the largest nation in the Southeast Asia region.

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

The MOU provides for customs cooperation, identification of textile and apparel manufacturers, and joint verification visits to provide each country’s government with the information necessary to stop textile and apparel transshipments. The conclusion of this MOU represents an important achievement in ongoing efforts to achieve a network of cooperative arrangements to prevent illegal transshipment of textiles and apparel.

The MOU is also the latest achievement in ongoing work under the bilateral U.S.-Indonesia Trade and Investment Framework Agreement (TIFA). The TIFA, which was established in 1996, seeks to further strengthen the close ties between the U.S. and Indonesia and to enhance two-way trade that currently stands at around $16.5 billion per year. The TIFA provides the two sides with a forum to identify, raise, and resolve matters that might otherwise hinder the development of bilateral trade and investment ties.

In their meeting, Ambassador Schwab, Trade Minister Pangestu and Vice President Kalla discussed issues on the U.S.–Indonesia bilateral trade agenda, including the enforcement of intellectual property rights (IPR), removal of barriers to exports of U.S. fruits to Indonesia, and reviving the World Trade Organization Doha Round.

Background

The United States is Indonesia’s largest market for exports of textile and apparel products. In 2005, textile and apparel imports from Indonesia were valued at $3 billion, making Indonesia the United States’ fifth largest textile and apparel supplier in value terms. The MOU will facilitate textiles and apparel trade by helping both governments better distinguish between legitimate transactions and shipments that circumvent trade rules and procedures.

The United States has previously concluded MOUs to combat illegal textile and apparel transshipments with the Philippines, Hong Kong and Macau, and is in the process of negotiating an MOU with Taiwan. These issues are also being addressed in the comprehensive bilateral free trade agreement negotiations that are ongoing with Korea and Malaysia.