Accused of infringing on 'economic sovereignty', is the US Indonesia trade agreement going yellow?
Beijing, December 10 (Xinhua) -- British media reported on the 9th that the trade agreement reached between the United States and Indonesia in July is facing collapse. The Indonesian side believes that the United States is attempting to include a "poison pill" clause in the trade agreement, which violates its "economic sovereignty", while the US side believes that Indonesia is "reneging" on its commitments.
US dissatisfied with Indonesia's' backtracking '
On the 9th, the Financial Times quoted insiders as saying that US Trade Representative Jamison Greer accused Indonesia of "reneging" on multiple commitments it had already made.
According to reports, Indonesian officials have informed the Office of the United States Trade Representative that the country finds it difficult to accept some of the binding commitments in the bilateral trade agreement and hopes to adjust the wording of these terms.
American sources have stated that Indonesia is not only "delaying time" in implementing the agreement, but even directly stating that it cannot fulfill the agreement already reached, demanding renegotiation and modifying the initial commitments into non binding content. This situation is highly controversial, and the US has a strong reaction to it. The agreement may face the risk of collapse
The US believes that Indonesia has "regressed" on two key commitments: first, to eliminate non-tariff barriers to US exports to Indonesia, and second, to take measures on digital trade-related issues.
According to the US side, Indonesian President Prabowo could have pushed for the domestic approval process of the agreement, but chose to remain inactive due to domestic political factors.
The Office of the President of Indonesia and the Office of the United States Trade Representative both declined to comment. According to reports, Greer plans to meet with Indonesian Economic Coordinating Minister Elronga Hartato this week to persuade the Indonesian side to resolve their differences.
Indonesia insists on 'economic sovereignty'
On July 15th, Trump announced that the United States had reached a trade agreement with Indonesia. The United States will impose a 19% tariff on all imported Indonesian goods, lower than the previous 32% tariff rate set by the US on Indonesia. As part of the agreement, Indonesia has committed to purchasing $15 billion worth of American energy, $4.5 billion worth of American agricultural products, and 50 Boeing aircraft.
In addition, US exports to Indonesia will enjoy tariff free and non-tariff barrier treatment, including some localization requirements - which the US believes are barriers to investment. Some Indonesian business groups have warned that canceling localization rules may affect the competitiveness of local businesses.
Apple Inc. in the United States was once affected by this rule. At the end of last year, Indonesia banned Apple from selling the iPhone 16 model due to its failure to meet the requirement of a 40% localization rate for smartphones. The ban was lifted only after Apple agreed to invest in the production of smartphone components in Indonesia.
The trade agreement also faces other obstacles. According to the Financial Times, the United States has been attempting to forcefully include a "poison pill" clause in the agreement, which stipulates that if Indonesia reaches other competitive agreements deemed detrimental to US core interests, the current agreement will be terminated. Indonesia refuses to accept the US demand, citing that these terms violate the country's "economic sovereignty".