U.S. Indonesia trade deal in jeopardy
Indonesia and United States flags together with textile cloth fabric texture
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A trade deal between Indonesia and the United States is at risk of unraveling as Washington officials think Jakarta will renege on the terms of the agreement, according to The Financial Times.
ReportCiting sources familiar with the matter, U.S. trade representative Jamieson Greer said Tuesday he believed Indonesia had “backtracked” on several commitments it had made.
Indonesian officials reportedly refrained from accepting some binding commitments in the agreement and conveyed this to the USTR.
Washington believes Indonesia is “backtracking” on promises to remove non-tariff barriers to US industrial and agricultural exports and take action on digital trade.
Reuters reported on Wednesday that an Indonesian official told the agency that tariff negotiations were ongoing and that no specific issues had emerged during the talks.
US President Donald Trump announced a deal In mid-July, Indonesia cut its so-called “reciprocal” tariffs on the Southeast Asian country to 19 percent from the 32 percent it had previously threatened. “tariff letter” to the country earlier that month.
Trump said that within the scope of the agreement, Indonesia “committed” to purchase $15 billion of US Energy, $4.5 billion of American agricultural products and 50 Boeing jets.
The US president also said that “US exports to Indonesia will be Tariff-Free and Non-Tariff Barrier Free”.
USTR and Indonesia’s commerce ministry did not immediately respond to CNBC’s request for comment.
Settle disputes
A person familiar with the matter told the FT that Indonesia had “clearly said that they cannot implement what they agreed to and that they need to renegotiate the initial commitments to be non-binding”, adding that the stance was “highly problematic and not well received by the US. Indonesia may be at risk of losing the deal.”
This is not the first time Washington and Jakarta have clashed over a trade deal. in novemberThe FT reported that Indonesia has rejected a “poison pill” clause in its agreement that other Southeast Asian economies such as Malaysia have accepted.
The “poison pill” clause threatens to cancel the trade deal if the country signs any rival deals it deems would jeopardize core U.S. interests.
Trump’s trade agreements with Asian countries caused other economies in the region to take a step back after these first agreements were announced.
For example, Trump said South Korea would invest $350 billion in the country, but Seoul said this simply could not be done. Hand over the amount in cash. South Korea eventually committed to investing $200 billion in cash over 10 years and a fund of $150 billion to be spent on shipbuilding investments.
Trump also announced that Japan would invest $550 billion in the country and that the United States would receive 90 percent of the profits from these investments. But, Tokyo later said that the profits will be shared between Japan and the United States according to the degree of contribution of both parties.
