Statement on Mutual Framework for U.S.-Indonesia Trade Agreement
In the coming weeks, the United States and Indonesia are set to finalize, sign, and prepare for the entry into force of the Agreement on Reciprocal Trade. This significant step forward marks a deepening of economic cooperation between the two nations.
The Agreement on Reciprocal Trade is expected to have a substantial impact on the trade relations between the United States and Indonesia. It aims to strengthen the bilateral economic relationship by reducing tariffs and non-tariff barriers while promoting regulatory cooperation and market access for both sides.
Key terms of the Agreement include tariff eliminations and reductions, addressing non-tariff barriers, rules of origin, and additional areas covered. Indonesia has committed to eliminating over 99% of tariff barriers for a wide range of U.S. industrial and food and agricultural products. The United States, in turn, will reduce reciprocal tariffs on Indonesian goods to a flat rate of 19%, with further reductions for certain commodities that are not naturally available or domestically produced in the U.S.
Indonesia will also work to remove barriers for U.S. exports, including import restrictions or licensing requirements on U.S. remanufactured goods or their parts, and adopting good regulatory practices. Both countries will negotiate rules of origin to ensure benefits primarily accrue to both nations.
The Agreement on Reciprocal Trade will provide unprecedented access to each other's markets for both countries' exporters. It will also address digital trade, economic security, labor standards, and commercial deals, aiming for fair and sustainable trade relations.
Indonesia has committed to protecting internationally recognized labor rights, adopting a prohibition on the importation of goods produced by forced or compulsory labor, and strengthening enforcement of labor laws. The country will also commit to adopting and maintaining high levels of environmental protection, improving forest sector governance, combatting illegal, unreported, and unregulated fishing, and combatting illegal wildlife trade.
The Agreement on Reciprocal Trade is a potential opportunity for both countries' exporters to expand their markets. It is a framework for future negotiations between the United States and Indonesia, built upon the U.S.-Indonesia Trade and Investment Framework Agreement, signed on July 16, 1996.
The United States and Indonesia have noted forthcoming commercial deals between U.S. and Indonesian companies, including the procurement of aircraft, agriculture products, energy products, and purchases valued at approximately 23.7 billion USD in total. These deals further underscore the economic potential of the Agreement on Reciprocal Trade.
The terms of the Agreement on Reciprocal Trade have not been fully disclosed yet, but it is clear that this agreement represents a significant step forward in the economic relationship between the United States and Indonesia.
The Agreement on Reciprocal Trade could potentially open new markets for U.S. exporters, particularly in the food and agricultural sectors, given Indonesia's commitment to eliminate over 99% of tariff barriers for these products.
This economic agreement between the United States and Indonesia also highlights a commitment to addressing environmental concerns, as Indonesia pledges to maintain high levels of environmental protection and combat illegal wildlife trade.
