AsianFin -- The Trump administration released details of its trade deal with Indonesia on Tuesday, a week after U.S. President Donald Trump first disclosed the deal.
Credit：Xinhua News Agency
Indonesia will eliminate approximately 99% of tariff barriers for a full range of U.S. industrial and U.S. food and agricultural products exported to Indonesia, and the United States will reduce to 19 % of the reciprocal tariffs, down from the 32% tariffs Trump announced on April 2, according to a joint statement on framework for U.S.-Indonesia agreement on reciprocal trade (“joint statement”) released by the White House.
Trump echoed the joint statement in his social media post. “Indonesia will be Open Market to American Industrial and Tech Products, and Agricultural Goods, by eliminating 99% of their Tariff Barriers,” he said in the post. The president also posted that Indonesia would provide critical minerals to the U.S. Indonesia will remove restrictions on exports to the United States of industrial commodities, including critical minerals, according to the joint statement.
Under the deal, Indonesia agreed to bring down a wide range of trade barriers, which is expected to result in at least $50 billion in additional market access for U.S. goods. The $50 billion includes the estimated value of new market access as well as purchases Indonesian companies intend to make of US goods, including liquefied natural gas, oil and agricultural commodities,Bloomberg cited a senior U.S. government official.
The joint statement said Indonesia has committed to address and prevent barriers to U.S. food and agricultural products in the Indonesian market, including exempting U.S. food and agricultural products from all import licensing regimes, including commodity balance requirements; ensuring transparency and fairness with respect to geographical indications; providing permanent Fresh Food of Plant Origin (FFPO) designation for all applicable U.S. plant products; and recognizing U.S. regulatory oversight, including listing of all U.S. meat, poultry, and dairy facilities and accepting certificates issued by U.S. regulatory authorities.
In order to address barriers impacting digital trade, services, and investment, Indonesia will provide certainty regarding the ability to transfer personal data out of its territory to the United States; eliminate existing HTS tariff lines on “intangible products” and suspend related requirements on import declarations; to support a permanent moratorium on customs duties on electronic transmissions at the WTO immediately and without conditions, per the joint statement.
Indonesia will work with the U.S. to address Indonesia’s non-tariff barriers that affect bilateral trade and investment in priority areas, including exempting American companies and originating goods from local content requirements; accepting vehicles built to U.S. federal motor vehicle safety and emissions standards; accepting FDA certificates and prior marketing authorizations for medical devices and pharmaceuticals; removing certain labeling requirements; exempting U.S. exports of cosmetics, medical devices, and other manufactured goods from certain requirements, according to the joint statement.
Goods that are transshipped or contain significant content from other countries are subject to a 40% tariff, the aforementioned senior official said. The official said the terms of what constitues the transshipment would be offered in a later document.
Trump on July 15 said he reached a trade deal with Indonesia that will charge a 19% tariff on the Southeast Asian economy, while U.S. exports to the country “are to be Tariff and Non Tariff Barrier FREE.” “If there is any Transshipment from a higher Tariff Country, then that Tariff will be added on to the Tariff that Indonesia is paying,” he added. Indonesia thus became the first trading partner receiving the Trump administration’s cut in planned tariffs through trade negotiations by August 1.
As part of the deal, Indonesia “has committed to purchasing $15 Billion Dollars in U.S. Energy, $4.5 Billion Dollars in American Agricultural Products, and 50 Boeing Jets, many of them 777′s,” Trump said in a social media post on July 15.
The joint statement on Tuesday disclosed commercial deals between U.S. Indonesian companies, including procurement of aircraft currently valued at $3.2 billion, purchase of agriculture products, including soybeans, soybeans meal, wheat, and cotton with an estimated total value of $4.5 billion and urchases of energy products, including liquefied petroleum gas, crude oil, and gasoline, with an estimated value of $15 billion.
The joint statement suggested the deal is currently a preliminary version as it said Washington and Jakarta would negotiate and finalize the agreement, prepare the agreement for signature, and undertake domestic formalities in advance of the agreement entering into force.
