The U.S. on Feb. 19 announced an agreement on reciprocal trade with Indonesia that will ostensibly eliminate tariff barriers on over 99 percent of U.S. products exported to that country across all sectors. The White House said the U.S. and Indonesia would undertake all applicable domestic procedures in the coming weeks to make the agreement effective, although it remains to be seen whether the Supreme Court decision to strike down the IEEPA tariffs derails that plan in any way.
According to a White House fact sheet, under the agreement the U.S. would maintain a 19 percent “reciprocal” tariff for imports from Indonesia (except for certain identified products that would benefit from a zero rate), a commitment that has already been rendered moot by the recent Supreme Court decision. Notably, the agreement contains a clause that would have allowed certain textile and apparel goods from Indonesia to benefit from a zero percent “reciprocal” tariff up to a specified volume of imports.
Another U.S. commitment is that it “may positively consider the effect that the Agreement has on national security, including taking the Agreement into consideration when taking trade action under section 232 of the Trade Expansion Act of 1962.”
Indonesia, for its part, has agreed to take the following actions:
- eliminate tariff barriers on over 99 percent of U.S. products exported to Indonesia across all sectors, including for agricultural products, health products, seafood, information and communications technology, automotive products, and chemicals;
- address a range of non-tariff barriers, such as exempting U.S. companies and originating goods from local content requirements, accepting U.S. federal motor vehicle safety and emission standards, accepting FDA standards for medical devices and pharmaceuticals, removing burdensome certification and labeling requirements, eliminating pre-shipment requirements, and taking steps to resolve many longstanding intellectual property issues;
- address and prevent barriers to U.S. agricultural products being sold in the Indonesian market, including by exempting food and agricultural products from all of Indonesia’s import licensing regimes and ensuring transparency and fairness with respect to geographical indications, including meats and cheeses;
- eliminate barriers for digital trade, including existing HTS tariff lines on “intangible products”, support a permanent moratorium on customs duties on electronic transmissions at the World Trade Organization immediately and without conditions, and ensure a level playing field for U.S. electronic payment service companies;
- join the Global Forum on Steel Excess Capacity and take actions to address global excess capacity in the steel sector and its impacts;
- cooperate with the U.S. to increase supply chain resilience, address duty evasion, and ensure adequate export controls and investment security, and remove restrictions on exports to the U.S. for all industrial commodities, including critical minerals; and
- adopt and implement a forced labor import ban and remove provisions from Indonesian labor laws that restrict workers and unions from fully exercising freedom of association and collective bargaining rights.
Additionally, the U.S. and Indonesia announced deals of approximately $33 billion worth of investment in agriculture, aerospace, and energy in the U.S., including purchases of approximately $15 billion worth of U.S. energy commodities, the procurement of commercial aircraft and aviation-related goods and services of approximately $13.5 billion, and purchases of over $4.5 billion worth of U.S. agricultural products.
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