At a recent meeting under their trade and investment framework agreement the U.S. and Indonesia agreed on next steps for expeditiously resolving a number of bilateral issues, possibly within the next few months. A press release from the Office of the U.S. Trade Representative states that during the meeting the U.S. outlined the Trump administration’s trade agenda and focus on making concrete progress on agriculture, high-technology products, digital services, financial services, and other issues. The two countries agreed on follow-up actions on these issues and discussed a work plan for addressing U.S. intellectual property concerns, “recognizing the urgency of progress in this area” given Indonesia’s listing on USTR’s Special 301 Priority Watch List.
USTR’s trade barriers report for 2017 includes a 19-page section on Indonesia highlighting a wide range of concerns, including those discussed at the TIFA meeting. The report states that in recent years Indonesia has enacted numerous regulations that have increased the burden for U.S. exporters, including import licensing procedures and permit requirements, product labeling requirements, pre-shipment inspection requirements, local content and domestic manufacturing requirements, and quantitative import restrictions. The government has also adopted measures that impede imports as it pursues agricultural self-sufficiency. The report notes that beginning in late 2015 the government introduced a series of economic reform packages designed to ease regulatory burdens and attract additional investment but that the impact of these reforms has been limited so far because of their limited scope and slow implementation.
Also at the meeting USTR Robert Lighthizer emphasized the Trump administration’s priority on lowering the U.S. trade deficit with Indonesia, which totaled $13.2 billion in 2016, up 5.5 percent from a year earlier. Two-way goods trade totaled $25 billion that year, including $6 billion in U.S. exports to Indonesia (nearly double from a decade earlier but down 15.2 percent from 2015) and $19.2 billion in imports from Indonesia (down 2.0 percent). U.S. services exports to Indonesia have increased more than 70 percent in the last decade and now total $2.5 billion while services imports from Indonesia amounted to $780 million in 2015 (latest available data).
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