Heru Andriyanto, Jakarta – Indonesia and the United States have agreed on a framework to negotiate an Agreement on Reciprocal Trade aimed at strengthening their bilateral economic ties. The agreement will grant exporters from both countries unprecedented access to each other's markets.

The framework follows a series of negotiations led by Indonesia's Coordinating Minister for Economic Affairs, Airlangga Hartarto, and culminated in a phone call earlier this month between President Prabowo Subianto and US President Donald Trump.

According to a statement from the White House released on Wednesday, the key terms of the proposed Agreement on Reciprocal Trade are as follows:

• Indonesia will eliminate approximately 99 percent of tariff barriers for a full range of US industrial and US food and agricultural products exported to Indonesia.

• The United States will reduce to 19 percent the reciprocal tariffs, as set forth in Executive Order 14257 of April 2, 2025, on originating goods of Indonesia, and may also identify certain commodities that are not naturally available or domestically produced in the United States for a further reduction in the reciprocal tariff rate.

• The United States and Indonesia will negotiate facilitative rules of origin that ensure that the benefits of the agreement accrue primarily to the United States and Indonesia.

• The United States and Indonesia will work together to address Indonesia's non-tariff barriers that affect bilateral trade and investment in priority areas, including exempting US companies and originating goods from local content requirements; accepting vehicles built to US federal motor vehicle safety and emissions standards; accepting FDA certificates and prior marketing authorizations for medical devices and pharmaceuticals; removing certain labeling requirements; exempting US exports of cosmetics, medical devices, and other manufactured goods from certain requirements; taking steps to resolve many long-standing intellectual property issues identified in USTR's Special 301 Report; and addressing US concerns with conformity assessment procedures. Indonesia will work to address barriers for US exports, including through the removal of import restrictions or licensing requirements on US remanufactured goods or their parts; the elimination of pre-shipment inspection or verification requirements on imports of US goods; and the adoption and implementation of good regulatory practices.

• The United States and Indonesia have also committed to address and prevent barriers to US food and agricultural products in the Indonesian market, including exempting US 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 US plant products; and recognizing US regulatory oversight, including listing of all US meat, poultry, and dairy facilities and accepting certificates issued by US regulatory authorities.

• Indonesia has committed 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. Indonesia has committed to 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; and to take effective actions to implement the Joint Initiative on Services Domestic Regulation, including submitting its revised Specific Commitments for certification by the World Trade Organization (WTO).

• Indonesia commits to join the Global Forum on Steel Excess Capacity and take effective actions to address global excess capacity in the steel sector and its impacts.

• Indonesia commits to protecting internationally recognized labor rights. Indonesia will, among other commitments, adopt and implement a prohibition on the importation of goods produced by forced or compulsory labor; amend its labor laws to ensure that workers' rights to freedom of association and collective bargaining are fully protected; and strengthen enforcement of its labor laws.

• Indonesia commits to adopt and maintain high levels of environmental protection and to effectively enforce its environmental laws, including by taking measures to improve forest sector governance and combat trade in illegally harvested forest products; encourage a more resource efficient economy; accept and fully implement the WTO Agreement on Fisheries Subsidies; and combat illegal, unreported, and unregulated fishing and illegal wildlife trade.

• Indonesia will remove restrictions on exports to the United States of industrial commodities, including critical minerals.

• The United States and Indonesia are committed to strengthening economic and national security cooperation to enhance supply chain resilience and innovation through complementary actions to address unfair trade practices of other countries, and through cooperation on export controls, investment security, and combating duty evasion.

In addition, the United States and Indonesia take note of the following forthcoming commercial deals between US and Indonesian companies:

• Procurement of aircraft currently valued at $3.2 billion.
• Purchase of agriculture products, including soybeans, soybean meal, wheat, and cotton, with an estimated total value of $4.5 billion.
• Purchases of energy products, including liquefied petroleum gas, crude oil, and gasoline, with an estimated value of $15 billion.

The White House said that in the coming weeks, both governments will negotiate and finalize the Agreement on Reciprocal Trade, prepare the agreement for signature, and undertake domestic formalities in advance of the Agreement entering into force.

Source: https://jakartaglobe.id/business/whats-in-the-new-usindonesia-trade-agreemen