Indonesia and the United States have reached a significant trade agreement aimed at enhancing bilateral economic relations. Under the terms of the agreement, Indonesia will eliminate tariffs on over 99% of U.S. goods, including agricultural products, health products, seafood, information and communications technology, automotive products, and chemicals. In return, the U.S. will reduce its reciprocal tariffs on Indonesian goods from 32% to 19%.
The agreement also addresses non-tariff barriers. Indonesia has committed to exempting U.S. companies and originating goods from local content requirements, accepting vehicles built to U.S. federal motor vehicle safety and emissions standards, and recognizing U.S. regulatory oversight for medical devices and pharmaceuticals. Additionally, Indonesia will remove import restrictions and licensing requirements on U.S. remanufactured goods and their parts, eliminate pre-shipment inspection or verification requirements on imports of U.S. goods, and adopt and implement good regulatory practices.
In the digital trade sector, Indonesia has agreed to eliminate existing tariff lines on intangible products and suspend related requirements on import declarations. The country will also support a permanent moratorium on customs duties on electronic transmissions at the World Trade Organization (WTO) and take effective actions to implement the Joint Initiative on Services Domestic Regulation, including submitting its revised Specific Commitments for certification by the WTO. Indonesia will provide certainty regarding the ability to transfer personal data out of its territory to the United States by recognizing the United States as a country or jurisdiction that provides adequate data protection under Indonesia’s law.
Furthermore, Indonesia has committed to joining the Global Forum on Steel Excess Capacity and taking effective actions to address global excess capacity in the steel sector and its impacts. The country will also remove restrictions on exports to the United States of industrial commodities, including critical minerals.
The agreement is expected to stimulate economic growth and create new opportunities for businesses in both countries. The U.S. and Indonesia will continue to negotiate and finalize the Agreement on Reciprocal Trade in the coming weeks, with the goal of implementing the agreement in the near future.