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RI Continues Negotiations With The US To Reduce Import Tariffs On Strategic Commodities

The Indonesian government is continuing its negotiation process with the United States (US) to reduce import tariffs on several national strategic commodities from 19 percent to 0 percent.

Coordinating Minister for Economic Affairs Airlangga Hartarto stated that several products currently under tariff negotiation include natural resource commodities that cannot be produced by the US.

"These products include palm oil, coffee, cocoa, agricultural products, and also other mineral products, including aircraft components and components of industrial products in specific industrial zones such as free trade zones," Airlangga mentioned during a press conference in Jakarta on Thursday.

He noted that although the US currently imposes a 19 percent import tariff on products from Indonesia, there remains room for negotiation to lower tariffs on certain products deemed strategic and not in direct competition with US domestic industries.

Airlangga stated that the United States is also attentive to the tariff treatment from other trading partners such as the European Union, which, through the Indonesia—European Union Comprehensive Economic Partnership Agreement (IEU-CEPA), has granted a 0 percent tariff on crude palm oil (CPO) originating from Indonesia.

"America is also observing that Europe is providing us with CPO at 0 percent under the IEU-CEPA, so some of that serves as a benchmark," he remarked.

Furthermore, previously, through the official website of the White House, the United States and Indonesia have agreed on a framework for the Agreement on Reciprocal Trade as an effort to strengthen the bilateral economic relationship between the two countries.

In the agreement, Indonesia is mentioned to eliminate approximately 99 percent of tariff barriers for various industrial and agricultural products originating from the United States. In return, the United States will impose a reciprocal tariff of 19 percent on products from Indonesia and will open opportunities for further tariff reductions on commodities that are either unavailable or not produced domestically in the U.S.

Furthermore, both countries are also committed to resolving various non-tariff barriers that affect bilateral trade and investment, including the exemption of Domestic Component Level (TKDN) requirements for certain goods from the U.S., the recognition of certifications from the U.S. Food and Drug Administration (FDA) for health and pharmaceutical products, as well as addressing issues related to intellectual property and conformity assessment procedures.

In the context of digital trade, Indonesia has also expressed its commitment to providing certainty regarding cross-border data transfers, eliminating tariffs on digital products (intangible products), and supporting a moratorium on customs duties for electronic transmissions at the World Trade Organization (WTO) forum.

In general, a joint statement reflects the agreements that have been discussed, and the United States highlights the key points and political commitments of both Indonesia and America that will serve as the foundation for future trade agreements. Furthermore, there will be continued discussions concerning the interests of both nations," explained Airlangga.

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Tag: Airlangga Hartarto CEPA CPO