After months of bilateral tariff negotiations, Indonesia's Coordinating Minister for Economic Affairs, Airlangga Hartarto, has verified that the country will be granted duty exemptions for 1,819 tariff lines in the US market.
The terms of concession are outlined in the Reciprocal Trade Agreement (ART) reached by both nations. He articulated during a virtual press briefing held in Jakarta that there was mutual consensus between Indonesia and the US to provide tariff exemptions for textile and garment items through a tariff rate quota (TRQ) system.
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“The agreement provides zero import duty for 1,819 Indonesian tariff lines, covering agricultural and industrial commodities such as palm oil, coffee, cocoa, spices, rubber, and electronic components including semiconductors and aircraft parts”, Hartarto says.
He elaborated on the concept of TRQ, which permits Indonesia to send textiles and garments to the US without duties within specific volume restrictions, on the condition that the items are made using raw materials brought in from the US, such as cotton and synthetic fibers.
Indonesia has also made the commitment to eliminate tariffs on various imports from the US, with a particular focus on agricultural products like wheat and soybeans.
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“This arrangement will benefit around four million workers in the sector and have an impact on approximately 20 million Indonesians,” Hartarto said. He added that products outside the specified tariff lines will remain subject to a 19 percent import duty.
Hartarto went on to affirm that the agreement encompasses stipulations regarding digital economic transactions between the two nations.
He reiterated Indonesia's dedication to streamlining import licensing processes and harmonizing standards for American industrial and agricultural goods, with a focus on lowering both tariff and non-tariff obstacles, especially in the information and communication, healthcare, and pharmaceutical industries.
“This means Indonesians will not pay import duties on products derived from soybeans or wheat, including noodles, tofu, and tempeh. Consumers will not bear additional costs related to import duties on these US raw materials”, he says.
“Indonesia supports cross-border data transfers in accordance with national laws and acknowledges the US commitment to consumer data protection”, he adds.
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As a component of the overarching discussions, Indonesia also agreed to acquire energy products totaling US$15 billion from the US, acquire Boeing aircraft worth US$13.5 billion, and import over US$4.5 billion in agricultural commodities from the US.
Hartarto stated that the Agreement on Rules of Origin will come into force 90 days after the finalization of necessary legal and regulatory procedures within each nation.
He further mentioned that the agreement is anticipated to contribute to Indonesia's overarching objectives for national development in the long run. “This agreement is designed to help us achieve the Golden Indonesia vision”, he said.