JAKARTA: Ratifying the Agreement on Reciprocal Trade (ART) with the United States is not on the near-term agenda, a government spokesman says, as Indonesia is prioritising countering the new Section 301 probes launched last week by the US Trade Representative (USTR), which serves as a precursor to imposing duties against unfair trade practices.
Jakarta is setting up a dedicated panel to prepare legal arguments and data to rebut US allegations of forced labour and dumping by homegrown industries.
“We need to resolve (the trade probe) first, as the (US tariffs) are being called off, right?
“The (US side) is not currently moving, so we are not moving either,” Edi Prio Pambudi, deputy for coordination of international economic cooperation at the Office of the Coordinating Economy Minister, told reporters on Tuesday.
The USTR’s latest Section 301 probes come after the US Supreme Court ruled that the tariffs imposed by President Donald Trump’s administration under the International Emergency Economic Powers Act last year were unconstitutional.
The court ruling on Feb 20 effectively invalidated the legal basis for the US-Indonesia ART signed the previous day, which would set a 19% tariff on Indonesian goods once ratified.
Edi underlined that ratification of the bilateral deal could not proceed until the legal issues were resolved.
Though the trade deal could still stand on its own despite the ruling, he continued, the provisions tied to the now-invalidated tariff authority had created a legal snag, preventing the deal from moving forward.
The new Section 301 probes are examining some 60 US trading partners, including Indonesia, over alleged excessive industrial capacity and weak enforcement of laws prohibiting foreign goods produced using forced labour.
Should these allegations be proven and lead to the imposition of Section 301 tariffs on locally made goods, Indonesia could lodge a challenge with the World Trade Organisation.
However, the government maintains that the process has not reached this stage, and that consultations with Washington are ongoing.
Djatmiko Bris Witjaksono, the Trade Ministry’s director-general of international trade negotiations, said the government would mount an “affirmative defence” and contest the allegations in the United States probe by using input from business groups.
“We will challenge the allegations with data and evidence.
“The outcome will depend on whether Indonesia’s rebuttal is accepted,” Djatmiko told reporters on Tuesday, after attending a briefing at the senior economic minister’s office.
The government is also considering issuing a regulation to restrict import goods linked to forced labour, in line with International Labour Organisation conventions.
“We will assert (this policy) by requiring Indonesian companies not to import raw materials produced with (forced) labour,” Coordinating Economy Minister Airlangga Hartarto said after the briefing.
Indonesia, along with nearly all countries, is subject to a 10% Section 122 import tariff imposed by the United States for a period of 150 days.
The tariff is set to expire in late July and unlikely to be extended, as the Trump administration would need congressional approval to do so.
The USTR expects the Section 301 probes to conclude in July as it races against the expiry date of the Section 122 tariff measure.
The probes’ deadline for written comments and requests to appear at hearings is set for April 15, with public hearings scheduled to begin on April 28.
“As the current (tariff) measure will expire soon, the United States will review whether to apply Section 301 to determine a new tariff rate that may last four years,” said Shinta Kamdani, chairperson of the Indonesian Employers Association.
Shinta said business groups were cautiously optimistic and noted that the sectors highlighted by the USTR’s Section 301 probes did not overlap with Indonesia’s main exports to the United States.
For instance, she said, one of the sectors under scrutiny was cement, which was not a major Indonesian export to the United States, whereas major exports like furniture and textiles were not part of the investigations. — The Jakarta Post/ANN
