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[News] Will Indonesia And US Trade Increases?
Posted at: 27 May 2019

Indonesia is quietly talking to the United States about the purchase of 32 new Lockheed Martin F-16 Viper jets and six C-130J cargo aircraft in what may partly be an effort to remove the country from any possible sanctions as the US-China trade war returns to a boil.

Well-placed Washington sources speculate that the Indonesians are seeking to protect their Generalized Scheme of Preferences (GSP) access, as well as to ward off possible US congressional retaliation against friendly countries that have recently purchased Russian military hardware.

Indonesia does not appear to be prominent on US President Donald Trump’s radar. But a US$12.6 billion bilateral trade imbalance and a rising trend of protectionism in Washington could change that, despite Indonesia just reporting its largest monthly trade deficit since 2013.

Two-way US-Indonesia trade last year hit $28.2 billion, a 7% increase over the previous year, with Indonesian exports outweighing US imports by $20.8 billion to $8.2 billion. Those flows only slightly closed the US’ deficit gap compared to 2017.

During a visit that year, US Vice President Mike Pence made it clear to President Joko Widodo that he had to do a lot more to “level the playing field and break down barriers” to ensure US exporters can fully participate in the Indonesian market.

While there is no timeline, Indonesia received another reminder of what is at stake with a visit last week by Bart Thanhauser, US Trade Representative Office director for Southeast Asia and the Pacific. His visit was part of an ongoing year-long GSP eligibility review related to Indonesia’s presence on a list of 16 trading partners with which the US has big trade deficits.

Most of the attention is focused on horticulture, beef imports and agricultural quotas in general, along with patent laws and draconian 2012 legislation which stipulates that all electronic data generated by foreign banks, insurance, e-commerce and credit card companies should be housed in Indonesia.

(source: Asian Financial Review)