The Governments of the Republic of Indonesia and the United States\nhave officially agreed upon The Agreement on Reciprocal Trade (ART). The\npact contains a range of comprehensive accords, from tariff exemptions\non flagship commodities to adjustments in import regulations. Below is a\ndetailed breakdown of the official agreement document.<\/p>\n
1. Background and Duration of the ART<\/strong><\/p>\n On 2 April 2025, the US Government unilaterally imposed a 32 per cent\nReciprocal Tariff on countries contributing to the US trade deficit,\nincluding Indonesia, which recorded a deficit of USD 19.3 billion in\n2024.<\/p>\n To safeguard the livelihoods of approximately four to five million\nworkers in labour-intensive industries, the Indonesian Government deemed\nnegotiations essential. Jakarta opted for diplomacy rather than\nretaliatory measures, which were considered more damaging to the\nnational economy.<\/p>\n Through intensive negotiations, the Reciprocal Tariff was reduced\nfrom 32 per cent to 19 per cent on 15 July 2025 via a Joint Statement on\nthe Framework ART. On 19 February 2026, the Presidents of Indonesia and\nthe United States formally signed the ART Agreement, setting tariff\nrates and exemptions for Indonesia\u2019s flagship products.<\/p>\n The agreement will only take effect 90 days after both nations\ncomplete their legal procedures \u2014 including consultation and\nratification \u2014 and provide written confirmation. The ART may be\nevaluated and amended at any time upon written request and mutual\nconsent of both parties.<\/p>\n 2. Benefits for Indonesia and Investment<\/strong><\/p>\n Indonesia has secured a zero per cent Reciprocal Tariff on its\nflagship export products, including palm oil, coffee, and cocoa. Tariff\nexemptions have been granted to 1,819 Indonesian products, comprising\n1,695 industrial products and 124 agricultural products.<\/p>\n For textile products, the US has prepared tariff reductions to zero\nper cent through a Tariff-Rate Quota (TRQ) mechanism. Investment in\nhigh-technology sectors \u2014 ICT, medical devices, and pharmaceuticals \u2014\nhas been facilitated through adjustments to local content (TKDN)\npolicies, domestic specification requirements, and deregulation.<\/p>\n Indonesia\u2019s implementation of Strategic Trade Management ensures a\nsecure business ecosystem, preventing the misuse of high-technology\ngoods. Streamlined import permits for US agricultural products are\nexpected to help businesses obtain raw materials more efficiently in\nsupport of national food security programmes.<\/p>\n Indonesia has also relaxed foreign ownership restrictions for US\ncompanies in certain sectors, including limitations in the financial\nsector and mining divestment requirements.<\/p>\n 3. Indonesia\u2019s Commitments to the United States<\/strong><\/p>\n Indonesia is opening market access to 99 per cent of US-origin\nproducts at zero tariff, effective upon Entry Into Force (EIF) of the\nagreement. Indonesia has committed to eliminating non-tariff barriers,\nparticularly those relating to import licensing, TKDN requirements,\nrecognition of US standards, and halal certification.<\/p>\n To balance foreign trade and meet domestic energy needs, Indonesia\nhas agreed to purchase Metallurgical Coal, LPG, Crude Oil, and Refined\nGasoline from the US. Indonesia has also agreed to procure US-made\naircraft, components, and aviation services to boost the competitiveness\nof the national and regional aviation industry.<\/p>\n Purchases of US agricultural products will be increased by Indonesia\nas raw materials for the food and beverage industry as well as the\ntextile industry.<\/p>\n 4. Specific Product Import Provisions<\/strong><\/p>\n Rice:<\/strong> The Government has allocated a special\nclassification import quota of 1,000 tonnes of rice from the US, though\nactual imports will be adjusted according to domestic demand. This\nfigure is highly insignificant, representing merely 0.00003 per cent of\ntotal national rice production, which reached 34.69 million tonnes in\n2025. Over the past five years, Indonesia has never imported rice from\nthe US.<\/p>\n Poultry:<\/strong> US poultry product imports take the form of\nlive poultry for Grand Parent Stock (GPS) needs, totalling 580,000 birds\nvalued at USD 17\u201320 million, given the absence of breeding facilities in\nIndonesia. Imports of mechanically deboned meat (MDM) for sausage and\nnugget production are estimated at 120,000\u2013150,000 tonnes per year.\nOther poultry parts are not prohibited provided they comply with animal\nhealth and food safety requirements. The Government guarantees no policy\nwill be enacted that sacrifices the domestic poultry industry or\nfarmers.<\/p>\n Maize:<\/strong> Import access for US maize is opened\nspecifically for raw material supply to the food and beverage industry.\nImport requirements are estimated at 1.4 million tonnes in 2025, and US\nmaize meets the required specifications.<\/p>\n Alcoholic Beverages:<\/strong> The value of alcohol imports\nfrom the US to Indonesia is relatively small, at approximately USD 86.1\nmillion, representing just 7 per cent of Indonesia\u2019s total alcohol\nimports of USD 1.23 billion in 2025. The policy is seen as supporting\ntourism, although Indonesia also continues to actively protect local\nalcohol exports such as beer and wine.<\/p>\n Second-hand Clothing:<\/strong> The Government has confirmed\nit will not permit the import of intact second-hand clothing for\nthrifting. Only shredded worn clothing (SWC) \u2014 garments that have been\ndestroyed for use as raw material in the recycled yarn and patchwork\nfabric industries \u2014 is permitted. The domestic industry is confirmed\nready to absorb all SWC imports.<\/p>\n Safeguards Against Import Surges:<\/strong> Should a surge in\nUS product imports disrupt domestic market stability, periodic\nevaluations will be conducted through the Council on Trade and\nInvestment forum.<\/p>\n 5. Non-Tariff Policies: Personal Data, Halal, and BPOM\nLicensing<\/strong><\/p>\n Personal Data:<\/strong> Cross-border data transfer\nregulations remain fully subject to the domestic Personal Data\nProtection Act, with no surrender of data sovereignty whatsoever. Data\ntransmission processes are conducted within a secure governance\nframework to enable Indonesia to attract investment such as cloud\ninfrastructure and data centres.<\/p>\n Halal Certification:<\/strong> Indonesia has not waived halal\ncertification requirements; food and beverage products remain obliged to\nhold halal certification. Food and beverage products containing\nnon-halal elements must be labelled as non-halal to protect\nconsumers.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/in-depth-look-at-the-indonesia-us-reciprocal-trade-agreement-from-zero-tariffs-to-import-regulations-1771737084",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}