Indonesia Prepares Response to US Trade and Investment Investigation, Denies Excess Capacity Allegations
The Indonesian government is preparing an official response to the trade investigation conducted by the United States through the Section 301 mechanism. This follows the probe into several aspects of Indonesian trade, including allegations of excess production capacity and forced labour issues.
Coordinating Minister for the Economy Airlangga Hartarto stated that the government has held an inter-ministerial meeting to formulate answers to these allegations. According to him, this response is an important stage before the investigation proceeds.
“Of course, we are asked to respond, because after we respond, we will submit it in the meeting, and then there will be further investigation. The important thing is that we just respond,” Airlangga said at his office on Monday (13/4).
He explained that the two main issues highlighted in the US investigation concern allegations of excess production capacity and the use of raw materials linked to forced labour practices. However, the government considers several of these allegations irrelevant, especially when related to certain commodities.
“The discussion is about excess capacity. For example, one is excess cement, for instance. We never export cement to America, so we just answer that,” Airlangga said.
Meanwhile, Trade Minister Budi Santoso emphasised that the government will submit a response document (submission comment) by 15 this month at the latest. He assured that all defence materials have been prepared and that, in general, there are no issues with Indonesia’s position.
“So on the 15th, we must submit regarding the initiation or Section 301 investigation. Everything has been prepared earlier; there were inputs, we still have time. But I think in general, there are no problems,” he said.
In that document, the government will assert that there are no policies causing structural excess capacity in Indonesia. National industrial production is said to fully follow market mechanisms.
“Indonesia has no policies that result in structural excess capacity,” Budi said.
Additionally, the government will explain that Indonesia’s trade surplus with the US occurs due to market demand factors in the Land of Uncle Sam, not due to domestic policy distortions.
On the other hand, the forced labour issue is also a concern in this investigation. Labour Minister Yassierli emphasised that Indonesia has strong labour regulations and does not tolerate such practices.
“We have always been very good with regard to human rights enforcement regulations, so there is no such thing, and we never tolerate forced labour in our production system,” Yassierli said.
He added that the questions from the US side are more directed towards Indonesia’s policies in banning imports of products originating from forced labour practices, rather than direct accusations against practices domestically.
The next process after submitting the document is a public hearing and further consultations. The government stated it is ready to follow all those stages as part of the usual international trade mechanisms.