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RI in ‘wait-and-see’ mode with US probe
Indonesia is waiting for the outcome of a trade probe being carried out by the United States following the decision by US President Donald Trump to sign an executive order in April commanding investigations into Indonesia and 15 other countries with which the US has trade deficits
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Indonesia is waiting for the outcome of a trade probe being carried out by the United States following the decision by US President Donald Trump to sign an executive order in April commanding investigations into Indonesia and 15 other countries with which the US has trade deficits.
Trade Ministry Foreign Trade Director General Oke Nurwan told The Jakarta Post on Saturday that US officials had started their investigation into Indonesia and had retrieved necessary documents from the Indonesian
government to identify the cause of the US’ trade deficit with the largest economy in Southeast Asia.
Oke claimed that such an investigation was not new as several disputes related to Indonesia-US trade relations had arisen prior to Trump.
“Before [Trump signed the order], we dealt with the US accusing us of dumping and subsidizing biodiesel and photocopy papers,” he said.
However, with the new order signed, Indonesia is preparing to face another accusation from the US regarding carrageenan, an ingredient extracted from seaweed and widely used in the food industry, as the US may condemn Indonesia’s carrageenan industry as environmentally noxious.
Furthermore, even though the US investigation into Indonesia has just started, Oke lamented that the issue might drive away US export partners.
“Even now when the US has yet to prove its suspicions, the issue may scare off our US export partners. They may feel uncertain about import deals with Indonesia as importing goods from us may cost them unexpected dumping fees,” he said.
The trade deficit issue existed long before Trump decided to launch the investigation. The US has been importing more goods from Indonesia for more than 15 years.
In 2016, data from the Trade Ministry revealed that Indonesia recorded a US$8.84 million trade surplus with the US, but the US claims Indonesia enjoyed a higher surplus of US$13 million.
Oke attributed the difference in the figures to different methods of export calculations between Indonesia and the US.
“In Indonesia, exports are calculated only by the value of the commodity itself. In the US, it includes additional costs such as customs fees and insurance, which are plugged into the value of the imported commodities,” he said.
According to DataLEADS, the US has trade deficits with most of its Asian partners. China tops
the list, with a staggering $347 billion trade surplus, followed by Japan, Vietnam, South Korea and Malaysia.
Meanwhile, SKHA Institute for Global Competitiveness chief economist Eric Sugandi said if the US found Indonesia guilty of tweaking its export policies, Indonesian exporters would suffer from numerous trade barriers and even restrictions from the superpower nation, losing their competitiveness altogether in the US market.
“Such an action is predictable because Trump has shown a tendency for protectionism,” said Eric.
He said Indonesia should try to overcome the threat by diversifying its exports to other regions, especially to emerging markets in Africa and Latin America.
“While the US will remain one of Indonesia’s major trading partners, it would help to start looking for opportunities in other countries with smaller markets but growing demand,” he said. (dea/dis)
