WTO TRADE POLICY REVIEW OF INDONESIA
Statement by U.S. Representative Ambassador Dennis C. Shea
Geneva – December 9, 2020
Thank you, Chair, and thank you to Ambassador Villalobos. The United States is pleased to welcome Vice Minister of Trade Jerry Sambuaga and the other members of the Indonesian delegation to the Trade Policy Review (TPR). We welcome the Secretariat and Government Reports and appreciate the opportunity to gain a clearer sense of the changes to Indonesia’s trade and investment policies since its last review in 2013.
Indonesia is an important economic partner of the United States, and we are committed to further expanding trade in agriculture and non-agricultural goods, investment, and services through our Trade and Investment Framework Agreement.
The United States commends Indonesia for maintaining solid economic growth since its last TPR, and we applaud recent institutional and regulatory reform efforts by the Government. While Indonesia has made some improvements to its economic policy, we agree with the Secretariat that there is significant scope for broader efforts to simplify complex government regulations, ease investment restrictions, increase transparency in policymaking, and reduce the effects of SOEs, all of which prevent Indonesia from benefiting more fully from global trade.
Seven years ago, during Indonesia’s last TPR, the United States highlighted the troubling trends of rising protectionism and increasing barriers to trade and investment in Indonesia. We are encouraged that since then, the Government of Indonesia has undertaken significant and meaningful efforts to improve its business and investment climate and to address some of our concerns. In particular, we commend Indonesia for its efforts to reform its import licensing regimes through the recent passage of the Job Creation Omnibus Law; its efforts to liberalize cross-border data flows and remove restrictions on the cross-border supply of reinsurance services; and its easing of foreign equity restrictions through the issuance of a revised negative investment list. These efforts have contributed to Indonesia’s strong economic growth over the years, as Indonesia has benefited greatly from its participation in the world economy.
We encourage the Government of Indonesia to continue with its reform efforts and adopt policies that further embrace trade and economic liberalization. Towards that goal, we are hopeful that Indonesia will reassess its continued use of local content requirements. As the Secretariat Report notes, there is long-standing and predominantly negative evidence of the impact of local content requirements on economic development and trade. We also hope Indonesia will reconsider its pursuit of agricultural self-sufficiency and associated import-restricting policies. As the United States has noted elsewhere, such policies can have unintended and negative impacts on food security, nutrition, and economic opportunity, particularly for a country’s most vulnerable populations. In addition, we encourage Indonesia to reform trade-impeding policies that run counter to Indonesia’s broader reform efforts, such as trading rights limitations, pre-shipment inspection requirements, and export restrictions, including taxes and prohibitions.
The United States urges the Government of Indonesia to adopt measures that ensure greater transparency in its policymaking process. We respectfully note that trade policy measures in Indonesia are routinely issued in final form without an opportunity for meaningful stakeholder consultation. Such opaque policymaking increases the cost of doing business, injects uncertainty into the trade and investment climate, and undermines the positive progress Indonesia has achieved in other areas. Looking ahead, as Indonesia formulates measures to implement significant pieces of legislation passed, including its Halal Law and Job Creation Omnibus Law, greater transparency will be important.
Lastly, we note that Indonesia is a significant and influential player in global trade and is well-integrated into the trading system. It is a member of the G20 and accounts for just under one percent of global merchandise trade. It is a major agricultural producer and exporter. In part for these reasons, we call on Indonesia to no longer seek special and differential treatment in current and future WTO negotiations. By taking this step, Indonesia would make a significant contribution to ensuring that the WTO remains a viable forum for meaningful trade negotiations.
Chair, we thank Vice Minister Sambuaga and the rest of the delegation for their attention to our questions and concerns. As the largest economy in Southeast Asia and a valued trading partner, the United States stands ready to work in closer cooperation with Indonesia here at the WTO, bilaterally, and in ASEAN and APEC.