00:00Where are we with this straight deal? India has signed the deal. Is Indonesia next?
00:06I believe so. As you already mentioned, the government has announced that we have completed the negotiations
00:12and they're doing legal scrubbing on both sides.
00:15And now they're just waiting for the schedule for the two presidents to be able to sign it.
00:20So I believe we're there.
00:22And we will, our tariff is 19 percent, since everything is relative, 1 percent lower than...
00:291 percent higher than India.
00:32But I think the details will be important, especially the exceptions that we could be getting on some of our important export products.
00:40We have been here before where we're close to the deal and yet the deal is not signed.
00:45India, case in point, waited six months on the back of that trade deal being signed off.
00:52I'm just wondering, are there still issues on the table which are a stumbling block?
00:57I believe we've overcome most of the so-called stumbling block issues in a kind of a, hopefully, a balanced way.
01:04Which one were they?
01:06Without going into details, I think basically what we were worried about as Indonesia, reflecting on what happened in other countries.
01:14We didn't want just a unilateral deal.
01:16We wanted a more balanced deal so that there is balance in terms of, you know, we give market access.
01:22We agree to purchase goods from the U.S.
01:25But what do we get in return should also be clear, which is some of the exceptions that we will get below 19 percent on some of the goods,
01:33like the so-called naturally available products that they don't have, like coffee, tea, palm oil.
01:38And then hopefully we will get some on the labor-intensive sectors, which are important for us to access the U.S. market.
01:46Were there additional asks on the part of the U.S.?
01:49Because we have read reports suggesting perhaps the U.S. wanted Indonesia to buy military equipment from the U.S.
01:56Well, there's always all these additional asks.
01:58But I think, again, we've tried to approach it in a very pragmatic way.
02:02Look, you know, this has to be balanced.
02:06We deal with it by saying both sides have to agree, have to be subjected to our domestic laws and regulations.
02:14And to some extent, we are using also the multilateral disciplines that, you know, we can accommodate you or consult with you or review some things,
02:24but subject to our domestic policies and regulations and WTO rules.
02:28So, you know, I think we try to balance it in that way.
02:33And that besides trade, I think the other aspect is investment.
02:37We try to also build it on a strategic relationship between U.S. and Indonesia so that it's also about attracting U.S. investments here
02:46to build out some of our supply chains that will also benefit the U.S.
02:51You talked about how it is important for it to be a balanced trade deal.
02:55Is it balanced? And is 18 percent good enough for Indonesia?
02:59Nineteen percent.
03:00Nineteen percent good enough for Indonesia?
03:02Well, relatively speaking, it is on the lower end.
03:06You know, ASEAN countries have gotten the lower end.
03:08So it's always relative, right?
03:10You know, it is what it is.
03:12We don't try to debate the right and wrongs of this.
03:16It is not reciprocal, is it?
03:17It was very unreciprocal at the beginning when we were starting having the discussions last year.
03:24But I think it's going towards a more balanced outcome, even though not perfect by any standards.
03:32But at least it's more balanced.
03:33And I think there's more understanding on both sides that if there are problems, there are issues.
03:38It is about the both sides trying to work through it.
03:42I'm just wondering which industries will be affected the most.
03:46I mean, some have pointed to perhaps textiles and footwear and the SMEs, which may get hurt.
03:52How does amnesia protect those industries?
03:55Well, that's exactly why we agreed to, you know, we decided to have the bilateral negotiations with the U.S.
04:00Because even though our exports to the U.S. is only 10 percent of our overall exports, for textiles, garments, furniture and seafood, the dependence on the U.S. market is very high, you know, like above 50 percent.
04:13And these are the labor-intensive sectors.
04:15So the labor would be affected.
04:18And as a collateral damage, also the suppliers that are linked, the SMEs that are suppliers to these sectors.
04:25So that's where we are hoping that we can get some preferential treatment on those sectors.
04:32And that's certainly, hopefully, that's the balance that we will get out of the agreement.
04:37Ibu Mari, how do you do global trade at a time when you're unsure whether additional tariffs are coming?
04:44Canada, case in point, where when President Trump was unhappy with what was being done by Prime Minister Carney, he threatened to slap additional 100 percent tariffs.
04:53I mean, what do you do?
04:55Do you diversify as much as you can?
04:58Do you friend shore as much as you can?
05:01Well, that's a really good question.
05:03I think the first thing I would say is that let's not dream about the world ever going back to anything normal that we knew before.
05:10This time it's really different.
05:11It's ruptured, to use Mark Carney's word.
05:14The system is ruptured.
05:16So what do you do?
05:17You have to manage the risk of the uncertainty.
05:19The answer to it is going to be there, and it probably will escalate, can escalate.
05:24So you deal with the U.S. as you can, deal with it bilaterally.
05:27But then you've got to diversify your markets, your trading partners, and maintain the openness that is needed.
05:36I believe that the reason why we haven't seen such a negative outcome out of the tariffs, you know, exports still going to the U.S.,
05:45is because the rest of the world didn't end up having trade wars with each other.
05:49So that's very important to maintain.
05:51What does that mean?
05:52Actually, ASEAN last year and Indonesia crafted a response.
05:56Deal with the U.S. bilaterally.
05:58Second, build your domestic and regional resilience.
06:00So do your homework because there's opportunity in the reconfiguration of the supply chains.
06:05So you need to do your domestic reforms.
06:08And then regional reforms or regional resilience by strengthening ASEAN and RCEP.
06:13And lastly, we have to maintain the multilateral rules and disciplines of the WTO in the WTO itself
06:21and in the way we are doing even the agreement with the U.S.
06:25There is a principle that we agreed on last year that whatever we do with the U.S.,
06:30we should not harm each other or our other trading partners
06:33and that we should try to find common positions, even as we deal bilaterally,
06:39that doesn't do harm to the rules and disciplines.
06:43Why should ASEAN nations deal with the U.S. bilaterally when it can respond collectively?
06:48This is a region of more than 600 million people.
06:52Can there be a collective response?
06:54No, the U.S., we tried that.
06:57The U.S. was not going to have anything like that.
07:00They wanted to deal with us bilaterally.
07:02That's why in the end we agreed, okay, each of us have different interests,
07:07different issues that we are facing with the U.S.
07:09Those are specific country issues, but there are common issues,
07:13like, for instance, the rules of origin or the transshipment,
07:16which is common to all of us and that can be harmful if we agree to a certain direction,
07:22like restrictive rules of origin.
07:24So in the end, I think we agree that we take a common position where we can,
07:29where it's going to hurt all of us and hurt the trading system.
07:32We try very hard to maintain that common position.
07:36You've worked closely with the WTO.
07:38I'm just wondering whether bilateral agreements weaken organizations like the WTO
07:43and perhaps even impinge on its efficiency.
07:47The whole question is kind of like, are bilaterals and regionals building blocks or stumbling blocks
07:55for the multilateral trading system?
07:58I think it's in our interest as middle-income countries, as developing countries,
08:01that benefit from a rules-based multilateral system to maintain that whatever we do bilaterally or regionally,
08:10that we do it in a way which is actually reinforcing the disciplines and rules and actually move forward
08:17in areas where the WTO has not been able to move, you know, like digital economy, e-commerce,
08:24or even some of this green agenda, we could take the move forward, right,
08:31and deepen our openness in terms of regional economic integration.
08:36So lead the way by example, demonstration effect,
08:40but also we should play a role in whatever is going to be happening in the WTO.
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