Indonesia wants to resist US demands on critical minerals: can't mess up relations with China and Russia

Recent multiple sources indicate that the trade agreement between the US and Indonesia may collapse, as Indonesia cannot agree to some of the binding commitments.

According to Bloomberg news on December 10, informed sources further revealed that Indonesia is resisting the trade agreement requirements proposed by the US, especially in the areas of critical minerals and energy, because it is concerned that these requirements would limit its independence and potentially endanger its relations with major foreign investors, China and Russia. Since the negotiations have not been made public, these sources requested anonymity.

The report said that the unacceptable requirements for the trade agreement signed by both sides include that if Indonesia signs other agreements deemed harmful to US interests by the US government, the US could cancel the terms of the agreement.

An informed source said that the current main issue in the negotiations is cooperation in the development of critical minerals, which is a priority area for the US, while China controls the supply chain of critical minerals and oil and gas investments in Indonesia. The US has indicated that any cooperation in this area must exclude third parties. Indonesia believes that this will affect its relations with China and Russia in the mining and energy sectors.

One of the informed sources revealed that Indonesia's Minister of Economic Coordination, Airlangga Hartato, and US Trade Representative Jacquelyn Griles are scheduled to hold a virtual meeting on Thursday (local time, 11th) to discuss the matter.

When asked about the progress of the negotiations on the 10th, Griles confirmed the meeting arrangement on the 11th, but refused to comment on any details. He said at an event: "We have a confidentiality agreement with Indonesia. But I want to say that we signed agreements with Malaysia and Cambodia at the ASEAN meeting in October, which is meaningful. I hope Indonesia can also reach the same position."

On the same day, Indonesia responded to the report, stating that the negotiations are ongoing and an agreement "beneficial to both sides" is expected to be reached soon. An official from Indonesia's Ministry of Coordinating Economic Affairs told Bloomberg: "There are no specific issues in the negotiations, and any dynamic fluctuations during the negotiation process are normal."

According to data from the Ministry of Foreign Affairs, our country is Indonesia's largest trading partner. In 2024, bilateral trade amounted to $147.8 billion, an increase of 6.1%, with our exports reaching $76.7 billion, up 17.6%, and imports totaling $71.1 billion, down 4%.

Our country is Indonesia's second-largest source of foreign investment, and Indonesia is our second-largest investment destination in ASEAN. The two countries are actively cooperating in areas such as infrastructure, capacity, green development, digital economy, and e-commerce.

Bloomberg also mentioned that Indonesia's relationship with China is closer in the issue of critical minerals.

The report said that Indonesia highly depends on China for capital, technology, and processing capabilities needed to upgrade its nickel and bauxite industries. In August, Indonesia's Deputy Minister of Investment and Downstream Development, Toto Taufik Pasaribu, stated that Chinese investment in Indonesia increased by 31% over the past six years, with total investment from 2020 to this year exceeding $35 billion, of which more than $15 billion was in metal processing.

The framework agreement reached between the US and Indonesia this July originally stemmed from President Trump sending letters to more than 20 trade partners, threatening to impose a series of tariffs if they did not reach an agreement by August 1st. In the letter to Indonesia, President Trump had threatened to impose a 32% tariff, which was later reduced to 19% in the agreement.

Indonesia agreed to cancel most tariffs on US industrial goods and agricultural products, and purchase billions of dollars worth of US-made aircraft, liquefied natural gas, and soybeans to reduce the trade surplus with the US.

Indonesia also agreed to remove non-tariff barriers for US companies, including strict local content requirements seen as investment obstacles.

Some business groups in Indonesia warned that removing local content regulations should not be done, as it could harm the competitiveness of domestic companies.

Original article: toutiao.com/article/1851171972953092/

Statement: This article represents the views of the author himself.