Negotiated Rules of Origin to Define 'Transshipment' in Indonesia
A joint statement from Indonesia and the U.S. sheds more light on what the president might have meant when he wrote "if there is any Transshipment from a higher Tariff Country, then that Tariff will be added on to the Tariff that Indonesia is paying."
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The joint statement, which outlines a trade framework between the two nations (see 2507150056), doesn't use the word transshipment, but rather says: "The United States and Indonesia will negotiate facilitative rules of origin that ensure that the benefits of the agreement accrue primarily to the United States and Indonesia."
The statement said the U.S. "will reduce to 19 percent the reciprocal tariffs, as set forth in Executive Order 14257 of April 2, 2025, on originating goods of Indonesia, and may also identify certain commodities that are not naturally available or domestically produced in the United States for a further reduction in the reciprocal tariff rate."
The statement said that Indonesia "will eliminate approximately 99 percent of tariff barriers for a full range of U.S. industrial and U.S. food and agricultural products exported to Indonesia."
A fact sheet that accompanied the statement also said that Indonesia's average applied tariff had been 8%, while the U.S. average applied tariff was 3.3% (before the reciprocal tariffs and additional Section 232 tariffs).
The statement also said Indonesia will adopt a prohibition on importing goods made with forced labor and strengthen its labor laws and their enforcement.
It said that Indonesia promises "to adopt and maintain high levels of environmental protection and to effectively enforce its environmental laws, including by taking measures to improve forest sector governance and combat trade in illegally harvested forest products; encourage a more resource efficient economy; accept and fully implement the WTO Agreement on Fisheries Subsidies; and combat illegal, unreported, and unregulated fishing and illegal wildlife trade."
The statement also said: "In the coming weeks, the United States and Indonesia will negotiate and finalize the Agreement on Reciprocal Trade, prepare the Agreement for signature, and undertake domestic formalities in advance of the Agreement entering into force."
The fact sheet that accompanied the statement said that the U.S. has its 15th-largest goods trade deficit with Indonesia, at $17.9 billion in 2024.
The fact sheet also said, "Today’s announcement shows that America can defend its domestic production and strengthen its defense industrial base while obtaining expansive market access with our trading partners."