Indonesia, US eye deal on tariff exemptions for palm oil, coffee

Indonesia and the U.S. have agreed on all substantial issues for a tariff deal, paving the way for the signing of an agreement by Indonesian Prabowo Subianto and U.S. President Donald Trump at the end of January.

Indonesian Senior Economic Minister Airlangga Hartarto was quoted by local media as saying after meeting U.S. Trade Representative Jamieson Greer in Washington on December 22 that the US wanted access to Indonesia's critical minerals and had agreed to give tariff exemptions to its palm oil, ⁠tea and coffee.

Indonesia is the world's biggest producer and exporter of palm oil and a major global supplier of robusta coffee beans.

According to Airlangga, all substantial issues have been resolved and the latest round of talks went well.

The main thing, of course, is providing balanced market access for American products, and at the same time, market access for Indonesia to the U.S., he said.

Officials from both countries are now seeking to set up a meeting between Prabowo and Trump by the end of January, where a trade agreement could be signed.

Airlangga said there was no provision in the agreement that would limit Indonesia from making trade deals with other countries.

The deal will also cover cooperation in digital trade, technology and national security matters, according to a statement later released by Airlangga's office, which provided no further details.

The U.S. imposed a 19% tariff on Indonesia after a preliminary agreement in July, down from the 32% U.S. President Donal Trump had threatened to impose in April, in return for Indonesia's promises to remove tariff and non-tariff barriers facing American exports, as well as to buy more American goods to close the trade gap.

Airlangga said there was no risk of the U.S. raising the tariff back to 32% if the January signing does not materialise because everything within the draft agreement had been agreed by both sides.

From January to October, two-way trade between the two countries was worth $36.2 billion, with Indonesia booking a $14.9 billion surplus, Indonesian data showed. The U.S. is Indonesia's second biggest export market.