During his state visit to the USA, Indonesian President Joko Widodo told US President Barack Obama that Indonesia intends to join the Trans-Pacific Partnership (TPP) trade deal. Currently, 12 countries have joined the TPP, including the USA and Japan, thus creating the world's largest free trade area (an area that covers about 40 percent of world trade). By many analysts the TPP is regarded a counterbalance to the big economic influence of China.
The TPP, which took five years of negotiation, is expected to boost trade among its member nations as it lowers tariffs for a wide variety of products. The deal will also set common standards on matters ranging from intellectual property protection to workers' rights. However, this is also the main obstacle for Indonesia to join the deal as law enforcement regarding intellectual property protection is very weak, while the country has also implemented several restrictions on imports and exports as well as introducing local content requirements (in other words implementing a more protectionist approach). However, President Widodo, a former furniture entrepreneur, emphasized that Indonesia, a G20 member and the largest economy in Southeast Asia, is open to foreign investment.
Previously, Indonesian Trade Minister Thomas Lembong said Indonesia will be ready to join the trade deal in about two years as it still needs to boost its competitiveness in order to compete with TPP members.
During his first state visit to the USA, President Widodo (who is often called Jokowi) finalized over USD $20 billion worth of trade deals between the USA and Indonesia. These deals include a USD $500 million infrastructure investment deal from Coca-Cola, a USD $1 billion energy and healthcare deal from General Electric, and a USD $13 billion shale gas deal between Indonesia's state-owned energy firm Pertamina and Corpus Christie Liquefaction (subsidiary of Cheniere Energy).
US President Barack Obama welcomes Indonesia's participation in the TPP deal. Obama, who spent some time in Indonesia during his childhood, said "our partnership is very much in the interest of the USA, given Indonesia's big population, its democratic traditions, the fact that the country is a large Muslim country with a tradition of tolerance and moderation, and its role in trade and commerce and economic development."
Climate Change and Toxic Haze in Southeast Asia
Widodo and Obama also touched on the topic of climate change, a sensitive topic given the severe haze in Southeast Asia (caused by forest fires related to slash-and-burn practices applied by palm oil and pulp & paper companies on the Indonesian islands of Sumatra and Kalimantan). Widodo cut short his visit to the USA as conditions have deteriorated over the past two days. The Indonesian government is currently planning a massive evacuation operation on parts of Sumatra and Kalimantan due to the toxic haze.
The disaster management agency of Indonesia said on Monday that the haze had started to drift towards the island of Java, home to over half of the Indonesian population. Although Indonesia ratified a regional agreement to reduce forest fires-induced haze, the law has yet to be enacted locally.