11 October 2019 (closed)
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Based on statements of officials at Indonesia’s Trade Ministry, the USA started its investigation into the trade deficits the USA has with 16 countries, including Indonesia. Two months ago US President Donald Trump ordered this trade probe as part of his “America First” policy. Trump wants the USA to have the upper hand (meaning a trade surplus) in trade relations.
It is yet one of the many controversial statements made by US President Trump when he gave the impression that these 16 nations - which all have a surplus in their trade with the USA - are using foul play. Indonesian Trade Ministry officials confirmed over the weekend that US officials have been requesting documents that could explain the cause of the US trade deficit with regard to Indonesia-USA trade.
Data from Indonesia’s Trade Ministry show Indonesia recorded a USD $8.84 billion trade surplus with the USA in 2016, while the US officials claim Indonesia’s trade surplus was actually USD $13 billion that year. There is indeed a difference between both countries in terms of calculating the trade balance. While Indonesia calculates exports by looking at the value of the specific export product, the USA includes various additional costs like custom fees and insurance into the calculation.
However, Oke Nurwan, Foreign Trade Director at Indonesia’s Trade Ministry, said these US investigations are actually not a new phenomenon. Also before Trump became president of the world’s top economy, US officials were doing research into US-Indonesia trade that sometimes led to disputes such as accusations of dumping. After all, the USA has had a trade deficit with Indonesia for the past 15 years. In fact the USA has trade deficits with most countries across Asia, led by China that had a whopping USD $347 billion trade surplus in China-USA trade last year.
If US investigators find evidence of “foul play” (for example policies of the Indonesian government that are regarded to facilitate dumping, such as biodiesel subsidies), then it could result in trade barriers or restrictions, implying Indonesian businesses’ competitiveness will be undermined further. Therefore, Indonesia is advised to continue its efforts to diversify its export markets (although the USA will remain to be Indonesia’s biggest trading partner).