Trade likely a top issue on Pence's Indonesian trip

US Vice President Mike Pence's trip, which also covers South Korea, Japan and Australia, marks his first official visit to Asia.
US Vice President Mike Pence's trip, which also covers South Korea, Japan and Australia, marks his first official visit to Asia.PHOTO: EPA

Country under US probe for potential trade abuse

JAKARTA • Indonesia is seeking to stay out of United States President Donald Trump's bad books, using a visit by his deputy, Mr Mike Pence, next week to reassure him on its commitment to free and fair trade.

Officials in Jakarta were left scrambling after Indonesia made it onto a list of nations Mr Trump has ordered to be probed for potential trade abuse. While South-east Asia's largest economy had previously avoided Mr Trump's crosshairs, it runs a sizeable trade surplus with the US.

Mr Pence's trip, which also covers South Korea, Japan and Australia, marks his first official visit to Asia. He will stress the US commitment to alliances and partnerships in the region, the White House has said. Yet South Korea, Japan and Indonesia are included in the trade abuse probe that Mr Trump says is aimed at cracking down on "foreign importers that cheat".

Said Mr Iman Pambagyo, director general for international trade negotiation at Indonesia's Trade Ministry: "We continue to regard the US as a strategic partner in terms of trade, in terms of economic cooperation, investment. But at this time of global economic uncertainty, we are puzzled with the signal being sent from Washington, including the inclusion of Indonesia as a country causing a huge deficit with the US and the filing of an anti-dumping petition for biodiesel. It really concerns us."

He added: "We want to understand the policy direction in terms of trade from Washington because when we talk about deficits I think you cannot ask for surpluses from all countries."

PUZZLING

At this time of global economic uncertainty, we are puzzled with the signal being sent from Washington, including the inclusion of Indonesia as a country causing a huge deficit with the US and the filing of an anti-dumping petition for biodiesel.

MR IMAN PAMBAGYO , director-general for international trade negotiation at Indonesia's Trade Ministry.

Indonesia ran a surplus of US$13 billion (S$18.2 billion) with the US last year, largely via exports of textiles, footwear, fishery products and natural resources. The probe has sparked consternation among some of Indonesia's most senior officials and ministers.

Indonesia has not been completely out of the glare over protectionism. It is disputing a complaint before the World Trade Organisation (WTO) brought by the US in relation to horticultural products, animals and animal products.

The US National Biodiesel Board Fair Trade Coalition also claims Indonesian and Argentinian producers are selling at prices below production costs while benefiting from "illegal subsidies" at home. The group, which seeks tariffs of more than 34 per cent on Indonesia, filed a petition last month with the US Commerce Department and US International Trade Commission.

Mr Pambagyo said Indonesia was prepared to respond to the petition and was considering the best way forward. Indonesian government officials have since met with representatives from the local biodiesel industry. "It is quite important for Indonesia to make sure our market access to the US is not being jeopardised by this allegation," he said.

Mr Fadhil Hasan, executive director of the Indonesian Palm Oil Association, said the issue should be raised by Indonesia's leaders with Mr Pence when he visits. Indonesia would not be able to compete if anti-dumping tariffs were imposed.

China, with a surplus of US$330 billion, tops the list of the nations in the 90-day investigation into the US trade deficit. It will also examine alleged currency misalignments and constraints imposed by the WTO.

Mr Pence will meet President Joko Widodo and Vice-President Jusuf Kalla, as well as US and Indonesian business leaders. Foreign Ministry spokesman Arrmanatha Nasir said terrorism and maritime cooperation are also likely to be discussed.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on April 15, 2017, with the headline 'Trade likely a top issue on Pence's Indonesian trip'. Print Edition | Subscribe