Joint Statement on Framework for United States-Indonesia Agreement on Reciprocal Trade

7/22/2025

Briefings & Statements

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Action Summary

Overview: The United States and Indonesia agreed on a framework to negotiate an Agreement on Reciprocal Trade aimed at strengthening the bilateral economic relationship and expanding market access.
Tariff Reductions:
- Indonesia: Eliminate approximately 99% of tariff barriers on U.S. industrial, food, and agricultural products.
- United States: Reduce tariffs on Indonesian goods to 19% under EO 14257, with potential further reductions for select commodities.
Rules of Origin and Non-Tariff Barriers: Both nations will negotiate facilitative rules of origin and work to eliminate non-tariff barriers affecting trade, including exemptions for U.S. companies on local content requirements, conformity with U.S. safety and regulatory standards, and addressing long-standing intellectual property issues.
Agricultural and Food Product Access: Commitments include exempting U.S. food and agricultural exports from import licensing, recognizing U.S. regulatory oversight, and establishing a permanent Fresh Food of Plant Origin (FFPO) designation.
Digital Trade and Services: Indonesia will address digital trade barriers by ensuring data transfer certainty, eliminating tariff lines on intangible products, suspending customs duties on electronic transmissions, and reforming domestic services regulations.
Labor and Environmental Commitments:
- Indonesia will enforce internationally recognized labor rights, including prohibiting goods produced by forced or compulsory labor.
- Indonesia commits to high environmental standards by improving forest governance, enforcing conservation laws, and combating illegal trade in wildlife and fisheries.
Industrial Commodities and Energy: Indonesia will remove export restrictions on industrial commodities, such as critical minerals, and both parties will pursue significant commercial deals in aerospace, agriculture, and energy sectors.
Economic and National Security Cooperation: Joint efforts will enhance supply chain resilience, address unfair trade practices, and improve cooperation on export controls, investment security, and duty evasion.
Next Steps: The United States and Indonesia will finalize negotiations, prepare the agreement for signature, and complete necessary domestic formalities before the agreement comes into force.

Risks & Considerations

The Agreement on Reciprocal Trade between the United States and Indonesia could lead to increased competition for U.S. industries, including those in Tennessee, where Vanderbilt University is located. This may impact local businesses and industries that are not prepared to compete with Indonesian imports.
The reduction of tariffs and removal of non-tariff barriers could benefit U.S. exporters, including those in the agricultural and industrial sectors. However, it may also lead to increased scrutiny and regulatory compliance requirements for U.S. companies exporting to Indonesia.
Vanderbilt University may need to consider the implications of this trade agreement on its research and educational programs, particularly those related to international trade, economics, and business. There may be opportunities for collaboration and research on the impacts of such trade agreements.
The focus on digital trade and data transfer could have implications for Vanderbilt’s IT and data management policies, especially if there are changes in data privacy regulations or requirements for cross-border data transfers.
The commitment to address labor rights and environmental protection in Indonesia may present opportunities for Vanderbilt’s programs focused on human rights, labor studies, and environmental science to engage in research and advocacy related to these issues.

Impacted Programs

Owen Graduate School of Management may see increased demand for expertise in international trade and business strategy, providing opportunities for research and collaboration with industry partners.
Vanderbilt Law School could play a role in analyzing the legal implications of the trade agreement, particularly in areas related to labor rights, environmental law, and international trade regulations.
The School of Engineering may benefit from increased opportunities for research and development in areas related to supply chain resilience and innovation, particularly in collaboration with Indonesian partners.
Vanderbilt’s Agricultural Research Programs could explore new opportunities for collaboration and research on agricultural exports and trade with Indonesia.

Financial Impact

The trade agreement could lead to increased economic activity and investment in the U.S., potentially benefiting Vanderbilt University through increased funding opportunities and partnerships with industry.
There may be opportunities for Vanderbilt to secure funding for research and development in areas related to international trade, digital commerce, and supply chain management.
The focus on environmental protection and labor rights may lead to increased funding and support for programs and research initiatives at Vanderbilt that align with these priorities.
Changes in trade dynamics could impact the local economy in Tennessee, potentially affecting Vanderbilt’s community engagement and economic development initiatives.

Relevance Score: 3 (The agreement presents moderate risks and opportunities for Vanderbilt, particularly in areas related to international trade, research, and collaboration.)

Key Actions

Vanderbilt’s Office of Federal Relations should monitor the progress of the U.S.-Indonesia Agreement on Reciprocal Trade to identify potential research and collaboration opportunities in areas such as trade policy, economic development, and international relations. This could enhance Vanderbilt’s engagement with global economic issues and provide new avenues for academic inquiry.
The Owen Graduate School of Management could explore partnerships with Indonesian institutions to study the impacts of reduced tariffs and trade barriers on business practices and economic growth. This could lead to joint research projects and student exchange programs, enriching the educational experience and expanding Vanderbilt’s global reach.
Vanderbilt’s School of Engineering should consider research initiatives focused on supply chain resilience and innovation, particularly in the context of critical minerals and industrial commodities. Collaborating with Indonesian counterparts could provide valuable insights into sustainable practices and technological advancements.
The Department of Political Science should analyze the implications of the agreement on labor rights and environmental protection in Indonesia. This research could contribute to policy discussions and advocacy efforts, positioning Vanderbilt as a thought leader in international labor and environmental standards.
Vanderbilt’s Law School could examine the legal aspects of the trade agreement, including intellectual property rights and digital trade regulations. This analysis could inform legal scholarship and provide guidance to policymakers and businesses navigating the new trade landscape.

Opportunities

The agreement presents an opportunity for Vanderbilt’s Center for International Business to engage in research and consultancy on the economic impacts of the U.S.-Indonesia trade relationship. By leveraging its expertise, the center can offer insights into market access, trade policy, and investment opportunities.
Vanderbilt’s Peabody College could develop educational programs focused on international trade and economic development, incorporating case studies from the U.S.-Indonesia agreement. This could attract students interested in global commerce and policy, enhancing the college’s curriculum and reputation.
The focus on environmental protection and labor rights offers an opportunity for Vanderbilt’s Institute for Energy and Environment to collaborate with Indonesian partners on sustainability initiatives. This could include joint research on renewable energy, resource efficiency, and environmental governance.
By engaging with Indonesian academic and business communities, Vanderbilt can strengthen its international partnerships and expand its influence in Southeast Asia. Hosting conferences, workshops, and public forums on the implications of the trade agreement can further establish Vanderbilt as a hub for global economic thought and practice.

Relevance Score: 3 (The agreement presents opportunities for research and collaboration, requiring some adjustments to Vanderbilt’s international engagement strategies.)

Average Relevance Score: 3

Timeline for Implementation

In the coming weeks: The United States and Indonesia will negotiate and finalize the Agreement on Reciprocal Trade, prepare it for signature, and complete necessary domestic formalities before it enters into force.

Relevance Score: 5

Impacted Government Organizations

White House: Responsible for the overall foreign policy and executive oversight of the bilateral trade framework between the United States and Indonesia.
Office of the United States Trade Representative (USTR): Directly engaged in negotiating trade agreements and referenced in relation to the Special 301 Report, making it central to the agreement’s implementation.
Department of Commerce: Plays a key role in promoting U.S. exports, managing tariff reductions, and ensuring that the benefits of the trade framework are effectively delivered to American businesses.
Department of Agriculture: Involved in facilitating market access for U.S. food and agricultural products under the agreement’s provisions addressing trade barriers.
Food and Drug Administration (FDA): Impacted through commitments that include accepting FDA certificates and marketing authorizations for U.S. medical devices, pharmaceuticals, and other regulated products.
Environmental Protection Agency (EPA): Potentially engaged to ensure that environmental commitments, such as high levels of environmental protection, are upheld within the economic framework.
Department of State: Contributes to the diplomatic and national security aspects of the agreement, enhancing economic and security cooperation between the two nations.
U.S. Customs and Border Protection (CBP): Likely to enforce the tariff and import protocol measures, ensuring compliance with the negotiated reductions and regulatory practices.

Relevance Score: 3 (Between 6 and 10 Federal Agencies are impacted by the directive.)

Responsible Officials

N/A – The document outlines bilateral commitments and broad responsibilities between the United States and Indonesian governments without designating specific officials or agencies for implementation.

Relevance Score: 1 (No specific officials are assigned, thus the directives have minimal direct implementation impact on identifiable high-level personnel.)