Indonesia–United States Free Trade Agreement Explained

The Indonesia–United States Free Trade Agreement is a significant trade deal that aims to boost economic ties between the two countries. It was signed in 2020.

The agreement covers a wide range of areas, including trade in goods and services, investment, and intellectual property. It also includes provisions for cooperation on issues like labor, environment, and small and medium-sized enterprises.

The agreement eliminates tariffs on over 90% of trade in goods between the two countries, making it easier for businesses to export and import goods. This will likely lead to increased trade and economic growth for both Indonesia and the United States.

Indonesia will propose a limited free trade agreement (FTA) with the US, aiming to benefit companies in the electric vehicle (EV) battery supply chain operating in the country.

The proposed FTA will cover some minerals shipped to the US, such as nickel, which is a critical component in EV batteries.

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Indonesia's nickel products have become increasingly important in the supply chain, and the country has been trying to leverage its nickel reserves to attract investment from battery and EV makers.

The US has issued new guidance for EV tax credits under the Inflation Reduction Act (IRA), requiring a certain value of battery components to be produced or assembled in North America or a free trade partner.

The proposed FTA will likely be similar to the one the US has signed with Japan for the critical mineral trade, which covers EV battery minerals such as lithium, nickel, cobalt, graphite, and manganese.

Here is a list of the critical minerals that may be covered under the proposed FTA: