Washington: A major trade deal between the United States and Indonesia is facing the risk of collapse, according to a senior US official, raising concerns about the future of economic cooperation between the two countries.
The agreement, completed in July this year, was expected to boost trade by removing tariffs and easing market access. Under the deal, Indonesia agreed to remove tariffs on more than 99 percent of US goods and lift several non tariff barriers. In return, the United States planned to reduce proposed tariff increases on Indonesian imports.
However, a US official said Indonesia has stepped back from some of its earlier commitments, especially those related to digital trade rules and the removal of non tariff barriers. The official added that if Jakarta does not fulfil the agreed terms, the entire deal could fall apart.
Indonesian authorities have denied backing away from the agreement. They said the discussions are still ongoing and that the remaining issues are mainly technical. Officials in Jakarta also stressed that they are trying to harmonize the legal language rather than reject the substance of the deal.
Recent reports suggest Indonesia is also resisting clauses in the pact that it considers too restrictive. These clauses reportedly link trade commitments to wider political or strategic conditions, which Indonesia views as unnecessary and limiting.
The uncertainty around the deal has added to broader concerns about trade stability in the region. Economists have warned that unclear trade rules could affect supply chains and future investment plans across Southeast Asia.
Both sides are expected to continue their discussions, but it remains unclear whether the agreement can be saved without significant changes. For now, businesses in both countries are waiting to see if the two governments can bridge the gap and keep the trade pact alive.