[CTC] Indonesia pushes for minerals talks in IPEF trade pillar, says Thailand to host next round

[Arthur Stamoulis]

Indonesia pushes for minerals talks in IPEF trade pillar, says Thailand to host next round
Inside US Trade, 7/18/23
 
Indonesia this week pressed Deputy U.S. Trade Representative Sarah Bianchi to include critical minerals market-access discussions in the Indo-Pacific Economic Framework for Prosperity negotiations, suggesting the issue could be on the agenda for a September negotiating round in Thailand.
 
A U.S. official, however, pushed back against the country’s claims, saying nothing had yet been decided about critical minerals or the timing or location of the next round.
 
Bianchi was in Jakarta on Monday and Tuesday to meet with Indonesian officials and stakeholders to discuss the IPEF negotiations. Jakarta has been vocal in calling for critical minerals discussions to be included in IPEF <https://insidetrade.com/node/177004> and reportedly proposed the idea during an IPEF ministerial in May. The Indonesian proposal was supported by seven Association of Southeast Asian Nations countries and Australia. Australia already has a trade agreement with the U.S.
 
A U.S. official during the Detroit meeting told Inside U.S. Trade that USTR Katherine Tai discussed critical minerals with her counterparts in the context of “supply chain resilience” and “not a new IPEF-led critical minerals pact.”
 
During Bianchi’s meeting with Indonesian Vice Trade Minister Jerry Sambuaga, “Indonesia again voiced the need for a commitment to market access, one of which is related to critical minerals so that there are real benefits to be gained,” according to an informal translation of an Indonesian government readout. “Meanwhile, Ambassador Bianchi said, based on the results of the IPEF Ministerial Meeting in Detroit, U.S., last May, the issue of critical minerals would be discussed in the trade pillar. The U.S. will explore the development of discussions in Pillar 1.”
 
But the U.S. official disagreed with Indonesia’s characterization that critical minerals would be discussed as part of pillar one. “With regards to critical minerals, I would strongly push back on the readout’s characterization and stress that nothing has been decided,” the official said.
 
A September 2022 ministerial statement that laid out the scope of the trade discussions did not mention critical minerals. That statement, however, came less than a month after President Biden signed the Inflation Reduction Act into law.
 
The IRA includes critical minerals requirements for electric vehicle tax incentives that favor free trade agreement partners. Japan, an IPEF member, in March struck a critical minerals agreement with the U.S. that the Treasury Department said constitutes a “free trade agreement” for the purposes of IRA requirements. The U.S. and the European Union are engaged in discussions over a critical minerals deal as well, while the U.S. and the United Kingdom in June announced they too would launch negotiations <https://insidetrade.com/node/177083> on a critical minerals pact.
 
The Philippines has also called on the U.S. to start bilateral talks <https://insidetrade.com/node/176731> about a critical minerals agreement.
 
According to the Indonesian readout, the U.S. also reiterated its request that IPEF members agree to implement high labor and environmental standards. Critics of the Biden administration’s trade policy have questioned how it will be able to convince countries to agree to high labor and environmental standards if market access remains off the table.
 
Administration officials have repeatedly pointed to the potential for IPEF members to benefit from increased U.S. private-sector investment as a major benefit of the framework. Sambuaga nodded to that possibility. “Indonesia invites U.S. investors to invest in energy transition projects,” he said, according to the readout. “This is to realize a green economy and downstream in the field of extraction of critical minerals and other raw materials needed in the clean energy sector, for example as a battery component for electric vehicles.”
 
Bianchi, according to the Indonesia readout, said the U.S. goal is to conclude the IPEF talks this year. The unofficial deadline for the negotiations is the November Asia-Pacific Economic Cooperation leaders summit in San Francisco, CA, which a Fijian official reiterated <https://insidetrade.com/node/177371> after the fourth IPEF round concluded in Busan, South Korea, over the weekend. -- Brett Fortnam (bfortnam at iwpnews.com <mailto:bfortnam at iwpnews.com>)

Arthur Stamoulis
Citizens Trade Campaign
(202) 494-8826




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