Siap – Publish What You Pay (PWYP) Indonesia and the Transnational Institute have responded critically to two recent trade agreements reached by the Indonesian government with the United States (US) and the European Union (EU), particularly regarding critical minerals, where Indonesia has successfully increased the added value of commodities such as nickel by 20-30% since the ban on raw exports was imposed in 2020.
The issue of critical minerals is often used by the Indonesian government as a key bargaining chip in negotiations with the US and EU to secure favorable agreements.
However, the secrecy surrounding the negotiation process, including the contents of the final agreements, has raised concerns about a potential “trade-off” of interests that could undermine Indonesia’s energy and resource sovereignty, particularly within the context of a just green economic transition.
Based on the latest update as of July 19, 2025, the reciprocal tariff agreement with the US (announced on July 15) includes Indonesia’s commitment to purchase 50 Boeing jets and increase imports of US agricultural and energy products, while the CEPA with the EU (political agreement on July 13) targets finalization by September 2025 with the liberalization of 80% of tariffs on goods and services.
Securing the supply chain for critical minerals has become a strategic issue in international trade negotiations, now being used as a tool by developed countries like the US and EU to pressure mineral-rich developing nations. This struggle often puts pressure on developing countries building value-added industries, creating a direct contradiction with Indonesia’s downstreaming policy.
PWYP Indonesia and TNI assess that the efforts of developed countries such as the US and the EU to secure the supply of critical minerals, including copper, nickel, and bauxite, have turned this issue into a tool of geopolitical pressure on resource-rich developing countries. Meanwhile, countries such as Indonesia are striving to build downstream industries to increase domestic value-added. In the reciprocal tariff agreement with the US, the Indonesian government claims to have obtained a tariff reduction of up to 19% (from the threatened 32%), opening up wider market access.
However, the US receives a 0% tariff on almost all of its products, including purchase guarantees by Indonesia in the agriculture and energy sectors, which could flood the domestic market and cause a trade deficit of nearly $18 billion, as in 2024.
This agreement involves a trade-off of interests in critical minerals such as copper, which Coordinating Minister for Economic Affairs Airlangga Hartarto has repeatedly referred to as the “strongest card.” However, this appears to be leading to a compromise that weakens downstreaming, including the potential relaxation of the copper concentrate export ban imposed in December 2024.
TNI researcher Rachmi Hertanti believes that the US has a strong interest in accessing critical minerals such as copper for its defense and chip technology industries. Trump’s protectionist policies, including “Made in America,” have closed the door for Indonesia to maintain domestic added value.
“The effectiveness of Indonesia’s mineral downstreaming negotiations is threatened by Trump’s policies. Including minerals in the negotiations has become irrelevant, and Indonesia has ultimately compromised for tariff reductions, sacrificing copper downstreaming and locking Indonesia back into raw material exports at the bottom of the global value chain,” Rachmi stated in a written statement received by siap.viva.co.id on Monday, July 21, 2025.
Furthermore, Rachmi emphasized that the ban on raw mineral exports is key to increasing economic value-added and must remain a non-negotiable position amid global geopolitics. The US and EU have protested this policy: the EU sued Indonesia at the WTO over the nickel export ban (with the US as a third party), and the US National Trade Estimate (NTE) 2024 report referred to it as a trade barrier, including for copper.
The Indonesia-EU CEPA regulates the energy and mineral raw materials chapter, which liberalizes market access and investment, including export restrictions, the removal of export duties, and local content (TKDN) requirements, all of which directly contradict downstream processing.
“The tug-of-war over US tariff reductions and EU market access only weakens Indonesia’s bargaining position. For example, the US today wants to strengthen its domestic processing industry capacity, particularly regarding copper, to eliminate dependence on China. As a result, Indonesia may be pressured to remove export restrictions on concentrates, including TKDN, and the intention to strengthen downstream industries, particularly copper, could be undermined,” concluded Rachmi.
Meanwhile, Deputy Director of PWYP Indonesia, Meliana Lumbantoruan, noted that tariff negotiations with the US could weaken efforts to downstream copper in Indonesia, which still faces many challenges, including the complex relationship between the Indonesian government and Freeport Mc-Moran, an American copper mining company.
“Freeport continues to look for loopholes to maintain its copper concentrate export relaxation. If the government succumbs to US pressure and relaxes the export ban, the downstreaming policy that began in December 2024 will lose its consistency and direction. This will be very detrimental to Indonesia in the long term,” Meliana asserted.
Far from environmental sustainability commitments, Meliana further emphasized that the increased demand for critical mineral raw materials has triggered excessive exploitation of natural resources, which risks damaging ecosystems, triggering ecological disasters, and exacerbating the climate crisis.
“The ban on raw mineral exports should be used to control licensing and production more wisely. This could be an important tool in achieving responsible resource management aligned with environmental sustainability commitments,” she explained.
Meliana doubts that both trade agreements have commitments to environmental sustainability issues. “For example, in the Indonesia-EU CEPA, there are no clear mechanisms for environmental impact assessments that provide clear legal implications for parties that do not
comply. Especially with the US.
President Trump is not someone who believes in environmental sustainability. In fact, from the outset of his administration, Trump has withdrawn from the Paris Agreement’s climate action commitments and reinstated fossil fuels as the primary energy source for the US,” she concluded.
For this reason, PWYP Indonesia and the Transnational Institute urge the Indonesian government to be transparent and open public access to the contents of Indonesia’s trade agreements with the US and the EU so that the risks and potential losses they may cause can be assessed. The potential losses that may be incurred must be comprehensively reviewed by the Indonesian House of Representatives before giving approval for ratification.
Source: Viva