Jakarta, February 22, 2026 – The Government of Indonesia and the House of Representatives (DPR) RI should not proceed with the ratification of the Indonesia-US Agreement on Reciprocal Trade (ART) that was recently signed on February 19. This is because the US reciprocal tariff agreement has been ruled illegal and unconstitutional by the US Supreme Court. Therefore, the DPR RI must firmly reject the Government’s ratification of this agreement.
The Indonesia-US ART includes a commitment from Indonesia to eliminate 99% of tariffs on US goods, while the US imposes reciprocal tariffs of up to 19% on Indonesian goods. This deal also involves massive purchases worth $33 billion, including $15 billion in US energy (such as crude oil, gasoline, LPG, and coal) and 50 Boeing aircraft units ($13.5 billion).
Rachmi Hertanti, a researcher at the Transnational Institute, believes the ART agreement—which lowers tariffs to 19% for Indonesia—is no longer relevant after the Supreme Court’s ruling. Although President Trump may still implement a global tariff of 10%-15% using Section 122 post-ruling, these tariffs are temporary and require Congressional approval for extension. This will not be easy. Furthermore, a global tariff of 10%-15% is still lower than the 19% tariff Indonesia obtained by sacrificing everything.
“It is very clear that there is no longer a valid reason for the Indonesian Government to continue the ratification process. The ART agreement is no longer relevant. The DPR RI must reject the ratification of the Indonesia-US ART. Moreover, this is not a win-win agreement as explained by the Government; it is a swap of Indonesia’s resource sovereignty for illegal reciprocal tariffs—illegal not only under the US Supreme Court ruling but also under WTO GATT rules,” Rachmi asserted.
The ART agreement involves a quid pro quo practice or an unbalanced exchange of interests. For a 19% tariff reduction, Indonesia has risked everything (“19 against everything”), including its mineral resource sovereignty, which is essentially being used to secure US supply chains for its defense interests rather than the welfare of the Indonesian people.
Aryanto Nugroho, National Coordinator of Publish What You Pay (PWYP) Indonesia, noted that the Indonesia-US ART requires commitments on natural resource concessions and obligations that go far beyond a tariff trade agreement. There are suspicions that this deal is merely an “entry point” for massive critical mineral exploitation without guaranteed protection for the long-term interests of the Indonesian people. This is evident from the extension of Freeport McMoRan’s mining permit until 2061, ExxonMobil’s contract extension until 2055, and the promise to purchase fuel and bioethanol from the US.
“The extension of mining permits and oil and gas concessions reinforces a long-term ‘concession fire sale’ pattern. This effectively grants exploitation rights to these US corporations until mineral reserves are completely exhausted, a ‘life of mine’ scheme. Once reserves are depleted, the people will only inherit permanent environmental impacts without control over the strategic assets that have been drained. It is highly detrimental to Indonesia in the long run if resource sovereignty is sacrificed for ‘non-reciprocal’ tariff reductions,” Aryanto emphasized.
Aryanto added that this condition is worsened by the mandatory ethanol blending program for gasoline, which allows ethanol imports from the US with a potential 0% tariff whenever domestic production is deemed insufficient. This policy kills the incentives to develop a local ethanol industry from raw materials like sugarcane or cassava, which should ideally create domestic jobs and value. Without transparency mechanisms such as the Extractive Industries Transparency Initiative (EITI) to monitor payments and cost-recovery allocations, this agreement risks creating further trade deficits and hindering the transition to renewable energy. Instead of strengthening domestic capacity, Indonesia is positioned as a market for US energy surplus through long-term import dependency
Critical Minerals for Whose National Interest?
The Indonesia-US ART will facilitate US investment in critical minerals, including silica sand processing for semiconductor raw materials, through an MoU that encourages investment collaboration between the Indonesian company Galang Bumi Industri and Tynergy Technology Group. The ART agreement states that the US Export-Import Bank (EXIM Bank) and the US International Development Finance Corporation (DFC) will support investment financing in vital sectors in Indonesia, subject to eligibility and collaboration with US private-sector partners—effectively linking Indonesian infrastructure with US capital and oversight.
However, these promises of investment financing are seen as demanding significant concessions of Indonesian sovereignty in return. The ART agreement obligates Indonesia to protect US national security interests and provide special treatment for US investors. The agreement sets prescriptive operational mandates for Indonesia’s mineral sector, designed to integrate Indonesia into the U.S. defense and industrial base. It includes specific provisions that provide protection and investment convenience without imposing unconditional rules or burdensome regulations on foreign investors, and requires Indonesia to adopt ART provisions into its domestic regulations.
Some of these include, The removal of Local Content Requirements (TKDN) and Domestic Specifications, including the removal of forced domestic specification processing requirements (Article 2.2), requiring Indonesia to eliminate export restrictions on critical minerals (Article 6.1), removing divestment obligations in the mining sector (Article 2.28), adn the right to transfer profits without delay (Article 2.27).
According to Aryanto, this contradicts the statement by the Minister of Energy and Mineral Resources, Bahlil Lahadalia, at a press conference on February 21, which claimed that critical mineral cooperation with the U.S. would still comply with existing national laws.
“The removal of TKDN and the prohibition of export restrictions on critical minerals in this deal are direct attacks on the national downstreaming (hilirisasi) agenda. The government seems forced to surrender to U.S. protectionist policies, while our own policy space to build value-added industries at home is being stripped away,” he asserted.
Due to its sensitive nature, Indonesia-U.S. critical mineral cooperation is also inseparable from efforts to subject Indonesia’s trade and investment policies to U.S. national security priorities. Rachmi explained that the ART is not a trade agreement but a “super agreement” capable of controlling Indonesia’s strategic diplomatic policies, which have historically followed a “free and active” (bebas aktif) principle.
This threatens Indonesia’s sovereignty as an independent nation. Indonesia is not only required to create export control rules and investment screening mechanisms in line with U.S. standards (Article 5), but these provisions effectively give the U.S. a veto over Indonesia’s future trade diplomacy with U.S. rivals. Furthermore, the U.S. can unilaterally assess and cancel the agreement (Article 5.3) if Indonesia is deemed to have violated these security provisions.
“These security compliance provisions have the potential to trigger retaliation risks from third parties and create an asymmetry of compliance that places Indonesia in a subordinate position to the U.S. This also locks Indonesia out of diversification strategies with other countries, preventing us from protecting our national development interests by avoiding dependence on a single nation”, Rachmi explained.
For these reasons, the Government should not hesitate to refrain from ratifying the ART Agreement. The Government must also be transparent regarding the 11 business deals signed, so they are not used as leverage to harm Indonesia. A public trial (Uji Publik) regarding the broad potential impacts of the ART Agreement must be conducted transparently by the Government and DPR RI so that this trade deal does not become an instrument to “barter” the people’s sovereignty over state-controlled natural resources.
Media Contacts:
- Rachmi Hertanti, Transnational Institute (TNI): r.hertanti@tni.org
- Aryanto Nugroho, PWYP Indonesia: aryanto@pwypindonesia.org