Editorial: Indonesia must leverage US Supreme Court tariff ruling to go back to negotiating table
The government hinges a lot on an “in accordance with domestic law” clause that does not exist
Heading into the Eid al-Fitr weekend, President Prabowo Subianto held a three-hour roundtable with prominent journalists and experts covering a wide range of issues, one of which was the recently signed Agreement on Reciprocal Trade (ART).
The ART was signed just hours before the US Supreme Court ruled Trump’s tariffs unconstitutional. That ruling entirely gutted the legal basis for the US tariff regime, but Indonesia remains trapped. Because we prematurely converted our tariff rate into a bilateral treaty obligation, we locked in a 19 percent rate. Meanwhile, countries that waited or simply did nothing are now looking at rates between 10 and 15 percent.
We gave up local content policy, critical mineral export restrictions, publishing sector ownership rules, and a dozen other hard-won regulatory positions—and in exchange, we got a tariff rate higher than what countries that signed nothing are paying.
Pressed on these massive concessions during the roundtable, Prabowo repeatedly deflected with a single defense: the agreement includes an all-encompassing clause stating that commitments will be executed “in accordance with domestic laws and regulations.“ If a treaty provision conflicts with our laws, the logic goes, we are not bound by it. It sounds reasonable. The only problem: it doesn’t exist where the president thinks it does.
“In accordance with domestic laws and regulations”
The phrase does appear in the ART, but only in five specific clauses, all of them clustered in Section 5 on economic and national security cooperation. These cover things like Indonesia restricting transactions with companies on the US Entity List, adopting anti-transshipment measures, and aligning with US export controls. The domestic-law qualifier was placed there deliberately, as a concession to the fact that these are sensitive sovereignty-adjacent commitments.
It was, however, not placed anywhere near the three commitments Prabowo was asked about.
Take local content requirements, for example. Article 2.2 of Annex III reads: “Indonesia shall exempt U.S. companies and U.S. goods from local content requirements.” Full stop. If Indonesia currently has local content rules that apply to everyone—and it does—this agreement requires Indonesia to exempt American companies from them. It is not ambiguous; it’s the entire text of the clause.
The same absence of protection applies to rare-earth minerals and nickel, which Indonesia currently places an export ban on in support of our downstreaming efforts. Article 6.1 of Annex III states that Indonesia “shall remove restrictions on exports to the United States of industrial commodities, including critical minerals.” Indonesia’s downstream processing policy—the ban on exporting raw nickel that has anchored our industrialization strategy for over a decade—is indeed a restriction on exports of critical minerals. There is no domestic-law carve-out, the way the President thinks there is.
The final, and perhaps most culturally sensitive, is on foreign ownership of the publishing sector. Prabowo was asked why we agreed to remove the maximum foreign ownership regulations on media companies, which we instituted with the 1999 Press Law. Article 2.28 of the ART requires Indonesia to “allow foreign investment without ownership restrictions for U.S. investors in... publishing.” This would open up a sector we have long considered sensitive enough to protect. Again, no domestic-law qualifier appears anywhere in the clause.
He then deployed the same “domestic laws” defense when pressed on a separate clause gutting our publisher rights regulations in relation to US social media companies. The agreement explicitly dictates: “Indonesia shall refrain from requiring U.S. digital services providers (platform services) to support domestic news organizations through paid licenses, user data sharing, and profit-sharing models.“ This completely neutralizes recent national efforts to make tech platforms pay for local journalism as mandated under Presidential Regulation No.3/2024. We have long considered this sector sensitive enough to protect, yet neither the ownership clause nor the digital platform clause contains any domestic-law qualifier.
The President should know that a contractual carve-out exists where it is written, not where you wish it had been written.
Let’s not ratify this deal
President Prabowo must not ratify the agreement and return to the negotiating table. Use the time to actually read what the agreement says, identify which commitments serve Indonesian interests and which don’t, and push back on the rest. Other countries have done exactly this; Malaysia declared the agreement null and void following the Supreme Court ruling and are waiting for the US to come up with a new proposal for them. We should do the same.