AMBASSADOR HALIDA DISCUSSES BILATERAL TRADE AND

C O N F I D E N T I A L SECTION 01 OF 02 JAKARTA 002351

SIPDIS

NOFORN
SIPDIS

FOR EAP/MTS; EB/TPP/IPE; EB/TPP/BTA; EB/TPP,PA
COMMERCE FOR 4430/ BERLINGUETTE
COMMERCE PASS USPTO JNESS
DEPT PASS USTR FOR DKATZ, RBAE

E.O. 12958: DECL: 08/27/2017
TAGS: ETRD EINV ECON BEXP ID
SUBJECT: AMBASSADOR HALIDA DISCUSSES BILATERAL TRADE AND
PROSPECTS FOR BIT

REF: JAKARTA 02188

JAKARTA 00002351 001.2 OF 002


Classified By: JONATHAN A. ALAN FOR REASONS 1.4 (B) AND (D)


1. (C) SUMMARY: Embassy met with Government of Indonesia
(GOI) Special Assistant to the Minister of Trade Ambassador
Halida Miljani on August 24th to discuss bilateral trade
issues, including commencement of an exploratory dialogue on
a U.S.-Indonesian Bilateral Investment Treaty (BIT).
Ambassador Halida reacted positively to the prospects of a
BIT and agreed to schedule a Digital Video Conference (DVC),
possibly on September 20th, to begin discussions. She
emphasized that there were "no promises" that exploratory
discussions would lead to negotiations. Halida also spoke
candidly about the current slate of GOI regional trade
negotiations and shared her opinions on free trade. END
SUMMARY


Bilateral Investment Treaty- Playing Hard to Get?
-------------- --------------


2. (C) Ambassador Halida responded positively to the
prospects of negotiating a Bilateral Investment Treaty (BIT)
with the United States. She conceded that it was still not
clear who would have lead responsibility for BIT discussions,
but expressed her preference for Deputy Minister Mahendra
Siregar of the Coordinating Ministry for Economic Affairs
over officials from the Investment Coordinating Board (BKPM).
She described the GOI position as "open to discussions" but
stressed there were "no promises" that an exploratory
dialogue would lead to negotiations.



3. (C) When asked her assessment of the U.S. model BIT
text, Halida raised concerns over the template's suitability
for Indonesia, but acknowledged it serves as a useful
"starting point." She admitted that she was unsure whether
Indonesia was prepared to implement the requirements of a BIT
and stressed the need for flexibility if both countries
eventually agree to negotiations. "Everything would have to
be on the table", she argued. We suggested that a Digital
Video Conference (DVC) with Washington would offer an
opportunity to understand the GOI position more fully and
possibly address some of Indonesia's concerns. Halida agreed
and promised to coordinate on scheduling a DVC, but suggested
that our target date of September 20th might be too soon to
organize properly.


Indonesia and Japan- Friends with Benefits
--------------


4. (C) Halida spoke positively about the recently signed
Indonesian-Japanese Economic Partnership Agreement (EPA) and
described Japan as "a very important partner." She said one
of the reasons the agreement is good is because of
complementary agricultural trade as result of the differing
climates between Japan and Indonesia. Halida was also
pleased that the EPA included significant trade capacity
commitments on the part of Japan. She expressed her view
that trade capacity provisions should be considered an
essential part of all future trade agreements. "I know some
countries don't want to raise a lion", she explained, "but
trade capacity is the only way Indonesia can fully benefit
(from trade deals)."


FTA with Australia? Not so Fast
--------------


5. (C) Halida spoke disapprovingly of negotiations toward
an Indonesian-Australian Free Trade Agreement (FTA). She
told us that the order to pursue trade talks with Australia

JAKARTA 00002351 002.2 OF 002


came from Trade Minister Pangestu directly. Halida confided
that neither she nor Deputy Minister Siregar saw sufficient
benefit to negotiating with Australia, and suggested that an
agreement is unlikely anytime soon. When asked about recent
Trade and Investment Framework (TIFA) negotiations between
Indonesia and New Zealand, Halida insisted the New Zealand
TIFA is an end in itself and not necessarily a precursor to
an FTA.


Free Trade Is Not My Religion
--------------


6. (C) Halida was candid and animated when discussing her
philosophy on international trade. She admitted she is not a
believer in free trade, but that she follows the orders of
Minister Pangestu. Halida believes that protecting certain
local products (i.e. rice and cooking oil) is not only
Indonesia's right, but also its responsibility. Halida
conceded that while Pangestu is by nature a multi-lateralist,
as Trade Minister she is pursuing an agenda of bilateral
trade agreements out of practical necessity. Halida, who is
originally from Kalimantan, went on to discuss regional
differences in negotiating style within Indonesia. She
described the Javanese characteristic of "extreme politeness"
and contrasted it with her more assertive and direct nature.
Halida also expressed impatience with "take it or leave it"
styles of negotiation, remarking that "If people deal with us
nicely- we are nice, but we don't respond to (ultimatums)."



The BIT- Who's the Lead?
--------------


7. (C) COMMENT: Halida's preference of Mahendra Siregar
over BKPM Officials to lead the BIT discussions reflects the
increasingly bitter rivalry between MOT and BKPM. Siregar
has already told us privately that he does not want
responsibility for the BIT negotiations and that BKPM will be
our point of contact. The final decision lies with Minister
for Coordinating Economic Affairs Boediono, but it is not
clear whether Boediono has made that decision.
HUME