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