Jakarta Globe - 1 May 2025
As US tariff looms, Indonesia now closer to joining Mexico’s CPTPP trade club
As US tariffs loom over global trade, Indonesia is trying to diversify its markets as the Southeast Asian nation sets its sights on joining the Trans-Pacific trading group that brings together economies like Canada, Japan, and Mexico.
Jakarta is currently negotiating with the US on the 32 percent tariff rate set to be imposed on Indonesian goods starting early July. According to senior minister Airlangga Hartarto, Indonesia seeks a “fair and square” deal with the US, one that is mutually beneficial.
Amid the ongoing negotiations, Indonesia wants to expand its market, among others, by tapping into its non-traditional export destinations. Quite high up the agenda is unlocking the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) market. This is a twelve-member free trade pact that encompasses Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and its latest member, the UK.
Trump has repeatedly threatened CPTPP members Canada and Mexico with harsh tariffs. The CPTPP also actually evolved out of the Trans-Pacific Partnership (TPP), a proposed agreement that never came into force after Trump decided to pull the US out of the pact during his first term.
Indonesia officially applied to the CPTPP last September. The Jakarta Globe recently asked Airlangga about the time frame for Jakarta to become the trade club’s full-fledged member. While he did not state a specific deadline, he revealed that CPTPP members would gather later this year for some discussions that would likely touch on Indonesia’s application.
“We are in the process of acceding to the CPTPP. We believe that CPTPP members will meet in the middle of this year. From there on, they would decide on the next steps for the accession,” Airlangga told the Globe on the sidelines of the Investor Daily Round Table conference in Jakarta on Wednesday evening.
Airlangga revealed that some CPTPP members had expressed intent to back Indonesia’s application, citing Malaysia, Singapore, and the UK among the supporters.
Once fully implemented, the CPTPP allows up to 99 percent of tariff lines among the club’s members to be duty-free. The bloc makes up almost 15 percent of the global gross domestic product (GDP). The CPTPP offers market access to countries with whom Indonesia does not have a trade pact, particularly in the Latin American region.
Of all CPTPP members, Japan becomes Indonesia’s largest trading partner with annual trade reaching around $35.7 billion in 2024. This marks a huge gap compared to Indonesia’s trade with CPTPP’s Latin American members: Mexico (almost $2.6 billion), Peru ($479 million), and Chile ($473 million). Indonesia-Canada trade hit nearly $3.6 billion last year, official government figures showed.
