US reciprocal tariffs is illegal, Agreement of Reciprocal Trade must not be ratified
Indonesia Civil Society Coalition for Economic Justice (MKE Coalition) urges President Prabowo Subianto not to ratify agreement on reciprocal trade (ART) between Indonesia and the United States (US) signed on February 19, 2026. The 19% tariff reduction that Indonesia received in this agreement is not commensurate with the surrender of the country’s self-sufficiency and sovereignty to US interests.
For this reason, the following are the fundamental reasons underlying the ART Agreement not being ratified, namely:
First A US Supreme Court ruling has declared the reciprocal tariffs imposed by President Trump to be invalid (illegal). Therefore, the Indonesia-US ART Agreement has no legal basis in the US and does not need to be continued.
Second the ART is not a bilateral agreement but a unilateral adjustment to US economic and security interests that place Indonesia under US control and limit Indonesia’s political and foreign relations with third parties, thereby threatening Indonesia’s sovereignty as an independent country.
Third the Agreement has provisions that fundamentally contradict numerous national laws and regulations and places many obligations for the Indonesian government to revise dozens of national laws and regulations to facilitate US economic and security interests rather than facilitating the interests and protection of the rights of the Indonesian people.
Fourth the Agreement puts great pressure on the Indonesian national economy due to the implementation of articles that are of trade balancing requirement the US has imposed on Indonesia to purchase more imported goods from the US. This is disproportionate to the export value Indonesia will receive, potentially impacting Indonesia’s economy. The continued weakening of the Indonesian rupiah exchange rate could result in fiscal pressure.
With its broad and fundamental impact on the life of the nation, the ART must be reviewed and there is no need for the Indonesian Government to ratify, especially if it is done without the approval of the Indonesian House of Representatives. This is in accordance with the constitutional mandate regulated in Article 11 paragraph (2) of the 1945 Republic of Indonesia Constitution which states that agreements which have broad and fundamental consequences for the lives of the people related to the financial burden on the state, and/or require changes or the formation of laws must have the approval of the Indonesian House of Representatives.
This norm has been reaffirmed in the Constitutional Court Decision No. 13/PUU-XVI/2018 concerning international agreements. International agreements that meet the criteria of Article 11 paragraph (2) of the 1945 Constitution need to be discussed with the Indonesian House of Representatives and ratified through a law. The Constitutional Court Decision also emphasizes the obligation of the Indonesian House of Representatives to conduct an impact analysis assessment of an international agreement on its broad impact in making decisions regarding international agreements to be ratified.
Therefore, the Indonesia Civil Society Coalition for Economic Justice (Koalisi MKE) urges the Indonesian House of Representatives (DPR RI) not to simply serve as a rubber stamp for the government. Instead, it must seriously conduct a comprehensive impact analysis in a transparent and democratic manner, involving broad public participation. This step is necessary, given that the Bylaws are explicitly unfair to the Indonesian people.
The following are the potential detrimental impacts of the ART towards Indonesian people:
Food and Agriculture
This agreement practically limits Indonesia’s policy on importing food and agricultural products. Indonesia no longer has the flexibility to assess domestic needs, protect local producers, and ensure national quality standards, as well as suitability to the socio-cultural context, before products enter the domestic market. Consequently, an asymmetric market access regime has been created. This has resulted in at least four things: (1) price pressures and unequal competition; (2) narrowing market access for small-scale food producers; (3) the risk of systemic dependency; and (4) the increasingly institutionalized marginalization of small-scale food producers. The exclusion of US agricultural products from this commodity balance will eliminate Indonesia’s ability to protect domestic agricultural product prices during peak harvest times. This is further compounded by the obligation to purchase a number of US agricultural products within predetermined quotas, including one million tons of soybeans and 1.6 million tons of corn from the US. If the government ratifies this agreement, it will also severely impact local livestock farmers, who, according to reports from farmers in Ponorogo, are already struggling to maintain meat prices, which in some markets have already fallen by almost half their normal levels.
Fishery
The Indonesian government has made a mistake in limiting policies to improve the welfare of fishermen. This agreement is considered unequal and risks harming fishermen and the local fishing industry. This agreement forces Indonesia to sacrifice natural resource sovereignty for unequal tariffs, which ultimately can suppress the national fisheries processing industry. Indonesian fishermen will be less competitive in the local market with a flood of products from the US due to the 0% tariff imposed by the Indonesian government and threatens national fish biodiversity due to the dominance of imported fish from the US. In fact, imports of fishery commodities into Indonesia have been strictly regulated to protect local farmers and fishermen, with a focus on imports of raw materials for industry, including Ministerial Regulation of the Ministry of Maritime Affairs and Fisheries No. 14 of 2024 concerning Supervision of Imports of Fishery Products. Regulating strict supervision of the type, quantity, and place of entry of imported commodities through an electronic system. And Ministerial Regulation of Trade No. 19 of 2025 (as amended by Ministerial Regulation of Trade No. 38 of 2025) concerning the Policy and Regulation of Salt and Fishery Commodity Imports. This regulation regulates mechanisms, quotas, and sanctions for importers who violate the provisions. In addition, this agreement will have an impact on subsidies for traditional fishermen if Indonesia is aligning its position with the US on WTO Fisheries Subsidies Agreement, which will be reduced because of it.
Intellectual Property
Through this reciprocal tariff agreement, Indonesia is also required to ratify several international intellectual property conventions within two years of its entry into force, including the 1991 International Convention for the Protection of New Plant Varieties (UPOV). This regulation will threaten and eliminate farmers’ rights and freedoms to develop, plant, store, and even exchange seeds. These rights and freedoms over seeds are what enable Indonesia to maintain its food sovereignty. UPOV is primarily intended to provide protection and market guarantees for the global seed industry. The Indonesian government itself, in an open statement by The Permanent Mission of the Republic of Indonesia to the United Nations, the World Trade Organization, and other International Organizations in Geneva in February 2024 affirmed that Indonesia will maintain its non-membership of the UPOV 1991 to ensure policy space for the protection of smallholder-managed seed systems and Indonesia’s genetic resources. We urge the Indonesian government to adhere to this commitment and not submit to trade agreements with the United States.
Digital
Indonesia is being blocked from an opportunity to collect digital services tax, which is deemed to “discriminate” against US corporations (Article 3.1). This limits the government’s ability to collect taxes and increase state revenues that can be allocated for public services. This will allow large US technology corporations to continuously dominate an economic system based on data extraction. Furthermore, the government is prevented from requesting access to source code upon US entities conducting business in Indonesia (Article 3.4). This removes accountability and responsibility from US corporations. Indonesia, as a consumer, has the right to source code transparency and needs to monitor technology products that can pose risks, including privacy violations, discrimination, and online gender-based violence. Indonesia is also being urged to support US interests at the WTO regarding a permanent moratorium on import duties on digital goods (Article 3.5). Indonesia has been positioned to revoke the moratorium to create fairness between digital goods producing countries and consumers. This is also stated in Regulation of the Minister of Finance No. 17 of 2018 which has regulated import duties on digital goods, although the rate remains 0%. We urge the government to maintain this commitment and ensure that Indonesia continues to prioritize the interests of the people.
Critical Minerals
The agreement establishes a prescriptive operational mandate for Indonesia’s minerals sector, designed to integrate Indonesia into US defense and industrial interests rather than Indonesia’s strategic economic interests. It includes specific provisions that provide investment protection and facilities without conditions for foreign investors, requiring Indonesia to eliminate existing national laws and regulations designed to protect national strategic interests and natural resource sovereignty. These include the elimination of Local Content Requirements (TKDN) and Domestic Specifications, the elimination of enforced domestic specification processing requirements (Article 2.2), the elimination of critical mineral export restrictions (Article 6.1), the elimination of divestment obligations in the mining sector (Article 2.28), and the right to transfer profits without delay (Article 2.27). Furthermore, there is no guarantee that technology transfer in industrial cooperation in this sector will be carried out by the US. This agreement is a direct attack on the national downstreaming agenda, and our own policy space to build value-added industries domestically has been seized.
Industrialization
Crucial provisions in the ART concerning the strategic direction of Indonesian industrialization will have a significant impact. Indonesian industry will face a reorientation of its industrialization structure, particularly regarding provisions regarding Foreign Investor Facilitation. Article 6.1 requires Indonesia to facilitate US investment in the most strategic sectors, thus limiting the scope for affirmative national industrial policy, and the industrialization agenda is no longer fully under the control of national policy. Furthermore, the weakening of the local content requirement (TKDN) and protection of the domestic manufacturing industry in Article 2.2 of Appendix III (TKDN Exemption), and the elimination of domestic specification requirements, erode one of the main instruments of national industrial development: the local content obligation. Furthermore, the imposition of tariffs on Indonesian manufactured products will also impact workers. Labor provisions do appear positive, with calls for changes to employment regulations, particularly regarding limiting outsourcing and contract employment practices. They provide space for democratization of labor unions. These seemingly positive provisions will not materialize if the domestic industrial structure is in tatters due to the economic pressures from this agreement. While labor issues must be addressed, exchanging them for narrowing national production by liberalizing economic fundamentals will force Indonesia into a subordinate position in the global supply chain, further stifling labor conditions in an already difficult situation.
Access to Medicine
ART requires Indonesia to establish a new regulation regarding data exclusivity for five years (Article 2.26). Data exclusivity allows originator companies to gain a five-year monopoly, prohibiting generic companies from using clinical trial data to produce generic versions, even if the medicine is not patented. Therefore, this regulation will strengthen the originator company’s monopoly, slowing the entry of generic drugs, ultimately increasing medicine prices. This change will benefit originator drug companies, which are multinational companies from various countries.
The government often claims that trade agreements are an effort to improve the Indonesian economy and thus improve the welfare of the people. However, the potential problems mentioned above actually show negative impacts that will exacerbate the suffering of the people. Once again, we urge the Indonesian government to NOT ratify the agreement with the United States and the Indonesian House of Representatives to carry out its supervisory function as a representative of the Indonesian people.
This statement is supported by:
- Ekologi Maritim Indonesia (Ekomarin)
- FARKES Reformasi
- Indonesia AIDS Coalition (IAC)
- Indonesia for Global Justice (IGJ)
- FIAN Indonesia
- Kesatuan Perjuangan Rakyat (KPR)
- Puanifesto
- Sahita Institute (HINTS)
- Serikat Mahasiswa Indonesia (SMI)
- Serikat Petani Indonesia (SPI)
- Legal Center for International Trade and Investment, Fakultas Hukum, Universitas Indonesia
- Lembaga Pengkajian Hukum Internasional, Fakultas Hukum, Universitas Indonesia
