United States, explained.
Making educational games for children with the theme to love the environment at a home industry in Malang, East Java, Indonesia, 20 August (Aman Rochman/NurPhoto via Getty Images)
If Washington is to judge its trade partners on environmental measures, Jakarta actually has a good story to tell.
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The right climate for Indonesia-United States cooperationThe right climate for Indonesia-United States cooperation
Indonesia is feeling a little ignored. The recent visit by US Vice President Kamal Harris to Vietnam and Singapore led to speculation that Indonesia was not a priority for the Biden administration. “Snubbed again, Joe?” read one local headline. A few weeks beforehand, US Defence Secretary Lloyd Austin had also left Indonesia off his itinerary during a trip to Southeast Asia.
No doubt the raging spread of Covid-19 in Indonesia was a reason the two senior US figures opted not to visit. That would have been regarded as fair enough, only that the Philippines is also in the throes of widespread Covid-19 transmission and Austin did manage a stop-over in Manilla.
But it would be premature to interpret this diplomatic absenteeism as a signal that Indonesia is no longer important to US foreign policy. Two arenas, in trade and climate change, underscore the growing opportunities the US and Indonesia have to work cooperatively.
In the last decade, the trade balance between the two countries has shown positive trend. According to the most recent figures, two-way trade in goods amounted to almost US $28 billion, with Indonesia boasting a trade surplus. The United States leapt from its position as Indonesia’s fourth largest trading partner after China, Singapore and Japan to second place in 2020, just below China.
Where this economic relationship might be expanded is in the realm of environmental issues. The Biden administration has said environmental issues will be the reference point for its trade policy. In addition to re-joining the Paris Climate Accords following his inauguration, Biden also held a virtual summit in April to mark his efforts to regain US leadership on global climate change action. Indonesia was among the countries invited.
While Indonesian products have often been targeted for criticism over suspected environmental damage during production, Indonesia actually ranks better than many other sources of US imports. This claim is supported by Indonesia’s achievement in the “Environmental Performance Index” (EPI), a ranking scale produced by Yale and Columbia University in collaboration with World Economic Forum and the Joint Research Centre at European Union. The index, which has been published every two years since 2006, is regarded as a prominent measure for evaluating environmental performance in different policy categories.
If the US government is serious in ensuring environmental issues are the reference point trade cooperation with other countries, Indonesia should see for itself a bigger potential.
According to EPI 2020, Indonesia’s attention to environmental sustainability is ranked higher than the three countries (China, Vietnam and India) that collectively have so far fulfilled almost a quarter of all US imports. Indonesia’s performance was ranked at 116, while China, Vietnam, and India were ranked at 120, 141, and 168 respectively. The index reported that on 11 issues categories with 32 environment related indicators – ranging from air quality to water resources – Indonesia was seen to have better performance compared these other US trading partners.
So if the US government is serious in ensuring environmental issues are the reference point trade cooperation with other countries, Indonesia should see for itself a bigger potential to take advantage of its record in environmental performance to appeal to the Biden administration.
The groundwork is already underway. The US has been developing cooperation with Indonesia on climate change, including with the formation of a joint climate task force. This task force aims to seek opportunities across four themes, namely: (i) envisioning climate ambition toward net zero emission; (ii) natural capital and ecosystem services for land use, forestry, mangroves, and marine zones; (iii) managing renewable energy transition; and (iv) sustainable and blended finance.
Moreover, Indonesia’s position as co-chair of Coalition of Finance Ministers for Climate Action, which most recently met in April during the World Bank and International Monetary Fund 2021 meetings, should be considered by the Biden administration if the United States seeks to make use of all forums to disseminate its climate change agenda. Indonesia could serve as a bridge between the US and other countries, especially developing ones.
For example, the Biden administration’s decision to join the Coalition in April may allow the United States to work more closely with Indonesia in dealing with climate finance, which is a growing concern for many countries across the globe. Indonesia and the United States already cooperate in this area, having implemented what has been regarded as a successful debt swap through the Tropical Forest and Coral Act (TFCA) programs, where Indonesia’s debt payments are reduced in exchange for conservation related activities. The aim is to protect biodiversity while sustaining the livelihood of local residents and offers the kind of example that could be used elsewhere in the world.
Considering what already exists and potential for Indonesia-US cooperation on trade and climate change, both countries need each other. The geopolitical dynamics in the region are also driving Indonesia and the United States to cooperate. The essence of cooperation should not be determined solely by an official visit – or the absence of one. Positive interactions that are continuously maintained will determine the future.
Eko NM Saputro
About the author
Eko NM Saputro
Eko NM Saputro is a senior policy analyst at Fiscal Policy Agency, Indonesian Ministry of Finance.
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