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U.S. hopes Obama trip will boost trade with Indonesia

By Doug Palmer

WASHINGTON (Reuters) - The United States hopes President Barack Obama's visit next week to Indonesia will help spur reforms that boost trade with Southeast Asia's largest economy and the world's fourth most populous nation.

"Economic nationalism, regulatory uncertainty and unresolved investment disputes give pause to American companies seeking to do business in Indonesia," U.S. Secretary of Commerce Gary Locke said in a speech on Wednesday.

To increase trade, "it's incumbent upon Indonesia to make market-oriented reforms that will make it a more attractive market, not just for U.S. companies but companies all around the world," Locke said.

"Growing trade with Indonesia is a piece of the president's broader plan to create jobs here at home by growing market access overseas."

Obama is returning to the country where he spent part of his youth for talks in Jakarta with President Susilo Bambang Yudhoyono and a stop in Bali to meet civil society groups and urge further progress on democracy.

Indonesia -- a majority Muslim nation of 230 million people -- and the United States are expected to sign a "comprehensive partnership" agreement, which Locke said would be a "blueprint for cooperation on a whole host of issues."

Two-way trade between the United States and Indonesia was just $18 billion last year, a tiny chunk of the $788 billion in trade the United States did with all Pacific Rim countries in 2009.

"In fact, Indonesia does less trade with the United States than some of its smaller, less populous ASEAN (Association of Southeast Asian Nations) neighbors like Singapore, Malaysia and Thailand," said Locke, who will be leading a clean energy trade mission to Indonesia in May.

The United States exported $5.1 billion of goods last year to Indonesia, led by civilian aircraft and farm goods such as soybeans, animal feeds and cotton.

CHINESE PREMIER TO VISIT

U.S. imports from Indonesia were just $12.9 billion last year, included clothing and textile goods, furniture, electronics, computer accessories and coffee.

Chinese Premier Wen Jiabao will visit Indonesia just weeks after Obama but Locke downplayed the idea that the back-to-back trips were a demonstration of Washington and Beijing vying for influence.

"I don't think these visits in any way were set up to compete against each other," Locke said.

But Ernie Bower, director for Southeast Asia at the Center for Strategic and International Studies, said he did see a healthy competition between the United States and China for "hearts, minds and markets" in Southeast Asia.

China "really picked up its game" in Indonesia with help it provided during the Asian financial crisis in the late 1990s and Obama's trip helps set the stage for more U.S. involvement in a strategically important region, Bower said.

But Indonesia has a long way to go before it is ready to join a proposed regional free trade agreement with the United States, said Mark Orgill, manager for Indonesia at the U.S.-ASEAN Business Council.

A much less ambitious trade deal between ASEAN and China already has raised concerns among Indonesia's manufacturers, Orgill said.

The United States began talks this week on the proposed Transpacific Partnership pact with Australia, Chile, Singapore, New Zealand, Peru, Vietnam and Brunei. Two other ASEAN countries, Malaysia and Thailand, have expressed interest in joining the talks.

"Indonesia fights battles at home" over moves to open its market, Orgill said.

(Editing by John O'Callaghan)

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