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Cablegate: Ambassador and Trade Minister Speak On

VZCZCXRO7329
RR RUEHCHI RUEHDT RUEHHM
DE RUEHJA #2433/01 2471016
ZNR UUUUU ZZH
R 041016Z SEP 07
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 6062
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHBJ/AMEMBASSY BEIJING 4269
RUEHBY/AMEMBASSY CANBERRA 1104
RUEHDT/AMEMBASSY DILI 0867
RUEHUL/AMEMBASSY SEOUL 4164
RUEHKO/AMEMBASSY TOKYO 0732
RUEHHK/AMCONSUL HONG KONG 2367
RUEHJS/AMCONSUL SURABAYA 1921
RUEAIIA/CIA WASHDC
RUQODAZ/CARIBROC KEY WEST FL
RHHJJPI/PACOM IDHS HONOLULU HI
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 02 JAKARTA 002433

SIPDIS

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: N/A
TAGS: ETRD EINV ECON BEXP ID
SUBJECT: AMBASSADOR AND TRADE MINISTER SPEAK ON
U.S.-INDONESIAN TIES

REF: A. JAKARTA 2188

B. JAKARTA 2351

JAKARTA 00002433 001.2 OF 002


1. (U) SUMMARY: Ambassador Hume and Minister of Trade Mari
Pangestu made public remarks on U.S.-Indonesian relations
before an audience of Indonesian business leaders on August
30th. Ambassador Hume described a strategy for understanding
the broader U.S.-Indonesian relationship in the context of
three themes: reform, security and "connections." Pangestu
spoke positively of Indonesia's trade relationship with the
United States and called for increased bilateral trade
missions. Pangestu also expressed her views on prospects for
a Bilateral Investment Treaty (BIT) and outlined her
"building block" approach toward future negotiation of a
U.S.-Indonesian Free Trade Agreement. The remarks were made
during a reception hosted by the Indonesian Chamber of
Commerce and Industry (KADIN). END SUMMARY


Finding the Strategic Center
----------------------------

2. (U) Ambassador Hume outlined a framework for the
strategic relationship between the U.S. and Indonesia. He
described an approach centered on three themes: reform,
security and "connections," the last referring to Indonesia's
relationships both regionally and within the broader
international community (copy of the remarks submitted to
EAP-MTS). The Ambassador acknowledged the progress Indonesia
has made in the years since the advent of democracy, but
noted "there's still work to be done." He also discussed the
importance of security issues and affirmed U.S. commitment to
regional security cooperation. The Ambassador's speech
emphasized Indonesian responsibility for identifying and
implementing solutions to the challenges facing the country,
but promised continued U.S. commitment and engagement to
address these issues.


U.S.-Indonesia FTA: "The Building Block Approach"
--------------------------------------------- ----

3. (U) Dr. Pangestu referenced the recently published study
"Toward a U.S. Indonesian Free Trade Agreement" co-funded by
KADIN and the U.S. Chamber of Commerce and published by the
Peterson Institute for International Economics. She agreed
with the study's central conclusion: while an FTA between the
U.S. and Indonesia would be beneficial for both parties,
Indonesia would have difficulty complying with the investment
and intellectual property rights (IPR) provisions. Pangestu
outlined a "building block" strategy whereby Indonesia would
focus on achieving measurable progress in discrete areas
before negotiating a comprehensive trade agreement. Pangestu
affirmed her commitment to the U.S. Trade and Investment
Framework Agreement (TIFA) describing it as "a good way
forward," specifically citing the investment, services and
IPR working groups.


The BIT: It's Not You; It's Me
-------------------------------

4. (U) Pangestu was cautious about the prospects of
negotiating a Bilateral Investment Treaty (BIT). She
acknowledged the BIT's "very high standards" and declared
that Indonesia will "study in depth and explore" the issue
before entering into negotiations. Despite expressing
concerns about Indonesia's readiness to commit, she described
BIT negotiations as "a target to aim for" that would be
considered "stage by stage," beginning with commencement of
exploratory discussions.


How Do We Get There From Here?
------------------------------

JAKARTA 00002433 002.2 OF 002

5. (U) Pangestu argued that the investment relationship
between the U.S. and Indonesia must be developed "from both
sides" and encouraged KADIN to organize more trade missions
to the United States "beyond the usual stops to New York and
Washington." She complained that Indonesia has not yet seen
a substantial increase in U.S. investor interest as measured
by "actual, realized investment." Pangestu has been
impressed with international scholarship programs and
contended that large number of Indonesian students studying
in the U.S. "cements people to people relationships" and
strengthens trade and investment ties. Lastly, she cited
Indonesia's strong relationship with the U.S. Chamber of
Commerce and suggested Jakarta as the perfect home for their
new Asian headquarters.
HUME

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