Indonesia minister: U.S. drops nuclear reactor and South China Sea articles from trade agreement

Indonesia minister: U.S. drops nuclear reactor and South China Sea articles from trade agreement

Indonesia Minister: U.S. Drops Nuclear Reactor and South China Sea Articles from Trade Agreement

Indonesia’s foreign minister confirmed that the U.S. has removed contentious provisions related to nuclear reactor exports and South China Sea (SCS) cooperation from the bilateral trade agreement under negotiation, according to reports from ASEAN summit discussions. The revisions follow prolonged tensions over U.S. demands for Indonesia to align its policies with Washington’s strategic priorities.

The U.S. had previously sought to include clauses requiring Indonesia to lift restrictions on raw mineral exports—critical for nuclear reactor components—and to formalize joint SCS maritime cooperation with China. However, Jakarta has resisted these measures, citing concerns over economic sovereignty and legal ambiguities. Indonesia’s foreign ministry reiterated that it does not recognize China’s territorial claims in the SCS and maintains no overlapping jurisdiction with Beijing. According to Reuters, Indonesia has no overlapping claims in the SCS.

The nuclear reactor provision was reportedly linked to U.S. export control policies, which have recently suspended licenses for nuclear equipment suppliers like Westinghouse and Emerson to sell to China. Reuters reports that the U.S. has suspended such licenses.

While the U.S. has imposed broad export restrictions on China, Indonesia’s refusal to open its mineral markets to the U.S. has complicated trade negotiations.

The revised agreement now focuses on reciprocal tariff reductions, with the U.S. lowering its “reciprocal tariff” on Indonesian goods to 19% from 32%, while Indonesia commits to reducing non-tariff barriers for U.S. imports. A Diplomat analysis claims the agreement is at risk of collapse.

However, U.S. officials have criticized Jakarta for delaying implementation of these commitments, raising concerns about the deal’s viability.

Indonesia’s foreign minister emphasized that the revised terms prioritize economic cooperation over geopolitical entanglements, aligning with ASEAN’s broader goal of maintaining regional stability without favoring major powers. According to reports, this reflects Indonesia’s balancing act between U.S. strategic demands and its own economic and sovereignty concerns.

The final agreement remains under negotiation, with both sides seeking to reconcile trade benefits with geopolitical sensitivities. Investors should monitor developments, as the deal’s structure could influence Southeast Asia’s integration into U.S. supply chains and its stance on SCS disputes. East Asia Forum analysis suggests this could reshape regional dynamics.