Administration Indicates It Will Continue Indonesia’s Preferential Trade Treatment : Asia: Move puts U.S. in a diplomatic minefield as it tries to foster human rights.

In the midst of a full-drawn campaign to boost the United States’ economic clout in Asia, the Clinton Administration stepped gingerly Monday through the minefield of human rights in a growing, $3-billion market, indicating that it will continue Indonesia’s preferential trade treatment.

Treasury Secretary Lloyd Bentsen, embarking on a weeklong visit to Indonesia, Thailand and China, said he urged President Suharto in a private meeting to relax quickly his opposition to expanding Indonesia’s extremely limited labor rights.

Using cautious language about a nation where, human rights monitors say, labor organizers have been jailed and beaten by soldiers, and where the military has intimidated labor negotiators, Bentsen said, “We’re seeing progress take place in Indonesia; we hope for more.”

Officials made it clear that President Clinton, who is scheduled to visit Indonesia next fall for a meeting of the Asia-Pacific Economic Cooperation forum, is unlikely to come down hard on Indonesia and remove the duty-free treatment given to its exports to the United States--a step that would be likely to prompt retaliation and would sour U.S. ties with an important and growing customer.

Rather, they said, a temporary extension of the preferential treatment is the almost-certain course.

At issue is more than protection of human rights in general and the rights of workers in particular to organize unions, important as those matters may be. With a growth rate over the last two decades that far outpaces that of the West--it ranged from 5.5% to 7% a year for each of the past five years--Indonesia exemplifies the economic explosion occurring in the developing nations of Asia, among the fastest-growing and most competitive markets in the world.

Thus, the debate brings into potential conflict the moral leadership traditionally assumed by Washington, Clinton’s own commitment to human rights and the politically important role that trade with Asia can play in building job-creating exports for the United States.

It is a debate that will be continued when Bentsen arrives later in the week in China, where Clinton is under pressure to remove the trade benefits he extended for a year last June unless progress is demonstrated on a wide range of human rights issues.

The issue is coming to a head in Jakarta because the White House must decide by Feb. 15 whether to continue the duty-free status given to many of Indonesia’s exports under the trade provisions known as the Generalized System of Preferences. Indonesia is expected to present details of its case to officials in Washington on Thursday.

Last June, Jakarta was given an eight-month extension, under an annual review conducted by the federal government, after the Administration said it was “very seriously concerned” because Indonesia did not conform to internationally accepted labor rights. Across the 3,500-mile chain of islands that make up Indonesia, there is one government-sanctioned labor union.

In issuing the extension in June, U.S. Trade Representative Mickey Kantor said the export benefits would be in “serious jeopardy” if Jakarta could not demonstrate “substantial concrete progress.”