Australia’s free trade deal with Indonesia will finally kick in on July 5, providing a welcome boost for exporters amid the coronavirus-induced economic downturn.
Some 15 years after negotiations first began, Indonesian officials have completed the formal ratification of the agreement. It was given the green light in Canberra in December and Indonesian MPs finally signed the deal into law in February, just in time for President Joko Widodo’s historic visit to Australia.
The Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA), which was signed-off on in March 2019, will cover 18 billion Australian dollars (11.74 billion U.S. dollars) in agriculture, education and health services between the two countries.
Australian Trade Minister Simon Birmingham on Thursday announced that it will come into force on July 5, and provide a boost to both economies amid the coronavirus pandemic.
Under the deal 99 percent of Australian goods will enter Indonesia either duty-free or under improved arrangements.
“This is the most comprehensive bilateral trade agreement Indonesia has ever signed, and will give a competitive edge to Australian exporters, particularly at a time when many are doing it tough as a result of the COVID-19 crisis,” Birmingham told Nine Entertainment newspapers.
“The economic stresses being caused by COVID-19 in both Australia and Indonesia make this agreement even more important, as it will provide an opportunity to better stimulate growth and investment across both nations during the recovery phase.”
Tariffs on frozen beef and sheep meat exported to Indonesia will be halved to 2.5 percent and Australian grain growers will have annual duty-free access for 500,000 tonnes of wheat, barley and sorghum every year.
Tariffs will eventually be lifted on all Australian dairy products while providers in the educational, tourism, transport, telecommunications, energy, health and aged care services will have improved access to the Indonesian market.
“This agreement locks in bilateral trade and investment so that as Indonesia’s economy grows, Australia prospers,” said Jennifer Westacott, chief executive of the Business Council of Australia.
“This agreement will help diversify Australia’s trade and strengthen our economic and cultural relationship with one of our closest and largest neighbors.” Enditem