The Indonesia-Australia Agreement Signed

The Free Trade Agreement just signed with Indonesia has been billed as a win-win for both nations, with Australia set to profit from lower import tariffs and greater market access.


After years of negotiation, lawmakers in the Indonesian parliament officially ratified the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) last week. It has been described as opening opportunities for economic growth in both countries. The Australian parliament ratified the deal back in November 2019.

Indonesian President Joko Widodo (“Jokowi”) then flew to Canberra to sign the trade agreement with Prime Minister Scott Morrison and delivered a speech to parliament. The speech came after Mr Morrison hosted the president for a private dinner at The Lodge on Sunday, in an effort to demonstrate how important he considers a close relationship with the nation, which is one of the fastest growing in the Indo-Pacific and our 13th largest trading partner.

The Indonesian PM told the Australian Parliament that his country’s economy would be the fourth largest in the world by 2050 – by which time he expects its middle class to have become the globe’s third largest. In his meeting with the Australian PM, Jokowi argued for free and fair trade, both bilaterally and regionally, in the face of increasing protectionism.

It’s expected that under the deal Australian businesses will profit from lower import tariffs and greater market access – increasing the competitiveness of local exports and boosting Aussie ownership of companies based in Indonesia. The FTA will eliminate tariffs on 99% of Australian goods imported into Indonesia, while also simplifying paperwork for Australian exporters by guaranteeing the automatic issue of import permits for live cattle, frozen beef, sheep meat, and other key exports.

The size of Indonesia’s consumer market explains why Australian industries have been so supportive of the new trade deal. Food consumption in Indonesia is predicted to have quadrupled by 2050. The agreement provides cattle, beef, grains, sheep meat, dairy, sugar, horticulture and a range of other commodities with significant new export opportunities.

The South-East Asian country is the world’s most populous Muslim nation and recorded a gross domestic product of more $1.5 trillion in 2018, according to the World Bank.

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