The Australian Government has announced that it has reached agreement with Indonesia regarding the terms of a bi-lateral free trade agreement. The text of the agreement is yet to be released, but the expected benefits will primarily be better access to Indonesia for Australian exporters of goods and services.
The benefit of the Free Trade Agreement (FTA) for Australian importers will be lessened due to the existence of the ASEAN FTA under which most exports from Indonesia already enter Australia duty free. Under the ASEAN FTA there are currently about 190 tariff lines that attract duty until the end of 2019 and then are duty from 2020. Most of these items are textile products. If the Indonesia FTA commences at the start of 2019, a complete duty free outcome will be achieved a year earlier than would otherwise have been the case.
The main benefit from an import perspective would come in the form of relaxed certification requirements. At this stage DFAT is reporting “Improvements in administrative procedures for exporters and importers to facilitate goods trade“. However, DFAT has not stated whether this new FTA will allow origin self-certification.
From an export perspective, the biggest wins are around live cattle, frozen beef, sheep meat, feed grains, sugar, dairy, citrus, vegetables, steel and copper. The improvements come not only in the form of reduced tariffs but the guaranteed automatic issuing of import permits.
At this stage the terms of the FTA have been agreed, but the document has not been finalised, translated and signed. It is expected that this will occur by the end of the year. Given the parliamentary review process that will need to take place in respect of the finalised and signed document, implementation in mid-2019 seems most likely.
Source: FTA / Hunt and Hunt
