Australia and Indonesia have tonight signed an historic free trade agreement – a sign of thawing diplomatic ties and better access for Australian farmers.
The free trade agreement is key to both Australian and Indonesian agriculture, unlocking more opportunities for the red meat, wheat, grains, dairy, sugar and horticulture industries.
PM Scott Morrison was accompanied to Indonesia on Friday 31 August by the new Minister for Trade Simon Birmingham and National Farmers’ Federation president Fiona Simson.
“By making my first overseas visit as Prime Minister to Indonesia, I want to make a clear statement about the importance of our relationship, and the commitment of my government to deepening our economic and security co-operation,” Mr Morrison said.
— Scott Morrison (@ScottMorrisonMP) August 31, 2018
Australia exported around $3.5 billion worth of agricultural goods to Indonesia in 2017, almost half (49.5%) of our total exports to Indonesia.
The signing of the document means that over 99 per cent of Australian goods exported to Indonesia will enter duty free or under significantly improved preferential arrangements.
The agreement will improve access to the Indonesian market for key agricultural products and help Australian farmers gain a greater share of this important market.
According to National Farmers’ Federation President Fiona Simson, the agreement ensures Australian farm exporters can contribute to Indonesia’s economic growth by providing high quality food and fibre to Indonesian consumers.
The agreement creates new opportunities for Australian farmers and Indonesian processors to partner in exporting to the world
Indonesia is Australia’s biggest wheat consumer with Australia exporting nearly a quarter of all of its wheat to Indonesia. That’s over $1.2 billion on average each year.
Trade talks with Indonesia were reignited in 2015 following a long hiatus.
The agreement follows significant efforts by Prime Minister Malcom Turnbull, cultivating strong ties between himself and President Joko Widodo.
Mr Morrison deciding to proceed with the scheduled signing after being sworn in as Prime Minister a week ago.
The new PM says the deal will further strengthen the $16.5 billion relationship Australia has with Indonesia, our 13 largest trade partner.
“We have been ably led by the committed diplomacy of the Coalition Government, including former Trade Minister Steven Ciobo,” said Ms Simson.
Ms Simson said the enhanced trading arrangements were welcome news for farmers, many of whom were struggling with drought.
“About 70 per cent of Australian food and fibre produce is exported.”
Expanded market access in existing markets and the establishment of new exports, ultimately means more money in the pockets of our farmers.
Agricultural exports to Indonesia are valued at $2.4 billion, while petroleum and manufactured goods are also in strong demand.
Issues covered in the agreement will include investment opportunities for businesses, service providers and primary producers as well as market access, rules of origin and removal of export barriers.
“Opening international markets is critical to agriculture’s aim to reach a production value of $100 billion by 2030. It locks in trade opportunities and provide the market certainty needed to help reach that target,” Ms Simson said.
Key agricultural outcomes will include:
- Duty free access for 575,000 head of live male cattle per year, growing at 4 per cent per year
- Remaining tariffs on all Australian exports of frozen beef and sheepmeat into Indonesia reduced to 2.5% immediately, and eliminated after 5 years
- Guaranteed duty free access for 500,000 tonnes of feed grains per year (wheat, barley, sorghum), increasing at 5% per year
- Reducing the tariff on Australian sugar to 5% (from 8-12%)
- Immediate elimination of 5% tariff for milk and cream as well as for grated or powdered cheese, of all kinds.