ASEAN-Australia-New Zealand FTA: Indonesia entry-into-force: Impact for New South Wales

18 November 2011

The Agreement Establishing the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA) will enter into force for Indonesia on 10 January 2012. At that time, AANZFTA will be in force for all 12 signatories to the agreement.

Entry-into-force of AANZFTA for Indonesia will benefit both Australia and Indonesia. Tariffs on a wide range of Australian exports to Indonesia will reduce to zero, improving market access opportunities for Australian exporters (see section 1 below). Indonesia will also bind existing levels of market openness in various services sectors, providing greater certainty for Australian exporters and investors (see section 2 below). Many existing Indonesian exports to Australia are currently paying tariffs and for most of these products Indonesia will receive duty-free treatment from entry-into-force of AANZFTA between our two countries.

Australia and Indonesia are the two largest economies in AANZFTA. Total goods and services trade between Australia and Indonesia stood at $12.9 billion in 2010, making Indonesia our 12th largest trading partner globally and fourth largest trading partner in ASEAN. AANZFTA’s entry-into-force for Indonesia presents an opportunity to grow further our trade and investment relationship.

The Australian Prime Minister and Indonesian President launched the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) negotiations in November 2010. The IA-CEPA will build on AANZFTA and further strengthen the bilateral economic relationship. In taking the IA-CEPA negotiations forward, the Department of Foreign Affairs and Trade welcomes submissions on issues relating to Australia’s trade, investment and economic cooperation with Indonesia (email to ia-cepa@dfat.gov.au). IA-CEPA developments can be followed at http://www.dfat.gov.au/fta/iacepa/index.html.

1. Trade in Goods

New South Wales merchandise exports to Indonesia (calendar year 2010) were $802 million. Export products included:

The following analysis summarises tariff outcomes for access to Indonesia under AANZFTA for some of the products of export interest to New South Wales.

Wheat (HS Heading 1001)

Aluminium and articles thereof (HS Chapter 76)

Cotton (HS Chapter 52)

Iron and steel and articles thereof (HS Chapters 72-73)

Machinery and mechanical appliances (HS Chapter 84)

Beef (HS Heading 0201-0202)

Products of the milling industry (HS Chapter 11)

Fertilisers (HS Chapter 31)

Pharmaceutical products (HS Heading 3003-3004)

2. Trade in Services Opportunities for New South Wales

CASE STUDY – WIRE MESH INDUSTRIES

Wire Mesh Industries is a Sydney-based company, manufacturing and supplying knitted, welded and woven wire mesh products.

Products include automotive components, mist eliminators, sieves and screens.

These products are supplied to the automotive, defence, mineral and resource sectors, petrochemical refining, engineering, manufacturing, building and construction and insulation industries.

Wire Mesh Industries exports to a range of markets including Singapore, Malaysia, Indonesia, Thailand, New Zealand, Papua New Guinea, China and Romania as well as supplying all States and Territories within Australia.

On entry-into-force of AANZFTA for Indonesia, 5% tariffs on woven stainless steel cloth will be eliminated.