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

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

Queensland’s merchandise exports to Indonesia (calendar year 2010) were $1.2 billion. Export products included:

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

Copper (HS Chapter 74)

Cotton (HS Chapter 52)

Machinery and mechanical appliances (HS Chapter 84)

Beef (HS Heading 0201-0202)

Aluminium and articles thereof (HS Chapter 76)

Fertilisers (HS Chapter 31)

Wheat (HS Heading 1001)

Live animals – cattle (HS Heading 0102)

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

Residues and waste of food; Prepared animal fodder (HS Chapter 23)

2. Trade in Services Opportunities for Queensland

CASE STUDY – QUEENSLAND COTTON

Owned by Olam International Pty Ltd, Queensland Cotton is a Brisbane-based company, and a major supplier of premium cotton to the world's textile markets. Queensland Cotton markets cotton to all major consuming markets including China, Indonesia, Japan, Thailand, Republic of Korea, Vietnam, Malaysia, Taiwan, Italy, Turkey, Pakistan and India.

The company provides services to all stages of the cotton industry supply chain, including sourcing cotton from growers, running ginning operations for more than 800,000 bales, classing, warehousing and shipping, risk management and marketing services.

With operations in Australia, the United States and Brazil, Queensland Cotton is able to source cotton from premium cotton growing regions of both northern and southern hemispheres. This enables Queensland Cotton to deliver a quality product to the global market year-round.

When AANZFTA enters into force for Indonesia, tariffs on Australian cotton exported by Queensland Cotton will be bound at zero from entry-into-force.

1. January – September 2010 figure