Indonesia-Australia Comprehensive Economic Partnership Agreement: Outcomes
Key outcomes for Australia
Building on the ASEAN-Australia-New Zealand Free Trade Agreement, IA-CEPA will provide better and more certain access to the Indonesian market for Australian exporters.
Over 99% of Australian goods exports by value to Indonesia will enter duty free or under significantly improved preferential arrangements by 2020 (compared with 85% under AANZFTA).
Indonesia will issue import permits automatically and without seasonality for key products such as live cattle, frozen beef, sheep meat, feed grains, rolled steel coil, citrus products, carrots and potatoes (import licences are a major irritant for many Australian exporters into Indonesia)
|Product||Treatment at entry into force||Longer term outcome|
|Live male cattle||Duty free (from 5% tariff) access for 575,000 cattle in year one||4% annual growth in volume reaching 700,000 by year 6.
A review for subsequent increases
|Frozen beef||Tariff cut to 2.5% (from 5%) and access for unlimited volume||Elimination of tariff after 5 years|
|Sheep meat||Tariff cut to 2.5% (from 5%) and access for unlimited volume||Elimination of tariff after 5 years|
|Feed grains||Duty free access for 500,000 tonnes in year one||5% annual growth in volume thereafter|
|Sugar||Locked in 2017 "early outcome" of reduction of tariff to 5%||Ongoing|
|Dairy||Elimination or reduction of tariffs across a number of dairy lines||Removal of all remaining tariffs on dairy lines|
|Citrus||Mandarins – tariff cut to 10% (from 25%) for 7,500 tonnes per year||Tariff reduced to 0% over 20 years. Duty free access for unlimited volume thereafter.|
|Oranges – duty free access for 10,000 tonnes in year one.||5% annual growth in volume thereafter|
|Lemons – duty free access for 5,000 tonnes in year one||2.5% annual growth in volume thereafter|
|Vegetables||Potatoes – tariff cut to 10% (from 25%) for 10,000 tonnes per year for five years||After five years, 5% tariff for 12,500 tonnes per year
2.5% annual growth in volume thereafter
|Carrots – tariff cut to 10% (from 25%) for 5,000 tonnes per year||Tariff progressively reduced to 0% over 15 years.
Unlimited volume permitted at 0 tariff after that
|Hot and cold rolled steel coil||Duty free access (from between 2.5% to 11.25%) for 250,000 tonnes in year one||5% annual growth in volume thereafter|
|Copper cathodes||Tariff eliminated|
Goods – other key outcomes
Trade facilitation - Improvements in administrative procedures for exporters and importers to facilitate goods trade
Non-tariff measures - Dedicated chapter on non-tariff measures (NTMs) with bilateral co-operative mechanism enabling regular discussion of NTMs – a first for an Australian FTA
Services and investment
Market access outcomes on services and investment will provide increased certainty to Australian businesses and services suppliers in the Indonesian market, including guaranteed levels of Australian ownership. Indonesia's commitments are much stronger than they have ever agreed to before in a trade agreement. Indonesia will not be able to limit the level of Australian ownership – or require that ownership be divested – below the percentages agreed (with limited exceptions).
IA-CEPA also contains a set of high-quality, modern rules governing the treatment of services and investment, as well as modern rules on digital trade.
Obligations are balanced with robust safeguards to preserve Australia's right to regulate in the public interest.
|Sector||New level of binding for market access|
|Work training||Australian ownership up to 67% for supplying certain technical and vocational training|
|University education||Automatically locks in future liberalisation for Australian universities setting up in Indonesia – Indonesia intends to open its higher education sector further in the future|
|Mining and related services||Australian ownership up to 67% of contract mining services and mine site preparation services|
|Hospitals and in-hospital pathology, paramedic and specialist medical and dental clinics||Australian ownership up to 67% of large hospitals and, within large hospitals, up to 67 per cent of pathology, paramedic and medical and dental specialist clinic services. No geographic limitations|
|Aged care services||Australian ownership up to 67% of aged care facilities|
|Telecommunications||Australian ownership up to 67% of telecommunications|
|Tourism||100% Australian ownership for 3, 4 and 5 star hotels and resorts, no geographical limits; 67% Australian ownership of most other accommodation, restaurants, cafes and bars, as well as tour operator services and tourism consultancy services; 51% marinas.|
|Professional services||Australian ownership up to 67% of architectural, urban planning and most engineering and surveying services|
|Construction services||Australians ownership up to 67 % most construction-related work|
|Energy||Indonesia committed to allow Australian ownership up to:
|Wastewater management||Australians ownership up to 67% of wastewater management|
|Transport||Australian ownership up to 67% for highways, bridges, tunnel concessions and parking services and 51% for operation of railways|
Key outcomes for Indonesia
Building on the ASEAN-Australia-New Zealand Free Trade Agreement, Australia will immediately eliminate all remaining tariffs on Indonesian imports into Australia.
In response to a specific Indonesian request, Australia has provided the most liberal origin requirements for Indonesian electric motor vehicles of any Australian trade agreement.
Services and investment
Australia's services and investment commitments in IA-CEPA lock in Australia's existing open policy settings, similar to those in other trade agreements. These commitments include exceptions that preserve policy flexibility in sensitive areas such as:
- public health and education
- social services
- culture and broadcasting
- indigenous policy
- maritime transport.
Indonesian investment in Australia will be subject to Australia's foreign investment policy, including screening by the Foreign Investment Review Board.
As part of an overall skills package, Australia and Indonesia have agreed to a reciprocal Skills Exchange, allowing people with staff tertiary level skill qualifications from both countries to gain 6 months experience in the other's market.
Australia has also committed to allow up to 200 Indonesians per year to engage in 6 month work training opportunities in Australia – this will help build the capacity of Indonesia's workforce in key sectors, including those of interest to Australian investors.
Indonesia will also receive an increase in the number of Australian work and holiday visas (from 1000 today to 4100 in year one, growing to 5000 over six years). This will provide useful work experience for young Indonesians as well as assist regional Australia to meet seasonal labour requirements.
IA-CEPA includes a new $40 million, five-year Economic Cooperation Program (ECP).
The ECP is designed to unlock the vast potential of the bilateral economic relationship between Australia and Indonesia. The overarching goal is to maximise the benefits of IA-CEPA, support two-way trade and investment, improve market access, and promote inclusive economic growth in Indonesia for the mutual benefit of both countries.
In particular, the ECP will support IA-CEPA implementation in three priority sectors: Agrifood, Advanced Manufacturing and Services (skills). This will involve delivering multi-year activities to achieve three key outcomes around greater market access; better integrated markets; and enhanced skills.
Proposed initial multi-year activity areas are:
This is the ‘core business’ of the ECP. Delivering and sustaining full implementation of IA-CEPA commitments will bolster Indonesia’s trade and investment and will require sustained engagement with officials, socialisation of outcomes, and assessing potential sectors for deeper engagement over time.
Opportunities to strengthen new areas of partnership between Australia and Indonesia will also be explored through feasibility studies in areas such as strengthening linkages between Indonesian digital services firms and Australian capital markets
Agrifood Innovation Partnerships
Commencing with a new Grains Partnership, the ECP will support deeper industry engagement on grains for food (with a view to innovation in Indonesia and third markets) and feed (for a more efficient and productive farming sector in Indonesia, with enhanced animal health outcomes).
Further sectoral Agrifood Innovation Partnerships are planned as part of ECP in future years, including in other sectors where significant opportunities exist such as horticulture.
Powering advanced manufacturing
With an early focus on electric batteries and resource inputs to power Indonesia’s planned electric vehicle program, the ECP will support closer collaboration and new opportunities for partnership between Australia and Indonesia in advanced manufacturing.
This will be pursued through a new mechanism for engagement between peak bodies, leading firms and government agencies to scope opportunities and support the standards and conformance ecosystem in advanced manufacturing.
Co-investing in skills and training
Supporting closer economic partnership between Indonesian industry and Australian TVET providers through Industry Committees in priority skills sectors and a skills ‘clearinghouse’ mechanism.
The activity will support a range of training delivery models (blended online-offline, train-the-trainer and online training) driven by Industry Committees, commencing with tourism, agriculture and digital services, with later potential expansion into health professionals, advanced manufacturing, construction, creative economy and social services subject to available resources and commercially viable training opportunities. A partnership to bolster the participation of women in TVET in Indonesia will also support female workforce participation.
Business opportunities: IA-CEPA Economic Cooperation Program (ECP) — Investment Design