INDONESIA-AUSTRALIA Comprehensive Economic Partnership Agreement

Fact Sheet

The Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA)

creates the framework for a new era of closer economic engagement between Australia
and Indonesia and opens new markets and opportunities for businesses, primary
producers, service providers and investors. IA-CEPA is a comprehensive agreement,
building on existing multilateral and regional agreements including the ASEAN-Australia-
New Zealand Free Trade Agreement (AANZFTA). This agreement is necessary, supported
by the fact that total of trade between Indonesia and Australia is 8.645 billion USD in 2018.

Country: Republic of Indonesia Country: Commonwealth of Australia

Population: 261 million people Population: 25 million

GDP: 1.042 trillion USD
Exports to Australia: 1.072 billion USD
Major Australian Export: Crude
Petroleum, Coal, Wheat, Live Animals
GDP: 1.432 trillion USD
Exports to Indonesia: 2.611 billion USD
Major Indonesian Export: Crude
Petroleum, Refined Petroleum, Tobacco,
Wood

Timeline of the Agreement

Agreement Establishing the Australian and Indonesian

ASEAN-Australia-New Trade Minister signed IA-
Zealand Free Trade Area CEPA
2010

2009 2019
Commencement of the
Negotiation of IA-CEPA

Authored by Reynard Kristian

Scope and Coverage

 Trade in Goods
 Trade in Services
 Customs Procedures
 Trade Facilitation
 Non-Tariff Measures
 Investment
 Economic Cooperation
 Movement of Natural Persons
 Other issues (Electronic Commerce; Competition Policy; Financial Services;
Telecommunications; Sanitary and Phytosanitary Measures; and any other issues
which take into account new and emerging issues relevant to business realities)
 Institutional and Framework Provisions (Transparency; General Provisions and
Exceptions; Institutional Provisions; Dispute Settlement Procedures; Final
Provisions).
Key Outcomes for Indonesia

 Australia will immediately eliminate all remaining tariffs on Indonesian imports

into Australia.
 There are exceptions of Australia’s services and investment commitments in sensitive
areas such as: (a) public health and education; (b) social services; (c) culture and
broadcasting; (d) indigenous policy; (e) maritime transport.
 Indonesian investment in Australia will be subject to Australia's foreign
investment policy, including screening by the Foreign Investment Review Board.
 Australia and Indonesia have agreed to a reciprocal Skills Exchange, allowing
people with tertiary level skill qualifications from both countries to gain 6 months
experience in the other's market.
 Indonesia will 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 framework for trade and investment-related cooperation
through a jointly-funded work program. The joint work program will support
technical assistance and capacity building activities across a range of trade-related
areas to strengthen commercial links and help stimulate two-way investment.

Authored by Reynard Kristian

Key Outcomes for Australia

 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 guarantee automatic issue of import permits 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).
 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.

 Increased certainty to Australian businesses and services suppliers in the

Indonesian market, including guaranteed levels of Australian ownership.

 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.

Sources

https://data.worldbank.org
https://dfat.gov.au/trade/agreements/not-yet-in-force/iacepa/Pages/indonesia-
australia-comprehensive-economic-partnership-agreement.aspx
https://www.kemendag.go.id/id/economic-profile/indonesia-export-import/balance-of-
trade-with-trade-partner-country?negara=311
https://www.nortonrosefulbright.com/en/knowledge/publications/e9bcbc8b/indonesia-
and-australia-finalise-ia-cepa-indonesia-australia-comprehensive-economic-partnership-
agreement

Authored by Reynard Kristian