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Indonesia-Australia Comprehensive Economic Partnership Agreement

Indonesia-Australia Comprehensive Economic Partnership Agreement

Indonesian Foreign Affairs Minister Retno Marsudi informed that IA-CEPA negotiations between both nations are now completed for about 90 percent. Several issues that still need to be agreed upon include cooperation in the field of education as well as the extension of tourism and work visas. To finalize these issues the Indonesian government will invite the Australian prime minister for a meeting in Indonesia in April 2018.

Marsudi is optimistic that the content of the IA-CEPA can be fully agreed upon by both sides in April 2018 and be signed before the end of 2018. However, Marsudi emphasized that Indonesia is in no hurry to sign the free trade agreement as the most important matter is that both nations will fully benefit from the agreement. This requires some careful thought. Originally, negotiations were planned to conclude in November 2017. However, both countries failed to reach an agreement on several issues.

Over the last couple of years Indonesian exports to Australia have actually been falling gradually. Based on data from Statistics Indonesia (BPS), non-oil gas exports to its distant neighbor fell to USD $1.9 billion in 2017 from USD $3.7 billion in 2014.

Last Saturday (17/03) President Widodo stated – at the ASEAN-Australia Special Summit 2018 in the International Convention Center in Sydney – that “the world’s axis of the economy is currently shifting from the Atlantic to the Pacific, with the highest economic growth now in the Asia-Pacific. And who is right in the middle of the Asia Pacific? ASEAN.” Widodo also signaled that he wants Australia to become a full member of ASEAN as it would improve the region’s economic and political stability. Currently, Australia is a dialogue partner of ASEAN.

Talks about the IA-CEPA were resumed in May 2016 after being put on hold amid a period of severe diplomatic tensions between Indonesia and Australia, involving the “2013 spy-scandal”, the execution of two Australian citizens in Indonesia, Indonesia‘s suddenly changing cattle trade policies, and the tough asylum-seeker policies of Australia.

Recent Diplomatic Tensions AustraliaIndonesia

• The “2013 spying scandal” occurred in 2013 when allegations were made that the Australian Signals Directorate, which is an intelligence agency in the Australian Government Department of Defense, attempted to monitor activity on the mobile phones of then-President Susilo Bambang Yudhoyono, his wife and several senior government officials.

• Another major diplomatic fallout occurred when – despite Australia‘s pleas for clemency – Indonesia executed two Australian citizens (members of the so-called “Bali Nine” drug trafficking ring) in May 2015.

• In mid-2015 Australian live cattle exporters objected strongly when Indonesia imposed barriers on cattle imports from Australia, slashing total cattle imports by 80 percent. The Indonesian government made this move in a bid to enhance self-sufficiency in beef. However, the decision actually led to soaring local beef prices and good gains for the so-called “beef mafia” (which refers to certain groups that deliberately hold on to the beef supply in order to let prices raise before selling beef).

• In early 2016 Indonesian officials said Australia is not doing enough to help refugees in the Asia-Pacific region.

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