Today in Jakarta, I will sign the historic Indonesia-Australia Comprehensive Economic Partnership Agreement, commonly known as IA-CEPA.
The deal marks a new chapter in Australia’s partnership with one of our closest friends and neighbours. Indonesia offers significant economic opportunities right on our doorstep. Our neighbour has one of the fastest-growing economies in the world, averaging five per cent growth over the past two decades.
Most predictions have Indonesia on track to be the world’s fifth-largest economy by 2030. With a population of 270 million people – an expanding middle-class – the world’s third-largest democracy and most populous Muslim nation – our agreement with Indonesia helps build economic prosperity for both our nations and the region.
However, IA-CEPA is more than just a trade agreement. It adds another bow to our already strong economic, security and strategic partnerships with Indonesia. We had the breakthrough signing of a security treaty back in 1995, the bilateral Framework for Security Co-operation in 2005 and the Comprehensive Strategic Partnership on 31 August last year.
The economic scope and coverage of IA-CEPA is comprehensive and should not be understated. The deal will ensure that 99 per cent of Australian goods exports by value to Indonesia will enter duty free or under significantly improved preferential arrangements.
For Australian farmers, IA-CEPA will provide better and more stable access to the Indonesian market for many products, including grains, meat, citrus and horticultural products.
It will also support Australian manufacturing in areas such as steel, copper and plastics.
Importantly, IA-CEPA will establish better mechanisms for Australia to address technical market issues and non-tariff barriers – important for traders as traditional tariff barriers are progressively removed.
IA-CEPA also contains strong outcomes for Australian investors and service providers in areas such as vocational education and training, health, tourism and mining services. It also provides a set of high-quality rules governing the treatment of services and investment, as well as modern rules on digital trade.
The mutual benefits that will be derived from this agreement are critical. Australia wants not only a stronger Australia but also a stronger Indonesia, knowing that economic growth enhances security and stability. By reducing trade barriers we can grow both of our economies and by encouraging trade and investment in areas of high potential for Indonesia we can build greater capacity for their continued successful development.
This agreement with Indonesia is the latest in a long list of free trade agreements signed by our government over the past five years under our government. Agreements with China, South Korea, Japan and the recent Trans-Pacific Partnership, now means total trade covered by free trade agreements has increased from 26 per cent to around 70 per cent.
These agreements have been a major reason why Australia continues to successfully navigate very challenging global trading conditions, which saw us record 12 monthly trade surpluses last year, and 22 in the last 24 months. 2018 was also the first calendar year since 1972 where every month was in surplus – the first time in 46 years.
This is in stark contrast to Labor who failed to start and conclude a free trade agreement whilst they were in government.
Trade continues to play a critical role in our continued economic success, directly employing 1 in 5 Australians and having contributed over one-quarter of Australia’s economic growth over the past five years.
And while this is significant, today is a day to celebrate the start of a new chapter in the Australia-Indonesia relationship, and one that will have long-lasting benefits by strengthening both our economies, our strategic ties, two-way investment flows and also ultimately boosting the prosperity of both our nations.