Indonesia–Australia Comprehensive Economic Partnership Agreement

The Indonesia–Australia Comprehensive Economic Partnership Agreement (IA-CEPA) is a bilateral agreement signed between Australia and Indonesia in March 2019, ratified by Australia in November 2019 and Indonesia in February 2020. The agreement contains a free trade agreement removing tariffs from nearly all products traded between both countries, in addition to loosening investment regulations in Indonesia for Australian firms and increasing the quota for Indonesians seeking vocational training in Australia.

Trade ministers Simon Birmingham and Enggartiasto Lukita sign a memorandum of understanding in Jakarta in August 2018, as Prime Minister Scott Morrison and President Joko Widodo look on

Agreements

IA-CEPA contains clauses on bilateral free trade, investments, skills training visas, investor arbitration, e-commerce, and intellectual property protection.[1] Indonesia, under the agreement, will remove tariffs from nearly all Australian products exported to Indonesia while all Indonesian products exported to Australia will be free of tariffs.[2] Australian firms would be permitted to hold a majority stake in Indonesian telecommunications, transport, health and energy firms. Additionally, the number of work holiday visas issued to Indonesians annually would be increased from 1,000 to 4,100 (later to 5,000[1] by 2026), and Australian universities would be permitted to open Indonesian campuses.[3]

The deal also includes protections against discrimination and expropriations, and prevents software developers from being forced to hand over their source code to sell their products. Additionally, Australian businesses were granted exceptions to an Indonesian regulation requiring online marketplaces in Indonesia to store data locally.[1]

History

Bilateral trade negotiations began between the two countries in November 2010, with the IA-CEPA itself being announced in a joint statement, during the presidency of Susilo Bambang Yudhoyono and the prime ministership of Julia Gillard.[4][5] After several conferences and meetings throughout 2011, another joint communiqué was released following a meeting in Darwin on 3 July 2012 calling for the launch of the deal's negotiations before the end of that year.[6] Afterwards, however, relations between the two countries soured (due to 2013 Australian spying scandal and the 2015 Indonesian execution of Australian citizens), and in 2015 Indonesia implemented tariffs on Australian cattle imports. Eventually Indonesian Trade Minister Thomas Lembong and his Australian counterpart Steven Ciobo announced a resumption of negotiations in March 2016.[7] Prior to the resumption of talks, four rounds of negotiations had been held.[8]

By February 2017, six rounds of negotiations had been held between the two countries, and both Australian PM Malcolm Turnbull and Indonesian President Joko Widodo (Jokowi) committed to wrapping up the discussions by the end of that year in March 2017.[9] Continued negotiations throughout the year failed to complete the deal by the end of 2017, which by November had totalled ten rounds.[8] In March 2018, Indonesian Foreign Minister Retno Marsudi admitted that negotiators were still attempting to resolve some issues and moved the deadline to the end of 2018.[10] Indonesian Trade Minister Enggartiasto Lukita further aimed to sign the agreement by November 2018 in April.[11]

Trade ministers Birmingham and Lukita formally signing IA-CEPA in March 2019

During new Australian prime minister Scott Morrison's first foreign visit in his tenure to Jakarta, he and Jokowi announced an agreement regarding IA-CEPA on 31 August 2018.[12] The signing was however delayed due to a bilateral spat over Australia's recognition of West Jerusalem as Israel's capital, which drew diplomatic protests from Indonesia.[13][14] The agreement was finally signed by Lukita and Australian Trade Minister Simon Birmingham in March 2019, subject to ratification by the Parliament of Australia and Indonesia's People's Representative Council.[15][16]

Australia's parliament ratified the agreement as part of the Customs Amendment Bill 2019 (alongside CEPAs with Peru, Hong Kong and China) on 26 November 2019 and the bill received royal assent on 3 December 2019.[17] The People's Representative Council ratified the agreement on 6 February 2020 during a plenary session.[18] It came into force on 5 July 2020.[19]

Reactions

Shortly after Indonesia's ratification of the agreement, Australia's Monash University revealed plans to open a campus in Indonesia, becoming the first foreign university to do so in Indonesia.[20] Indonesian economic observers remarked that the free trade agreement may lead to increased imports of agricultural products, primarily Australian beef, which may displace the local cattle industry.[21] The Australian Labour Party has also questioned the treaty's clauses on investor-state disputes and on temporary Indonesian work in Australia.[22]

References
  1. Medina, Ayman Falak (14 February 2020). "Indonesia and Australia Ratify IA-CEPA Agreement". ASEAN Briefing. Archived from the original on 16 February 2020. Retrieved 14 February 2020.
  2. "Jokowi to discuss capital relocation during Canberra visit". The Jakarta Post. 9 February 2020. Retrieved 14 February 2020.
  3. Walden, Max (9 February 2020). "Jokowi arrives in Canberra bearing 'gift', but relationship still has long way to go". ABC News. Archived from the original on 14 February 2020. Retrieved 14 February 2020.
  4. "Australia-Indonesia leaders meet in Jakarta to seal trade deal". The Straits Times. 31 August 2018. Archived from the original on 12 July 2019. Retrieved 14 February 2020.
  5. "Indonesia-Australia Joint Statement Jakarta, 2 November 2010". dfat.gov.au. Department of Foreign Affairs and Trade. Archived from the original on 18 April 2019. Retrieved 14 February 2020.
  6. "IA-CEPA news". dfat.gov.au. Department of Foreign Affairs and Trade. Retrieved 14 February 2020.
  7. "Resuming Indonesia-Australia Economic Partnership Agreement (IA-CEPA) Talks". Indonesia Investments. 17 March 2016. Archived from the original on 31 May 2016. Retrieved 14 February 2020.
  8. Busch, Matthew (7 December 2017). "The ill-advised rush for Australia to strike a trade deal with Indonesia". The Interpreter. Lowy Institute. Archived from the original on 23 December 2017. Retrieved 14 February 2020.
  9. Satchwell, Ian (7 March 2017). "Australia-Indonesia trade deal: Dealing with great expectations". The Interpreter. Lowy Institute. Retrieved 14 February 2020.
  10. Hidayat, Ali Akhmad Noor (18 March 2018). "Perundingan IA CEPA Ditargetkan Rampung Akhir Tahun 2018". Tempo (in Indonesian). Retrieved 14 February 2020.
  11. Mutmainah, Dinda Audriene (16 April 2018). "November 2018, Pemerintah Teken Perjanjian IA-CEPA". CNN Indonesia (in Indonesian). Retrieved 14 February 2020.
  12. Hodge, Amanda (1 September 2018). "Australia-Indonesia free trade deal a jobs bonanza, says Scott Morrison". The Australian. Retrieved 14 February 2020.
  13. "Australia Optimistis RI Teken IA-CEPA Usai Kisruh Yerusalem". CNN Indonesia (in Indonesian). 18 December 2018. Archived from the original on 18 December 2018. Retrieved 14 February 2020.
  14. "Aussie PM's Jerusalem decision risks Indonesian fallout". The Straits Times. 16 December 2018. Archived from the original on 22 January 2019. Retrieved 14 February 2020.
  15. Massola, James (4 March 2019). "Australian G8 universities eye Indonesian expansion after trade deal". The Sydney Morning Herald. Archived from the original on 3 August 2019. Retrieved 14 February 2020.
  16. "IA-CEPA deal to take RI-Australia ties to new level". The Jakarta Post. 4 March 2019. Retrieved 14 February 2020.
  17. "Customs Amendment (Growing Australian Export Opportunities Across the Asia-Pacific) Bill 2019". aph.gov.au. Parliament of Australia. Retrieved 14 February 2020.
  18. "Indonesia ratifies long-awaited free trade deal with Australia". The Jakarta Post. 6 February 2020. Archived from the original on 8 February 2020. Retrieved 14 February 2020.
  19. "Mulai Berlaku 5 Juli, Ini Manfaat IA-CEPA Bagi Indonesia". Bisnis.com (in Indonesian). 5 July 2020. Retrieved 7 July 2020.
  20. "Monash in Indonesia: Stimulus for international research or doom for local universities?". The Jakarta Post. 20 February 2020. Retrieved 25 February 2020.
  21. "Pengamat: Kesepakatan IA-CEPA Membuat Impor Sapi Makin Deras". Republika (in Indonesian). 12 March 2019. Retrieved 9 June 2020.
  22. Brown, Colin (5 September 2019). "The Indonesia-Australia Closer Economic Partnership Agreement (IA-CEPA): A Game Changer?". Australian Institute of International Affairs. Retrieved 9 June 2020.
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