ASEAN-Australia-New Zealand FTA: Indonesia entry-into-force: Impact for Tasmania

18 November 2011

The Agreement Establishing the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA) will enter into force for Indonesia on 10 January 2012. At that time, AANZFTA will be in force for all 12 signatories to the agreement.

Entry-into-force of AANZFTA for Indonesia will benefit both Australia and Indonesia. Tariffs on a wide range of Australian exports to Indonesia will reduce to zero, improving market access opportunities for Australian exporters (see section 1 below). Indonesia will also bind existing levels of market openness in various services sectors, providing greater certainty for Australian exporters and investors (see section 2 below). Many existing Indonesian exports to Australia are currently paying tariffs and for most of these products Indonesia will receive duty-free treatment from entry-into-force of AANZFTA between our two countries.

Australia and Indonesia are the two largest economies in AANZFTA. Total goods and services trade between Australia and Indonesia stood at $12.9 billion in 2010, making Indonesia our 12th largest trading partner globally and fourth largest trading partner in ASEAN. AANZFTA’s entry-into-force for Indonesia presents an opportunity to grow further our trade and investment relationship.

The Australian Prime Minister and Indonesian President launched the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) negotiations in November 2010. The IA-CEPA will build on AANZFTA and further strengthen the bilateral economic relationship. In taking the IA-CEPA negotiations forward, the Department of Foreign Affairs and Trade welcomes submissions on issues relating to Australia’s trade, investment and economic cooperation with Indonesia (email to ia-cepa@dfat.gov.au). IA-CEPA developments can be followed at http://www.dfat.gov.au/fta/iacepa/index.html.

1. Trade in Goods

Tasmanian merchandise exports to Indonesia (calendar year 2010) were $108 million. Export products included:

The following analysis summarises tariff outcomes for access to Indonesia under AANZFTA for some of the products of export interest to Tasmania.

Zinc and articles thereof (HS Chapter 79)

Aluminium and articles thereof (HS Chapter 76)

Seafood (HS Chapter 03)

Vehicles (HS Chapter 87)

Dairy (HS Chapter 04)

Iron and steel and articles thereof (HS Chapters 72-73)

Ores and concentrates (HS Chapter 26)

Wood and articles of wood (HS Chapter 44)

Beef (HS Heading 0201-0202)

2. Trade in Services Opportunities for Tasmania

CASE STUDY – LPI

Lightning Protection International Pty Ltd, known in the market as LPI®, is a fully-owned Australian manufacturer and supplier of direct strike lightning, surge and transient protection equipment, andearthing solutions. LPI's head office and manufacturing facility is based in Tasmania.

LPI is involved in risk management, system design, training, certification, installation and commissioning. It works in industries such as telecommunications, aviation and mining, as well as supplying monuments, high rise buildings and sporting centres.

The company has an established distribution network in over 45 countries, including Indonesia. LPI are active in mining, oil and gas, industrials, building and telecommunications sectors in Indonesia. The company has a well established distributor/dealer network covering all parts of Indonesia.

On entry-into-force of AANZFTA in Indonesia, tariffs on a range of products that LPI exports to Indonesia will be reduced from 5% to 0%. These include products such as lightning arresters, voltage limiters and surge suppressors.