Indonesia, Australia Sign Trade Agreement
Indonesia and Australia signed a trade agreement that provides tariff benefits for Australia and eases restrictions on import licenses on certain agricultural products, according to a notice from Australia's Department of Foreign Affairs and Trade. The agreement, called the Indonesia-Australia Comprehensive Economic Partnership Agreement, provides Australia with lowered tariffs and “import license advantages” on “live cattle, frozen beef, sheep meat, feed grains, citrus products, carrots, and potatoes,” according to a March 8 report from the U.S. Department of Agriculture.
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The new agreement builds on the existing ASEAN-Australia New Zealand Free Trade Agreement, USDA said, “further reducing tariffs and providing additional cooperative mechanisms for addressing non-tariff barriers and import licensing.” Included in the agreement is a tariff-rate quota that allows “reduced in-quota tariffs” on certain food and agricultural products “that expand in volumes at fixed increments over time,” the report said. ASEAN is the Association of Southeast Asian Nations.
The agreement also states that each product covered under the tariff-rate quota will “automatically” receive import permits from Indonesia, a “significant departure” from Indonesia’s import license procedures with other countries, USDA said. Indonesia currently has a two-step import licensing process that requires input from both the Ministry of Agriculture and the Ministry of Trade, USDA’s report said. That process is currently at the heart of an August 2018 U.S. complaint with the World Trade Organization. The trade agreement with Australia, however, shows Indonesia’s “willingness to modify the two-step licensing process as part of a larger agreement on trade, undercutting previous arguments that such a system is necessary to ensure food safety, food security and customs,” USDA said. The report said that Indonesia’s “removal of one step in the licensing process” will “likely result in additional market access advantages for Australian agriculture.”
The agreement’s impact on U.S. agriculture trade will vary, USDA said. While the agreement gives Australia an “immediate 2.5 percent advantage” on bone-in beef, which USDA said could “slow” the U.S.’s growing beef market, it would “likely have less impact on retail cuts as Australian cuts are already significantly cheaper than U.S. cuts.” In addition, the agreement’s “10 percent in-quota tariff” for potatoes “is likely to compete with U.S. potatoes currently exported for chipping and further processing,” USDA said.