On 4 March 2019, Australia and Indonesia sign the IA-CEPA, a Free Trade Agreement which, once implemented in Australia through domestic law, might create an exception to the Labour Market Testing requirement for Indonesian workers
The Department of Foreign Affairs and Trade’s website includes the following announcement:
Australia and Indonesia signed the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) on 4 March 2019. This agreement launches a new chapter in economic relations between Australia and Indonesia.
IA-CEPA creates a framework for Australia and Indonesia to unlock the vast potential of the bilateral economic partnership, fostering economic cooperation between businesses, communities and individuals.
Indonesia is a growing market for Australian goods and services exporters. In 2017-18, total two-way trade in goods and services with Indonesia was worth $16.8 billion, making Indonesia our 13th largest trading partner. IA-CEPA will provide Australian and Indonesian businesses an opportunity to expand and diversify this economic partnership.
IA-CEPA builds on commitments under our existing free trade agreement, the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) across goods, services and investment.
In addition to reducing non-tariff barriers to trade and simplifying paperwork, IA-CEPA will allow 99% of Australia’s goods exports to enter Indonesia duty free or with significantly improved preferential arrangements. All Indonesia’s goods exports will enter Australia duty free.
IA-CEPA will improve conditions for services suppliers and the climate for two-way investment. Australian services suppliers and investors will have greater certainty for entry and operation in the Indonesian market, helping to facilitate more Australian investment in Indonesia. This will create more opportunities for Australians to help meet Indonesia’s growing needs for investment and for the supply of world class services in its market.
What happens now?
Australia and Indonesia will now follow their respective domestic treaty making processes to bring IA-CEPA into force. For Australia, this will include tabling the text of the agreement in Parliament and an inquiry by the Joint Standing Committee on Treaties (JSCOT).
Why has the Government concluded an FTA with Indonesia?
As one of the fastest growing economies in the Indo-Pacific, Indonesia presents a significant opportunity for Australian businesses. By some estimates, Indonesia will be the world’s fifth-largest economy by 2030, and IA-CEPA ensures that Australia is well-placed to deepen economic cooperation and share in Indonesia’s growth.
As strategic partners and the two largest economies in Southeast Asia, the agreement also complements and supports our shared interest in fostering a secure and prosperous region.
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