Tariffs on Australian ag exports to Indonesia tumble under free trade deal

Tariffs will fall or be eliminated entirely on a raft of Australian agricultural exports to Indonesia as part of a wide-ranging free-trade agreement signed last week between the two nations.

Among other measures, Indonesia has agreed to guarantee the automatic issue of import permits for live cattle, frozen beef, sheep meat, feed grains, citrus products, carrots and potatoes, a marked change from the previous situation in which obtaining import permits  proved problematic for producers.

The Indonesia-Australia Comprehensive Economic Partnership Agreement was signed by new Australian prime minister Scott Morrison during his first overseas trip, having been negotiated by former PM Malcolm Turnbull before he was deposed on August 24.

Trade minister Simon Birmingham said the agreement would be a “major boost” for Australian farmers, allowing “greater certainty of access and lower tariffs.”

The full list of changes under the IA-CEPA includes:

• Tariffs reduced to zero on imports of live male cattle (down from a tariff of 5 percent), with access for 575,000 cattle in year one. This will rise by 4 percent each year to reach 700,000 cattle in year six.
• Tariffs on frozen beef and sheep meat cut from 5 percent to 2.5 percent before being eliminated within five years. Guaranteed access for unlimited volume in both commodities.
• Duty-free access for 500,000 tons of feed grain in year one, with 5 percent annual growth in volume thereafter.
• Elimination or reduction of tariffs across several dairy lines, eventually leading to the removal of all tariffs on dairy.
• Tariffs on mandarins cut to 10 percent (from 25 percent) and reduced to 0 percent over 20 years, with unlimited volume thereafter.
• Duty-free access for 10,000 tons of oranges in year one, with 5 percent annual growth in volume thereafter.
• Duty-free access for 5,000 tons of lemons in year one, with 2.5 percent annual growth in volume thereafter.
• Tariffs on potatoes cut to 10 percent (from 25 percent) for 10,000 tons per year for five years. After this, there will be a 5 percent tariff for 12,500 tons per year and 2.5 percent annual growth in volume thereafter.
• Tariffs on carrots cut to 10 percent (from 25 percent) for 5,000 tons per year, with the tariff progressively reduced to zero over 15 years. Unlimited volume will be permitted after that.

The IA-CEPA was welcomed by agricultural representative organizations representing a range of different sectors.

The Australian Livestock Export Council described it as “an agreement of great significance” while GrainGrowers, representing Australian grain farmers, said it would allow “new trade, investment and relationships to flourish between Australia’s grain industry and Indonesia’s food manufacturing, stockfeed and livestock sectors.”

The dairy industry also commended the agreement, with Indonesia’s position as Australia’s third-largest dairy export market on value terms.

“As Australia’s nearest neighbour with strong existing ties with our dairy industry, the conclusion of IA-CEPA will enhance the naturally emerging opportunities that are presenting themselves in that key market,” said Australian Dairy Industry Council president Terry Richardson.