Australian government and Indonesia signed a bilateral loans AUD1.5 billion (US$1.09 billion) to tackle the COVID-19 outbreak around the archipelago - Photo by President Office

JAKARTA (TheInsiderStories) – Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) will not be agreed upon this year, due to foreign policy. Without mentioning the issue, Trade Minister Enggartiasto Lukita said that the discussion domain is now between each Foreign Minister.

The agreement hang up is allegedly because of Australia’s plan to move its embassy to Jerusalem, which can increase tension in the region. While Indonesia’s stance supports the two-state solution for the Palestine and Israel dispute.

Previously, both countries agreed to sign IA-CEPA in this month after take negotiations around seven years. The Rp17.3 trillion (US$1.19 billion) value IA-CEPA bilateral trade agreement can make thousands of Indonesian products be exported to Australia without tariffs.

Previously, Indonesia and Australia aimed to sign IA-CEPA last November. The two countries have had discussions over the six years before reaching an agreement which is marked by the signing of the declaration today.

New Australian Prime Minister Scott Morrison and Indonesia President Joko Widodo has discussed some issues at the Bogor Palace after taking office on August 24. According to Widodo, Australia is one of Indonesia’s key partners and also for the ASEAN region.
After a bilateral meeting, Morrison and Widodo witnessed the signing of four agreements namely declaration on the conclusion of the IA-CEPA, a memorandum of understanding on cooperation in the field of creative economy, transportation, national cyber and crypto agency.
Both also emphasized the importance of respecting international law and security with the signing of the cooperation in the field of security, especially related to cyber security, regional and global issues, terrorism eradication, development of the concept of Indo Pacific, as well as the Palestinian issue.
Lukita explained, IA-CEPA not signed at the meeting because there are still legal requirement and other administrative issues that must be resolved. However, he emphasized that contents of CEPA has been been completed and no further discussion.

When IA-CEPA is implemented, he said, Indonesia will gain the advantage of ease of export and tariff will go to 0 percent. “For beef imports would be use tariff rate quota,” he said.

Instead, Australia will ease of investment in Indonesia in the education, health and capacity building sectors. Indonesia’s interest to encourage Australian investors open educational institutions in Indonesia, because now as many as tens of thousands of Indonesian students studying in Australia.

While, the Coordinating Minister for the maritime Luhut Panjaitan stated that the various agreements signed today will be able to increase export value of Indonesia.

“For example, right now many Australian car factory closed so we could be the first priority because of the distance we close,” he said.

IA-CEPA covers not only free trade pact in the form of goods, but also services, investment and intellectual property. The deal, which has been discussed since 2012 and was originally to be completed last year and should be signed in 2018.

Based on data from Statistics Indonesia, bilateral trade was valued at US$8.5 billion in 2017, with a deficit of $3.5 billion on the Indonesian side.

US$1: Rp14,500