CANBERRA, AUSTRALIA — A free trade agreement between Australia and Indonesia is set to take effect July 5 following the May 7 announcement that Indonesia has completed its domestic ratification process.

Simon Birmingham, Australia’s minister for trade, tourism and investment, said the landmark trade deal, known as the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA), will enhance export opportunities and deliver significant benefits for Australian farmers, businesses and investors.

Once enacted, 99% of Australian goods (by value) will enter Indonesia duty-free or under significantly improved preferential arrangements.

“After discussions earlier this week with my Indonesian counterpart, Minister of Trade Agus Suparmanto, we welcome this step that will see the benefits of this trade agreement flow from 5 July this year,” Birmingham said. “Securing a trade agreement with Indonesia has been a longstanding objective of our government, to further strengthen the strategic partnership between our nations and further expand the choices available for Australian exporters.”

Birmingham said the pact is the most comprehensive bilateral trade agreement Indonesia has ever signed, and will give a competitive edge to Australian exporters.

“The economic stresses being caused by COVID-19 in both Australia and Indonesia make this agreement even more important, as it will provide an opportunity to better stimulate growth and investment across both nations during the recovery phase,” Birmingham said. “With a population of over 260 million and one of the fastest growing economies in the world, Indonesia presents significant trade and investment opportunities for Australian farmers and businesses.”

Specifically, he mentioned grain producers as among the groups that will benefit most from the lower tariffs and improved access. The agreement also is expected to provide a boost to education and training.

“With one in five jobs trade related, enhancing export opportunities for our farmers and businesses will be crucial to reducing job losses arising from the COVID-19 crisis and a critical part of our ultimate economic recovery,” Birmingham said.

According to Australia’s department of foreign affairs and trade, Indonesia is a growing market for Australian goods and services exporters. In 2018-19, total two-way trade in goods and services with Indonesia was worth A$17.8 billion, making Indonesia Australia’s 13th largest trading partner.

Indonesia was Australia’s fifth largest export market for agricultural products in 2019 after China, Japan, the United States and South Korea. Australia’s agricultural exports are typically between A$2 billion to A$2.5 billion but have fallen the last two years as severe drought in Australia and strong competition from other suppliers have reduced Australia’s wheat shipments to Indonesia, according to the US Department of Agriculture.

Andrew Gee, minister assisting the minister for trade, tour and investment, said the IA-CEPA ratification comes at a good time as Australia eyes an economic recovery amid the coronavirus (COVID-19) pandemic.

“We need to focus on the things we can make, grow and sell, and agriculture will be a key part of that,” Gee said. “IA-CEPA will provide new opportunities for our farmers and businesses, and further strengthen our export sector.”

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