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Indonesia ready for FTA with New Zealand, Australia

Jakarta Post, Indonesia

Indonesia ready for FTA with New Zealand, Australia

By Linda Yulisman, The Jakarta Post, Jakarta

30 July 2011

Indonesia is ready to soon implement a free trade agreement with Australia and New Zealand as part of a free trade pact signed by ASEAN and the two countries.

Trade Ministry director general for international trade cooperation Gusmardi Bustami said Friday in Jakarta that the finance minister was preparing items for the legal enactment of the agreement, which would contain a schedule to lift tariffs.

He said he hoped the paperwork would be completed soon so the ASEAN-Australia–New Zealand Free Trade Area (AANZFTA), which Indonesia ratified in May, could be implemented this year.

“Once it is finished, the foreign minister will announce the enactment to all parties and the agreement will come into force 60 days after the notification,” he said.

Gusmardi added that Indonesia would remove 90 percent of 10,000 tariffs categorized under the normal track once the agreement took effect. The products affected include live animals and fruit, meat, fish, milk, cheese, eggs, vegetables, pharmaceuticals, wood and paper products.

“This is in accordance with all agreements,” he said, adding that tariffs on goods on sensitive lists, including beef and dairy products, would only be removed by 2020 to give local producers more time to prepare.

Based on the schedule, the removal of a further 6 percent of tariffs classed as sensitive track, which covers 1,000 items, would be reduced gradually to 0 percent by 2020, while the lifting of the remaining 4 percent of tariffs covering 400 items would depend on further negotiations.

The negotiations on the establishment of a free trade area between ASEAN’s 10 members began in 2005. The agreement was signed on Feb. 27, 2009, in Cha-am, Thailand, against the backdrop of the 14th ASEAN Summit.

Indonesia, Gusmardi said, was the last ASEAN country to implement the deal. Other ASEAN member states had already implemented the free trade deal.

The agreement is expected to facilitate the forging of better economic ties between the parties and pave the way towards higher investment in engaging countries.

Indonesia has resisted lowering tariffs on imports from Australia and New Zealand, especially beef and milk, due to fears that such a move would affect local beef and milk producers, which are mainly small- and medium-scale businesses.