Indonesia-Australia Comprehensive Economic Partnership Agreement Facilitates the Dairy Trade

IA-CEPA will greatly promote the bilateral food trade between Indonesia and Australia, especially for dairy and meat products. It is noteworthy that Indonesia will issue import permits automatically and without seasonality for key products such as frozen beef, sheep meat, feed grains and etc.

The Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) entered into force on 5 July 2020 ^[1]. Over 99% of Australian goods exports by value to Indonesia will enter duty free or under significantly improved preferential arrangements by 2020 (compared with 85% under AANZFTA).

Australia aims to increase the exportation of dairy products, barley and iron ore to Indonesia. Under IA-CEPA, Australian dairy products will be exempted from import tariffs, involving skimmed milk powder, whole milk powder, grated cheese, and liquid milk will be subject to zero-tariff by 2033 ^[2].

Indonesia is the 3^rd largest exportation market as well as country boasting the most remarkable import increase for Australian dairy products. During Mar. 2019 to Feb. 2020, Australia exported 37.6 thousands of dairy products to Indonesia, amounting to 101.9 million US dollars ^[2].

Goods market access from Australia to Indonesia

Product	Treatment at entry into force	Longer term outcome
Live male cattle	Duty free (from 5% tariff) access for 575,000 cattle in year one	4% annual growth in volume reaching 700,000 by year 6. A review for subsequent increases
Frozen beef	Tariff cut to 2.5% (from 5%) and access for unlimited volume	Elimination of tariff after 5 years
Sheep meat	Tariff cut to 2.5% (from 5%) and access for unlimited volume	Elimination of tariff after 5 years
Feed grains	Duty free access for 500,000 tonnes in year one	5% annual growth in volume thereafter
Sugar	Locked in 2017 "early outcome" of reduction of tariff to 5%	Ongoing
Dairy	Elimination or reduction of tariffs across a number of dairy lines	Removal of all remaining tariffs on dairy lines
Citrus	Mandarins – tariff cut to 10% (from 25%) for 7,500 tonnes per year	Tariff reduced to 0% over 20 years. Duty free access for unlimited volume thereafter.
	Oranges – duty free access for 10,000 tonnes in year one.	5% annual growth in volume thereafter
	Lemons – duty free access for 5,000 tonnes in year one	2.5% annual growth in volume thereafter
Vegetables	Potatoes – tariff cut to 10% (from 25%) for 10,000 tonnes per year for five years	After five years, 5% tariff for 12,500 tonnes per year 2.5% annual growth in volume thereafter
Vegetables	Carrots – tariff cut to 10% (from 25%) for 5,000 tonnes per year	Tariff progressively reduced to 0% over 15 years. Unlimited volume permitted at 0 tariff after that

Data source: IA-CEPA outcomes ^[3]

Australia's arrangements with Indonesia under the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) remain unchanged. While IA-CEPA builds on outcomes in AANZFTA, the two agreements will co-exist after IA-CEPA enters into force. Businesses will continue to be able to use AANZFTA