Indonesia-Australia trade deal provides savings for dairy exports

Indonesia-Australia trade deal provides savings for dairy exports

All tariffs on Australian dairy exports into Indonesia will eventually be scrapped as part of a new economic partnership agreement between the two countries, providing millions of dollars in savings for Australia’s dairy industry.

The Indonesia-Australia Comprehensive Economic Partnership Agreement (IA- CEPA) will build upon the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) by immediately removing existing tariffs on skim milk powder, whole milk powder and grated and powdered cheese.

Remaining tariffs on liquid milk will also be phased out by 2033, giving Australian dairy a competitive advantage over major dairy competitors in that market. Importantly, the agreement will also address non-tariff measures.

Peak dairy industry body, the Australian Dairy Industry Council (ADIC), welcomed the deal, saying it will create a closer relationship with one of Australia’s largest trading partners.

“As Australia’s close neighbour with strong existing ties with our dairy industry, launching IA-CEPA will enhance the naturally emerging opportunities that are presenting themselves in Indonesia,” ADIC Chair Terry Richardson said.

“This is a positive result for the Australian dairy industry and we thank Trade Minister Simon Birmingham and the Australian Government for delivering this outcome.”

The IA-CEPA and AANZFTA will together provide an estimated saving of over A$10.5 million in tariffs that would otherwise be levied on Australian dairy exports to Indonesia if neither agreement was in force.

Indonesia is a large and growing importer of dairy that is becoming more important for Australian exporters, ranking only behind Greater China and Japan as Australia’s third largest dairy export market on value terms. In 2018/19, Australia exported 56,647 tonnes of dairy to the Indonesian market, valued at A$192 million.

Source: ADF