Pacific News Minute: Australia-Indonesia to Announce Free Trade Agreement This Week

Aug 29, 2018

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The United States, Mexico, and Canada aren’t the only neighbors working on Free Trade Agreements. Just a few days after taking office, Australian Prime Minister Scott Morrison will travel to Indonesia this week to announce what’s being described as an historic deal.

The chaos in Canberra last week threatened an agreement that’s been in the works since 2016.

Now former Prime Minister Malcolm Turnbull was set to visit Jakarta to announce, not just the free trade agreement, but a new strategic partnership as well. All of that was thrown into doubt by Turnbull’s ouster in a Liberal Party coup, and Australia’s ABC reported that his replacement, Scott Morrison, would be unlikely to make the trip so soon after taking office.

In a statement yesterday, Prime Minister Morrison said he wanted to send a signal about Australia’s commitment to deepening economic and security cooperation.

Scott Morrison
Credit Clrdms / Wikimedia Commons

Despite its proximity, Indonesia is just Australia’s 13th largest trading partner at a little over 12 billion dollars a year. The exact parameters of the new agreement are not yet clear – the language is being scrubbed by both parties in advance of a signing ceremony later this year. Australian media report that tariff reductions will likely be marginal, and that politics outweigh economics – at least in the short term. An Australian University could open a campus in Jakarta.

On Friday, the day he expected to announce this deal in Jakarta, former Prime Minister Turnbull will resign from parliament. That will trigger a special election in his district that threatens the government’s one seat majority.

Prime Minister Morrison also announced that he will not attend the Pacific Island Forum Summit next month in Nauru and that Australia’s delegation will be headed up by new Foreign Minister Marise Payne.