Indonesian FTA in limbo, may be signed ‘this year’

Trade Minister Simon Birmingham was cautiously optimistic. “This a good deal for both our countries, which will increase the two-way flow of trade and investment, creating more opportunities for exporters and economic development,” he said.

“Numerous Indonesian leaders have publicly and privately acknowledged the benefits of this agreement. We continue to work towards signing this year.”

The text and other details of the FTA have been finalised and it remains only for both parties to sign it and individually ratify it.

The FTA was supposed to be signed late last year but a pledge by Prime Minister Scott Morrison during the Wentworth byelection campaign to consider locating Australia’s Israeli embassy from Tel Aviv to Jerusalem, caused some consternation in Jakarta, which is very pro-Palestine.

Noses out of joint

Former prime minister Malcolm Turnbull was sent to Jakarta as an emissary to ensure the FTA and the relationship more broadly was still on track but warned noses had been put out of joint and the issue risked becoming a factor in Indonesian domestic politics ahead of that country’s own election in April.

“We have to be very clear-eyed about that, and we have to take into account Australia’s national interests, and our interests in the region, when we consider a decision like this, said Mr Turnbull who, when in office, considered the idea but dropped it after a process of seeking considered advice.

Just before Christmas, Mr Morrison stopped short of relocating the embassy in an announcement that satisfied neither the Palestinians or Israelis.

He said Australia recognised West Jerusalem as the capital of Israel but would not move its embassy there straight away and would establish a trade and defence office.

He also acknowledged “the aspirations of the Palestinian people for a future state with its capital in East Jerusalem”.

Labor has promised that of elected, it would reverse the decision.

If the FTA is still unsigned by the election, it will be Labor’s to sign, should it win.

Shadow trade minister Jason Clare backed the conclusion of the deal and said Labor stood ready to make it a priority if it won the election and the deal was still unsigned.

“Indonesia is our next-door neighbour but we hardly look over the fence, we don’t talk to each other or work with each other as much as we should,” he said. “We trade more with New Zealand than we do with Indonesia.”

Mr Clare said as well as signing the FTA, Australian companies would need help accessing Indonesian markets, something Labor would facilitate.

It is understood pressure is being exerted on the government from groups such as grain growers who, under the deal, would be able to export 500,000 tonnes of grain to Indonesia, tariff-free.

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