T

he Indonesian and Australian trade ministers have stated their commitment to concluding negotiations on the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) in November, earlier than the official date in December.

“I’m sure it was a great surprise to our chief negotiators as we greatly support to conclude [IA-CEPA] by November. We may therefore work harder because the next negotiation will be held [in October] in Bali,” Australia Minister for Trade, Tourism, Investment Steven Ciobo told a press conference after meeting Indonesian Trade Minister Enggartiasto Lukita on Wednesday.

The ninth round of negotiations will be held from Oct. 2 to 6 and the 10th will be from Nov. 13 to 17 in Indonesia. In the event that negotiations are not finalized by then, the next — and expected — final round has been scheduled for Dec. 18 to 22 in Australia.

Once concluded, the IA-CEPA, the negotiations on which started in 2010, will be a win-win partnership that brings economic relations of the two countries to a new level, the ministers said.

Negotiations have so far come up with concrete steps to reduce Indonesia's trade deficit with its neighbor and new concepts to improve the exports of both to the world and boost Australian investment here, especially in education and health.

An exchange of tariff cuts, scheduled to take effect in two weeks, will also be included under the IA-CEPA, Enggartiasto said on Wednesday. Australia has agreed to lower herbicide and pesticide tariffs to zero from 5 percent and Indonesia has agreed to lower raw sugar tariffs to 5 percent from 8 to 13 percent.

Other goods that the two parties are negotiating for lower tariffs on include textiles and textile products, some of which face a 15 percent tariff, and Australian skimmed milk powder.

Australia is also committed to helping the country meet its high import requirement standards, including, for example, high sanitary and phytosanitary standards for fisheries and agricultural products, in a bid to boost Indonesia’s exports.

Bilateral trade between Indonesia and Australia has been on a downward trend in the past years. It shrunk to US$8.46 billion last year from $10.2 billion in 2012, down by 4.63 percent on average each year, according to Trade Ministry data.

Indonesia’s exports to Australia followed the same trend, dropping to $3.19 billion from $4.9 billion over the same period. Last year, Indonesia suffered a $2.06 billion deficit.

To jack up the two countries exports through a win-win partnership, negotiators come up with a powerhouse concept, whereby a task force will be formed to link businesspeople in both countries in a way that one country can import certain materials at lower tariff rates from the other and process them domestically and finally export the end products to a third country.

IA-CEPA Indonesia chief negotiator Deddy Saleh emphasized that Australia could buy cheaper rubber and crude palm oil (CPO) from Indonesia, process it into rubber products and oleo chemicals, and then export it somewhere else, also for lower prices.

“This way, we’ll benefit because they’d buy more of our products and Australia will benefit from lower production costs and more competitive prices of processed goods to sell globally,” he said.

Australia also seeks to invest more in health and education. Australia was Indonesia’s 16th biggest investor with US$174.7 million direct investment in 813 projects last year.

Deddy said Australia was considering establishing vocational schools in big cities in Indonesia, which was presently limited for foreign ownership. In turn, Indonesia is considering simplifying vocational school establishment procedures and allowing major share ownership for Australian investors under the IA-CEPA.

With more intensive knowledge transfer through more vocational schools and simpler investment procedures, the two countries expect a better flow of skilled labor, including nurses. Australia allows recruitment for nurses from across the world, including from Indonesia.