Indonesia-Australia Free Trade Agreement

8th May, 2020

On the the 6th May the Indonesian Government ratified the Indonesia-Australia Comprehensive Economic Partnership Agreement.  This Free Trade Agreement will commence 60 days after ratification, expected to be 6 July.
 
Indonesia and Australia are both members of the ASEAN-Australia-New Zealand Free Trade Agreement.  Under this existing Free Trade Agreement most imports of Indonesia goods into Australia are entitled to duty free entry.  As a result it is expected that the greatest benefits will be available to Australian exporters and service providers who will see improved market access.
 
Our Agricultural exporters will gain significantly as a result of reduced duty rates.

However, the existence of the ASEAN Free Trade Agreement does not mean that the Indonesian Free Trade Agreement should be ignored by importers.  A significant benefit of the Indonesian Free Trade Agreement is a system for using declarations of origin rather than certificates of origin issued by an official body.  An exporter will be able to use declarations of origin after the following occurs:

• Indonesia notifies Australia that it will implement the declaration of origin system; and
• the exporter is registered or certified by Indonesia.

The declaration of origin can be made on an invoice, delivery note or other commercial document provided it contains certain mandatory fields.  Declarations of origin:

• can be made after exportation;
• can be in electronic format;
• do not need to be in any prescribed form;
• only apply to a single importation; and
• are valid for 12 months after the date of issue.

The ability for declarations to be issued post importation will facilitate the claiming of refunds where a declaration or certificate of origin was not available at the time of import.
 
The Indonesia Free Trade Agreement also permits Australia to waive the requirements for documentary evidence.  This means that there is the potential for the Trusted Traded Origin Waiver Benefit to apply to this FTA.  This benefit is not currently available for the ASEAN Free Trade Agreement.
   
Now is an opportune time to review what trade with Indonesia is currently attracting customs duty.  Consideration should be given to whether those goods will satisfy the origin requirement of the Indonesia Free Trade Agreement.  If the lack of use of the ASEAN Free Trade Agreement is due to the administrative burden of obtaining certificates of origin, the flexibility of the Indonesian Free Trade Agreement may be the answer to this.

Our internal trade consultants can review the eligibility of your goods to this new FTA, please get in touch with sales@sccargo.com.au should you require any further details.