Indonesia-Australia Comprehensive Economic Partnership Agreement

  • Transcript, E&OE
16 March 2016

STEVEN CIOBO: Good afternoon, and I'm certainly very pleased today to be able to host Indonesia's Trade Minister Tom Lembong here in Australia. We've just come from having very cordial discussions in relation to the nature of the trade and investment relationship between Australia and Indonesia. It's a particularly exciting time, and I am very, very pleased that today we were able to formally agree to the recommencement of discussions between Indonesia and Australia on a Comprehensive Economic Partnership Agreement.

We think that this, in many respects, underscores the combined mutual interest of both of our nations going forward. An opportunity certainly that's consistent with, in Australia, the Prime Minister's vision to drive jobs and growth, and as part of our ongoing commitment to ensure the transition from a resources energy economy to an economy that's more focused on the services side and sees additional capital investment. In that respect, I think it's fair to say, Tom, that our discussion this afternoon highlights the many complementarities that exist between Australia and Indonesia, and certainly I'm very excited that we were able, as a result of our conversation today, to reach this formal commencement, or recommencement I should say, of these discussions.

This continues to build on the very solid work that my predecessor Andrew Robb made as Minister for Trade and Investment with the ability to secure the free trade agreements for Japan, for Korea, and China. The commencement of these discussions, I hope in the very near term, will also provide similar opportunities for investment into Australia and investment from Australia and additional trade between the two. But Tom, I'd invite you to make some remarks.

TOM LEMBONG: Thank you very much, Steve. I certainly share your excitement and optimism about the process we're now recommencing. I would like to add that this is a direct result, I think, of the excellent chemistry between President Jokowi of Indonesia and Prime Minister Turnbull. I think we're all benefiting from having two very business-minded leaders at the leadership of our two countries, and… secondly, I would add that I'm struck by the vibrancy and the freshness that I think both leaders and so far both sides in this negotiation have brought to the table.

I think- I'm hopeful that we can go beyond last generation trade talks and really be very forward-looking to 21st Century issues like digital economy, the services sector, which as you and Prime Minister Turnbull have pointed out, results in the highest quality jobs for both Australians and Indonesians. So it's indeed been an exciting dialogue, from my perspective.

STEVEN CIOBO: Wonderful, wonderful. Well, we're happy to take some questions in relation to the media release that's been put out, and you should have copies of the statement as well. QUESTION: When would you like to see this agreement concluded?

STEVEN CIOBO: Well, I think certainly in terms of the very cordial discussions that we've had today, there's a high level of ambition on both sides. Certainly from an Australian perspective, we want to ensure that there are some ideally early outcomes that we're able to secure in the short term, with a view to securing CEPA – the Comprehensive Economic Partnership Agreement – somewhere over the next 12 to 18 months. That presents, I think, very consistently with the strong track record the Coalition's had with respect to the North Asian powerhouses and three FTAs in place, and also mindful of the fact that Indonesia as our- a dear friend, and of course, very close neighbour, and the tremendous potential that exists, as I said, for these complementarities to be built upon.

TOM LEMBONG: I agree. I think it's a new chapter for Indonesia, as many of you are aware. We are hoping to turn outward, to reach out and foster a greater international cooperation, greater trade relationships, and the political moment appears to be just right. So domestically, I think, we will also see a lot of excitement and support, frankly, especially if we go into the areas which we've discussed as being the potential early outcomes and the areas that also we want to cover in the CEPA eventually. Again, as I mentioned, we should try to move beyond the old 20th Century battlegrounds, right, and really look at the freshest, newest developments in the 21st Century. I think both Australia and Indonesia have so much to offer to each other if we take that perspective. QUESTION: On agricultural trade, you mentioned 20th Century- moving beyond the 20th Century. Obviously, Australia and Indonesia, very important agricultural trading partners, but have also let each other down on other- on particular, live cattle or vegetable exports. Do the countries trust each other enough to move beyond what we already have in place for agricultural exports, and do you see scope for that in the 21st Century trading environment?

TOM LEMBONG: I have very little doubt that it's going to be a very good partnership between the two economies and the two societies. Just to give an example of the kind of verve and vibrancy that we're seeing now, sometimes to get to our destination we have to take a detour. So sometimes, maybe, we need to call a time out on the most contentious issues and work on areas where we can more easily find common ground. I sincerely believe that once you have a few successes, returning to those previously contentious issues becomes much easier.

So again, I think personally my priority is to try to broaden the dialogue so that we don't get bogged down on old issues of contention, whilst obviously not forgetting those old issues. In no way am I belittling the cattle trade. In fact, frankly, Prime Minister Turnbull, President Jokowi themselves have had fairly visionary discussions about the potential synergies if Australia and Indonesia were to partner more closely on the cattle trade and agricultural sector. But again, if there is a lot of entrepreneurial energy bubbling out from other areas, why should we allow those contentions to hold back other potential areas of partnership and collaboration?

STEVEN CIOBO: I would add that the ambition that we share is for this to be more than perhaps has traditionally been the case with FTAs. It is, by both name and desire, meant to be a broadening and deepening of the economic relationship. Focus around areas such as the services trade and the ability to drive investment, to drive services – of course, 80 per cent of our- Australia's economy is services based – so there's opportunities for technology transfer, for capacity building. There's opportunities that of course exist with respect to traditional sectors of the market – and that's agriculture and other related sectors – and we'll work through those, but it's not exclusively about those.

It's what we can do with those sectors and more, and both of us have indicated that for the two of us, this remains a top priority issue and both of us will be devoting ourselves in a way that reflects the ambition and the priority that we place on it. Should the Coalition have the good fortune to win the election, whenever it might be, and should I have the double good fortune of staying in this role, then I look forward to making sure that continues to happen. QUESTION: So what sort of political measures do you envisage would stabilise the relationship so it does become much more attractive for investment?

STEVEN CIOBO: Well certainly from an Australian perspective, the relationship is very stable. Frankly, there's – if I can use the phrase – never been a more exciting time to be the Minister for Trade and Investment when it comes to the relationship with Indonesia. In that sense, I think that there's a high degree of aspiration, and in fact, one of the additional measures that we're undertaking is the recommencement of discussions around the Indonesia-Australia Business Partnership Group. That group will be a key driver of the ambition that we share, with respect to the high level of business – both small, medium, and large – business aspiration and appetite to engage in each other's countries, to share technology, to share transfers of capacity building. So I think that there's a high level of latent ambition and appetite in the business community now.

TOM LEMBONG: Steve, I hope I'm not getting ahead of ourselves, but to share a bit of a peep inside the negotiations or the dialogue so far: one word which I think came up at least four times by my count in today's discussion was fun, which is not a word that comes up often in trade negotiations. But frankly, to your question, what kind of political measures can be take to strengthen, energise the bilateral relationship. We've talked about symbolic measures, which perhaps are not necessarily the biggest needle movers in terms of quantity or from a macro perspective, but might carry large symbolic benefits. We've talked for example about fashions and culinary, which I believe Australia is superb. We've already got celebrity chefs coming out of Australia. I pointed out in our discussions today not for nothing, Indonesia used to be called the Spice Islands. And again, it's going to be a huge GDP contributor. Perhaps not, but again it can serve as sort of an icebreaker and just put a nice tone to the overarching ambience around our trade discussions. I think that's the kind of a political measure that would serve to boost confidence, warm the tone of the dialogue. So yes, we're trying to be a bit out of the box and imaginative on how we can take this forward. QUESTION: Minister, when do you expect to meet next to negotiate this agreement? And secondly, what can you do to assure free trade critics in both countries that this is good for jobs, particularly in Indonesia?

TOM LEMBONG: Thank you Steve. So my understanding is that our negotiators met recently, but from a protocol perspective I think they're due to meet again in May in Indonesia. So it's Indonesia's turn to host. The first thing that springs to mind in terms of how is this good for jobs in both countries is just what I regard as the frankly stunning complementarity between the two economies, to be fairly plain spoken about it. Australia, in my view, is to be congratulated on the extremely high standards and the sophistication that you've achieved, whereas – let's not break any bones about it – Indonesia is a developing country.

So frankly, time and again as we move the discussion from topic to topic I was struck by the strong complementarity between Australia and Indonesia. I don't think we'll be killing each other's jobs, quite the opposite. I think Indonesia needs expertise and training and teaching, and Australians have excelled in the education space, the polytechnic space, in systems and quality control and discipline. And conversely of course Indonesia offers a very large market and a very large economy, but to progress it, to develop it, we need exactly all the things that Australia has to offer, and of course Australia will make a pretty penny, as you might say, providing those services to us I think.

STEVEN CIOBO: I mean, I would just add those that label themselves free trade sceptics in my observation more often than not have a degree of scepticism that's based on misinformation. I've seen that in a number of sectors, and it continues, I guess, for me to focus my mind on the job that I've got to do as an advocate about the benefits that flow from liberalised trade and from agreements such as the CEPA that we're looking at now with Indonesia. The fact is that it provides opportunity to drive jobs and growth, and it drives jobs and growth because it provides a heightened level of economic activity for Australian exporters. It creates a framework for investment with the reassurance that Australia is a stable democracy and one that provides long-term insurance in terms of that investment framework, and that capital – which Australia has been an importer of capital now since the day we were settled – provides a framework to employ people and to invest that capital in a way that generates economic capacity. So it's sort of broad brush strokes, that's been my observation. And look, frankly if you want to know why free and liberalised trade is good for an economy, history teaches us that for the last 50 or more years we've been a beneficiary of it.

QUESTION: Gentlemen, what do you think you can do quickly to get momentum into these talks? Could we see some interim agreements on the way to the final agreement? What do you think? And will Australia give Indonesia the same foreign investment concessions that it's given to China and Korea and Japan and the United States?

STEVEN CIOBO: Well, certainly we want to look at some early outcomes. Both Minister Lembong and I are committed, and have already indeed canvassed some areas where there could be some early outcomes to generate momentum. I think going into it, most importantly there's a very strong sense of goodwill, both in terms of my position on behalf of Australia, and on behalf of Minister Lembong on behalf of Indonesia. A high degree of focus, as I said, and priority given to this. We are close neighbours, we are good friends. We have the opportunity here to reach a broad-based agreement, one that really strengthens the economic relationship, which frankly has been significantly underdone given not only the proximity but the respective size of the markets and the degree of investment. I mean, Indonesia is our 12th largest trading partner and should be much higher up, so that is the opportunity that presents itself. There is a desire for some early outcomes, and both of us have discussed those and we'll say more about those in due course. And likewise, with respect to investment thresholds I think we leave those things for us to have those conversations and see what we're able to secure and reach an agreement on.

QUESTION: Minister, there is no doubt that establishing friendly will from both countries, but do Australia and Indonesia has a strategy to maximise from the agreement? Because right now Australia actually has free trade agreement with China, Korea and Japan, and lots of people don't really know how to use them to get the most out of it. So what's going to be different this time with Indonesia?

STEVEN CIOBO: Would you like to discuss from an Indonesia perspective, and then I can discuss it from an Australian?

TOM LEMBONG: Sure. I have to admit, and being only seven months into my job, trade can seem very esoteric to the person on the street, and it's probably a complaint shared by business communities around the world, right? Like, specific information on how to utilise the expedited processes or special facilities available under FTAs I think is something that probably all of us need to do a better job, you know, socialising to businesses and consumers all around the world. I think, as we all know the global economy is fragile and all around the world we're concerned about growth, right? So there's a strong impetus for us to drive harder I think, to push harder, to take the bold steps, to get breakthroughs, and rejuvenate the animals spirits that we all know drive economies. I have to say, I'm very much a people person. I'm very energised by the people on both sides of this dialogue, so I hope that we bring rejuvenated energy to our efforts to socialise to our respective peoples, our respective businesses, our respective small and medium sized enterprises all the possibilities that are opened up by this collateral partnership agreement.

STEVEN CIOBO: And in the Australian context I think there's several factors that come into play. Clearly there's an education campaign to be run so that Australian-based businesses, those that are involved in investment and exports, be they services, be they goods, soft commodities, whatever aspect, are made aware of the opportunities that present themselves. The fact is that through the excellent work of my predecessor Andrew Robb we have got a tremendous advantage with respect to Japan, Korea and China. An education campaign is part of it, and indeed the government has undertaken an awareness-raising exercise around that.

The second is to mobilise people through business networks, discussion points, and we're doing that with the Government's very proactive agenda of having free trade agreement road-shows. This is taking it from the front pages of newspapers to actual discussions in town halls, meeting rooms across the country, involving at a grassroots level opportunity for people and business, be they exporters or aspirational exporters, to come in to learn about what the opportunities are as they present themselves.

The fact is that if you look at – very early days – but if you look at both by volume and by value, exports from Australia are doing very, very well as a consequence of the FTAs. We've seen some big early gains both in value and volume. So I don't think that Indonesia actually needs to be radically different in terms of our engagement process. I think we've got in place a strong track record; we're going to continue to build on that. I want to, as much as possible, continue to develop new opportunities for Australian businesses, and I mean that genuinely in a two-way street, because it's not a paradigm of being win-loss, this is about win-win outcomes. We're committed to that, and I'm very confident that that will happen. So thank you all very, very much. Appreciate it.

Media enquiries