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Australia, Indonesia Sign Free Trade Pact

Indonesia's Trade Minister Enggartiasto Lukita and Australia's Minister of Trade, Tourism and Investment Simon Birmingham shake hands after signing an economic partnership agreement aimed at boosting trade and investment, March 4, 2019, in Jakarta.

Australia this week signed a free-trade agreement with Indonesia.

Australia shares a long maritime boundary with Indonesia and has close security ties, but experts have said that the bilateral economic relationship has been underdeveloped.

Australia hopes that will change after the signing of a long-awaited free trade agreement. It was delayed last year when Australian Prime Minister Scott Morrison suggested he might move his country’s embassy in Israel from Tel Aviv to Jerusalem.

In response Indonesia, a strong supporter of the Palestinian territories, considered putting the trade deal on hold. Australia later decided not to relocate its embassy in Israel, which has diffused much of the tension.

Indonesia hopes the trade pact signed in Jakarta this week will give its people more opportunities to work in Australia, as well as support for its palm oil industry. The deal is expected to benefit Australia’s agricultural and education industries. Australian universities and vocational training colleges will be allowed to operate in Indonesia. Its cattle farmers, grain growers, vegetable producers and steel makers are also expected to benefit.

“If you are a cattle producer across flood-ravaged north Queensland, or indeed the Northern Territory (or) elsewhere across the country, you are going to see huge growth in access for both live and frozen beef and cattle,” said Australian Trade Minister Simon Birmingham. “If you are working in the steel industry, you are going to see an opportunity for us to be able to export the equivalent of five Sydney harbor bridges each and every year in terms of steel production.”

The Business Council of Australia and the National Farmers’ Federation both support the trade deal, but trade unions say it could damage Australian jobs by allowing more Indonesian workers into the country. They fear migrant workers could be exploited and underpaid by unscrupulous employers.

The deal took eight years to negotiate. The signing ceremony has been deliberately low-key because of its proximity to an Indonesian presidential election next month.

Indonesia has the world’s largest Muslim population, and is home to 260 million people. Australia has a population of 25 million.

Experts say the Australian-Indonesia pact is a timely signal to the international community about the importance of free trade.

Australia has 10 free trade agreements currently in force, including accords with China, Japan and Korea.