International affairs

DFAT secures Hong Kong and Indonesian trade agreements

DFAT’s Chief Negotiator, Regional Trade Agreements Division, Elizabeth Ward, has outlined two new trade agreements between Australia and Hong Kong and Australia and Indonesia at a CEDA event in Adelaide.

Ms Ward said that the Australia-Hong Kong Free Trade Agreement (A-HKFTA) and the Indonesia-Australia Closer Economic Partnership Agreement (IA-CEPA) would provide new opportunities for Australian exporters and investors into the key markets.

“The Hong Kong agreement was a negotiation that didn’t take very much time in the greater scheme of things,” she said.

“It took us about a year and a half to negotiate which is probably an all-time record for any negotiation.

“In 1997 when an arrangement was structured with the United Kingdom for a transitional period before Hong Kong became part of China, it had its own constitution, it’s called the basic law.

“When we negotiated our agreement with China it didn’t include anything that happened in Hong Kong.

“Given the fact that it is Australia’s second largest business community outside of Australia; 100,000 Australians live in Hong Kong; there are 600 Australian businesses in Hong Kong; and there are 14 Australia-Hong Kong chambers of some sort or another in Hong Kong, it’s a pretty big deal.

“While our expectation is that Hong Kong prides itself on being an open economy, it was important to lock that in to a FTA but really this was a negotiation that was about services and investment.

“That’s what defines us, it’s those professional services that are in Hong Kong that really are the bedrock of Australia’s profile in Hong Kong.

“The e-commerce chapter was one of those legal chapters and the take home outcome for this agreement was the agreement that data should flow freely across borders, and its associated rule which is obviously extremely important is to allow business the opportunity to choose where they store their data.

“For the first time in any FTA between any party around the world that rule was extended to the financial services sector.”

She said that for South Australia in particular, the benefits to wine producers and exporters would be immense.

“Hong Kong has become increasingly important as a wine hub for the region.

“Wine producers can now standardise the label into multiple markets, it’s a huge saving for them to be able to say for these 10 countries we’ve just got his one label.”

She said that while the FTA with Hong Kong was reached in record time, discussions with Indonesia had started six years prior.

“This negotiation started in 2013, went through several boom and bust cycles and finally was concluded and signed by March this year,” she said.

“The focus for this was one of trying to create a look of mutual economic benefit, this was the first time that Indonesia had really done a very detailed bilateral agreement.

“We collected a business partnership arrangement between Indonesian and Australian stakeholders; on our side the Australia Indonesia Business Council (AIBC), the Australian Chamber of Commerce and Industry; and on the Indonesian side, the Indonesian Chamber of Commerce and Industry (KADIN) and also the counterpart to the AIBC, the IABC.

“They got together and formulated some ideas that would create the balance that we needed that would allow the Indonesian government to take this agreement forward.

“99 per cent of Australian goods will flow to Indonesia either under a zero-tariff arrangement or significantly better preferential arrangements.

“On the services and investment side of the negotiation we tried to pick up this idea that was given to us by both the Indonesian government and with the backing of this business partnership arrangement, of a powerhouse for Indonesia and that is choosing those services sectors, in particular where Australia has great strengths, that Indonesia is looking to improve.

“I’m talking about education, healthcare, the mining and engineering sector, aged care.

“For universities there are still a number of barriers but there are some very lively conversations.

“President Joko Widodo has been very clear that he is looking to improve the quality of education in Indonesia and is looking to Australia to provide some assistance.”

Event presentations

Elizabeth Ward, Department of Foreign Affairs and Trade MP3

Moderated discussion MP3

Delegate handout PDF