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Indonesia President Joko Widodo, left, walks with Prime Minister Malcolm Turnbull in Sydney on Sunday. AAP
by Fleur Anderson
Sugar growers and cattle farmers are the first beneficiaries of a newly restored friendship between Australia and Indonesia, expected to result in a wide-ranging trade trade deal by the end of the year.
Prime Minister Malcolm Turnbull and Indonesian President Joko Widodo, who patched over tensions two months ago over military co-operation, announced the long-overdue plan to transform one of our closest and most populous neighbours into a top trading partner.
Indonesia will lower tariffs on Australian sugar from 8 per cent to 5 per cent while Australia will eliminate tariffs on pesticides and herbicides coming from Indonesian suppliers.
Indonesia will also broaden export permits for Australian live cattle, which has the potential to bolster the Nationals fortunes in Western Australia, where One Nation threatens to make significant inroads at the March 11 state election.
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"We are both committed to concluding a high-quality, bilateral free-trade agreement, the Indonesia-Australia Comprehensive Economic Partnership, by the end of this year." Rick Rycroft
"The potential for us to expand our economic relationship is very clear," Mr Turnbull said on Sunday after meetings with his Indonesian counterpart.
"We are both committed to concluding a high-quality, bilateral free-trade agreement, the Indonesia-Australia Comprehensive Economic Partnership, by the end of this year."
The sugar and beef trade deals will also bolster the Nationals in Queensland, who are struggling as One Nation encroaches on their traditional territory.
Wilmar deal 'pessimistic'
However, the sugar deal is tainted with growing anxiety within the federal government that the protracted dispute between foreign-owned mill owner and sugar marketer Queensland Sugar could leave 1600 Queensland cane farmers without supply contracts to benefit from the sugar export deal.
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Indonesian President Joko Widodo accompanied by first lady Iriana Widodo. James Alcock
Parties negotiating in the Wilmar-Queensland Sugar dispute before the 9am Monday deadline for the latest package said they were "pessimistic" a resolution would be reached in the near term.
This means potential federal intervention by Deputy Prime Minister Barnaby Joyce as early as this week and comes after LNP backbencher George Christensen threatened to join One Nation unless the Turnbull government took action.
The last stumbling blocks to resolving the stand-off relate to QSL insisting the term of the agreement be for longer than 10 years, and Wilmar insisting cane farmers are paid the industry standard based on a daily global sugar price.
Mr Joyce has already spoken to Mr Turnbull and Treasurer Scott Morrison about the Commonwealth making a last-minute intervention this week that could either force the parties into mandatory arbitration or impose a code of conduct on the mill owners and the growers.
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Indonesia was Australia's biggest sugar customer in 2014. James Alcock
But parties involved with the negotiations remain "very hopeful" Wilmar and Queensland Sugar would reach an agreement on Monday.
Nevertheless the Queensland Parliament is still expected to vote on Tuesday on a motion by state LNP leader Tim Nicholls to amend the Sugar Industry Act compelling sugar millers and marketers into arbitration.
The state opposition would have to get the support of two Labor defectors, and a One Nation and Katter Party MP to be successful.
'Great news for farmers and exporters'
Trade with Indonesia is worth $15 billion a year but compared to other nations, Indonesia is only the 11th largest trading partner with Australia.
However there may be political headaches ahead in Australia with Mr Widodo's insistence one of his country's first priorities was the removal of barriers to trade, tariffs and non-tariffs for Indonesian products such as paper and palm oil.
Mr Joyce told The Australian Financial Review the Indonesian sugar and beef deals were significant wins for Australia because it allowed sugar farmers in particular to compete with other ASEAN countries on a more level playing field.
"Import permits have now been extended from four months to one year. This is great news for both our farmers and exporters as it brings greater stability to the trade and allows for longer-term planning," Mr Joyce said.
"With an increase in the weight limit from 350 kilograms to 450 kilograms for live feeder cattle, alongside an increase in the age limit, Australian farmers will have the ability to produce a greater range of cattle for the Indonesian market at competitive prices."
Indonesia was Australia's biggest sugar customer in 2014, when it purchased 1 million tonnes of sugar, which was almost twice as much as Japan, according to the Bureau of Statistics. "Indonesia has always been a big customer of Queensland sugar," said Phil Marano, the chairman of the Canegrowers trade group in the Burdekin region near Townsville.
"I think it will make an impact but we'll have to wait and see," he said.
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