Indonesia coy over sealing trade deal

Indonesia has cast new uncertainty over a trade deal with Australia.

Indonesian President Joko Widodo. Picture: AFP

There is new uncertainty over the Australia-Indonesia trade deal, with Indonesian Trade Minister Enggartiasto Lukita unable to reveal when the ­agreement would be signed, ­despite the Morrison government’s compromise position on ­Jerusalem.

The deal was expected to be signed last month, but Scott Morrison’s last-minute call to float moving the Australian embassy in Israel to Jerusalem upset Indonesia, which does not recognise the country and maintains ties with Palestinian authorities.

Indonesia released a much milder statement when the Prime Minister decided against an immediate embassy move and instead said Australia would recognise West Jerusalem as the capital of Israel as part of a pro-Israel shift in foreign policy.

Mr Lukita said yesterday the bilateral free trade deal would not get signed by the end of the year and he was not sure when it would be officially sealed.

“As to when (it will be signed), the foreign minister will arrange it, because it relates to the policy of the foreign minister,” he said.

Trade Minister Simon Birmingham simply said it was a good deal and he was unable to reveal a signing date.

“Numerous Indonesian leaders have continued to publicly and privately acknowledge the benefits of this agreement, which we welcome,” he said.

“This is a good deal for both our countries. It will increase the flow of trade and the flow of investment, creating more opportunities for Australian exporters as well as enhancing economic development within Indonesia.”

Mr Lukita argued in favour of trade agreements yesterday, when answering questions about his country’s $US7.5 billion ($10.5bn) trade deficit. He said Indonesia was struggling to boost exports because of high tariffs on its products abroad, which would be eased if the country had more trade deals.

Earlier this week, The Australian revealed Australia’s trade agency advised the government to close offices in the Middle East and boost resources in Indonesia just weeks before Mr Morrison announced he would open another trade office in Jerusalem.