DFAT

Mr

RG BuildingACT 0221

Joint Standing Committee on Foreign Affairs, Defence and TradeForeign Affairs Sub-Committee

No. 22

Joint Standing Committee on Foreign Affairs, Defence and Trade

ANSWERS TO QUESTIONS ON NOTICE

Department of Foreign Affairs and Trade

Inquiry into Australia's relations with Indonesia

Topic; Assistance to after 12 October 2002

What are the full details of assistance provided to Bali after 12 October 2002.

Answer:

Immediate Assistance

In the immediate aftermath of the Bali bombings, the Minister for Foreign Affairs approved$300,000 in emergency assistance to Bali, which was later supplemented by a further$121,000 from the bilateral aid program to Indonesia.

This assistance was used to purchase emergency medical supplies for Sanglah Hospital($14,000); fund an Australian expert to assess needs for, and prepare an inventory of, donatedmedical supplies ($22,000); support the Indonesia Red Cross's work in a range of areas($140,000); and provide psychosocial support for victims, their families and others involvedin the tragedy ($245,000).

Long Term Health Assistance

In February 2003, the Prime Minister announced a $10.5 million package of assistance to theBali health system.

The assistance comprises:

• An upgrade to Sanglah Hospital, focussing on a new intensive care centre comprising anintensive care unit, an intensive care coronary unit, and a bums unit, in conjunction with aprogram of emergency care capacity building, and the upgrading of the hospital's morgue,incinerator, and water supply ($4.5 million);

• The construction of a community eye treatment centre to treat operable blindness and theprovision of two mobile eye clinics ($2.94 million); and

• The creation of an on-going Bali memorial medical and health scholarship programcomprising both long-term study awards in Australia and short-term training ($3 millionover 5 years).

Economic Assistance

Through the Bali Rehabilitation Fund (BRF), Australia provided $750,000 to assistcommunities in Bali and surrounding areas affected by the downturn in the tourist industry.The Fund acts as a small grants program primarily supporting new economic initiatives,opportunities for economic diversification, market development and skill training anddevelopment for Balinese and other Indonesians whose livelihoods were severely disruptedfollowing the bombing and the resultant economic stress. Mr Downer announced a further

$750,000 for the BRF on 12 October based on the success of the Fund to date and anassessment of unmet need.

Australia has also provided direct assistance to Balinese firms to assist them in increasingtheir exports. The Technical Assistance Management Facility (TAMF) assisted the NationalAgency for Export Development in a pilot program to determine the export readiness of agroup of about 50 potential Balinese exporters. This activity, funded in July 2003, providedthe opportunity for handicraft producers to better align their product designs to globalcustomer preferences.

Australia is also contributing $4 million to the Indonesian Enterprise Development Facility(IEDF), which aims to help develop the small and medium enterprise (SME) sector in EasternIndonesia. The Bali arm of the IEDF, the Trade and Export Program (TEP), will work withproducers in the furniture and handicraft sector.

The Australian Government's overall commitment to Bali, in response to the disaster, nowstands at over $12.45 million (exclusive of IEDF).

Topic: ASEAN

(1) What were the other key outcomes of ASEAN?

(2) Can the Department shed light on the accuracy of reports referring to ASEAN's decisionto reject Australia's bid to be accepted as an ASEAN post-summit member?

(3) Can the Department clarify whether Australia sought dialogue partner status or any suchinitiative for this Summit or in the past?

Answer:

(1) Outcomes from ASEAN Summits, 7-8 October, Bali (including the ASEAN Summit,ASEAN+3 Summit, ASEAN-China Summit, ASEAN-Japan Summit, ASEAN-ROKSummit and ASEAN-India Summit) included:

ASEAN Leaders adopted the Declaration of ASEAN Concord II (Bali Concord II)

China and India acceded to the Treaty of Amity and Cooperation in South-EastAsia

ASEAN and China made a Joint Declaration on Strategic Partnership for Peace andProsperity

ASEAN and Japan signed a Framework for Comprehensive Economic Partnership

ASEAN and India signed a Framework Agreement on Comprehensive EconomicCooperation

ASEAN and India made a Joint Declaration for Cooperation to CombatInternational Terrorism

Japan, China and the Republic of Korea made a Joint Declaration on the Promotionof Tripartite Cooperation

(1) On October 9, the Prime Minister said the following in Parliament in response to aquestion from the Member for Pearce, Mrs Moylan:

"These media reports are of a piece with reports earlier this week that Australia had beenrebuffed in our alleged efforts to have an ASEAN-Australia leaders' summit. The onlyproblem is that we have not been doing any such lobbying. Indeed, we had advised ourASEAN friends that this was an issue for ASEAN to decide in its own time and in itsown way. I put on record the fact that the claim that some attempt was made to snub mein relation to this gathering is plainly wrong."

(2) Australia has been ASEAN's dialogue partner since 1974.

Australia has made known to ASEAN that we would be pleased to attend a summitshould ASEAN decide this, but that this is a matter for ASEAN alone, and that Australiais always ready to work with the countries of ASEAN to find practical ways to advanceour mutual interests.

Written question

(1) Do we have any economic and trade cooperation agreements in place with Indonesia?

(2) Have free trade agreements or trade and economic frameworks been discussed withIndonesia and, if so, in what forum? Are there any developments concerning a free tradeagreement or closer trade and economic framework with Indonesia?

(3) What would be the likely benefits of a free trade agreement with Indonesia? Whichsectors would be the most likely to benefit and the easiest to achieve agreement in? Whatwould be the likely obstacles?

Answer:

(1) Yes

(2) Australia and Indonesia have discussed their respective experiences in negotiating tradearrangements in both the Australia-Indonesia Ministerial Forum and the annual TradeMinisters' Meeting. Australia and Indonesia have agreed to consider closer cooperation insectors where trade can be facilitated.

(3) No comprehensive study of the likely benefits of a free trade agreement with Indonesiahas been undertaken.

Written question

(1) Is the ASEAN FTA agreement binding on members?

(2) What is the impact of the decision of ASEAN to form an AEC by 2020 and the varioustrade deals made with ASEAN's dialogue partners on the AFTA formed in 1992? What isthe essential difference between the AFTA goals of free trade by 2020 and the vision ofan ASEAN economic community recently announced?

Answer;

(1) Yes

(2) The trade arrangements ASEAN is negotiating with its various dialogue partners are atdifferent stages, but none are complete. Their impact will depend upon the ability ofASEAN members to implement the vision and the difference between treatment withinthe group and that afforded to non-members. No hard deadlines have yet been set fortariff elimination. The ASEAN Economic Community (AEC) goes beyond AFTA byaccelerating the liberalisation of trade in goods in selected sectors and by committingASEAN to full liberalisation in the area of services and investment and progressiveliberalisation in the area of capital movement.

Written question

What actions has Indonesia taken in regard to pursuing free trade agreements or closereconomic frameworks at the bilateral level with countries other than Australia?

Answer;

Indonesia has announced discussions with Japan on an Economic Partnership Agreement andwith the United States on a joint study on the benefits of a free trade agreement.

Written question

What progress has been made to achieving the Bogor Goals trade and investment goals of1994. Are developments on track in terms of the time frames identified in 1994? Whatimpediments may prevent APEC from achieving the trade and investment liberalisationBogor Goals of 1994.

Answer:

• APEC economies have committed to the Bogor Goals of "free and open trade andinvestment" by 2010 for developed and 2020 for developing economies.

o APEC has not defined "free and open trade investment" but the optimaloutcome would be to eliminate all tariffs and other trade barriers.

• To ensure progress is taking place, APEC economies have committed to Peer Reviews oftheir Individual Action Plans (lAPs) for achieving the Bogor Goals.

o Australia, Canada, Hong Kong, Japan, Korea, Mexico, New Zealand, andThailand have already successfully completed their Peer Reviews;

o Chile, China, Peru, Singapore, Chinese Taipei and the United States haveundertaken to do so in 2004.

• Once all twenty-one Peer Reviews are completed in early 2005, APEC will undertake amid-term stock take on progress towards meeting the Bogor Goals.

• APEC economies are generally on track to achieve the Bogor Goals.• The fact that two-thirds of goods traded in the region are subject to tariffs of 5% or less

demonstrates APEC's trade liberalisation achievements.• There are still 6-7 years from the 2010 deadline for developed countries.

o Before then the Doha Development Agenda and FTAs are expected to becompleted which will advance compliance with the Bogor Goals.

Written

(1) Can you provide the most recent figures and data comparing the two way trade betweenAustralia and Thailand, and Australia and Indonesia?

(2) Would there be any greater obstacles to securing a FTA with Indonesia than withThailand and, if so, what?

Answer:

See the tables below.Australian Merchandise Trade with Indonesia

Total exportsTotal importsBalance of merchandise trade

Principal exports (a)001 Live animalsOil Bovine meat f.c.f.012 Meat (excl. bovine) f.c.f.022 Milk and cream*02 Dairy products & eggs046 Flour of wheat057 Fruit and nuts, fresh or dried081 Animal feed*0 Food & live animals*1 Beverages & tobacco*24 Cork & wood251 Pulp & waste paper263 Cotton282 Ferrous waste & scrap*2 Crude materials (excl. food &333 Crude petroleum334 Refined petroleum522 Inorganic chemical elements533 Pigments, paints, varnishes542 Medicaments (incl. veterinary)*57 Plastics in primary forms598 Miscellaneous chemicalproducts*59 Chemical materials & prod.,nes*5 Chemicals & related products641 Paper & paperboard

1998-99

2,199,224

3,274,725

-1,075,501

39,54018,5036,11149,31113,98812,3669,6229,71123,7033,2058,14116,166524,08011,17920,68189,83116,71820,22011,2915,03716,34910,353

11,519

41,9126,907

1999-00

2,408,435

2,700,703

-292,268

108,16346,32910,26346,39318,58320,92314,74915,91029,8338,95432,96317,994390,06514,73222,95818,20720,94213,76620,5016,14012,94219,144

13,538

41,0279,684

2000 - 01

3,110,877

3,315,090

-204,213

146,14241,70313,15088,48224,88220,81225,12938,40640,2739,7795,33919,400548,8866,34327,956080,54322,54121,9849,23416,50324,388

16,902

43,06213,391

2001 - 02

3,193,701

4,010,214

-816,513

208,73557,15317,668113,11536,86232,02927,96034,70649,38312,4215,07217,796457,44511,28627,74978,10328,70819,43121,7479,83921,76029,337

20,995

44,08013,846

2002 - 03

2,907,921

4,600,378

-1,692,457

283,49867,27016,68189,22022,15234,80032,36324,15355,13715,5329,71830,267373,09121,99229,02571,06423,41718,00318,60114,90914,90324,040

16,305

42,18416,738

*65 Textile yam & fabrics672 Ingots of iron or steel*67 Iron & steel682 Copper684 Aluminium686 Zinc*68 Non-ferrous metals699 Other manufactures of basemetal*69 Manufactures of metals, nes*6 Manuf, classed by material723 Civil engineering equipment728 Specialised machinery742 Pumps for liquids744 Mechanical handling equipment*74 General industrial machinery*77 Electrical mach. & appliances781 Passenger motor vehicles782 Motor vehicles for trans, goods784 Motor vehicle parts793 Ships, boats & floatingstructures*7 Machinery & transportequipment*8 Miscellaneous manufactured931 Special transactions988 Confidential itemsOther

Principal imports (a)072 Cocoa*07 Coffee, tea, cocoa, & spices*0 Food & live animals248 Wood, simply worked251 Pulp & waste paper*2 Crude materials (excl. food &333 Crude petroleum334 Refined petroleum*51 Organic chemicals574 Polyacetals, primary*5 Chemicals & related products634 Veneers, plywood, particleboard635 Other wood manufactures641 Paper & paperboard642 Paper manufactures651 Textile yam653 Woven synthetic fabrics*65 Textile yarn & fabrics662 Clay construction materials664 Glass

24,32227,59431,49117,895117,11165,28523,94753,074

10,30319,20945,13528,8475,97010,33624,15219,1047,27418,29612,159939

37,288

24,65912,995552,61612,780

20,31334,84947,06329,35831,77940,5111,245,406

20,82039,17948,32059,13126,002

37,615118,47999,97056,12930,72645,39318,50422,808

32,6504,42943,84223,080170,99663,10218,97951,427

13,78121,69741,61027,73510,55912,28727,93119,51265,37826,00627,3839,675

74,170

49,08018,764561,56118,098

12,71521,85253,93539,00638,54636,790907,08437,00741,81441,19752,78629,891

47,093105,850110,29651,75727,49645,28128,12930,659

32,3258,39947,02826,775188,85663,69013,82854,460

20,18530,21049,39538,82913,36319,70837,18531,99464,45518,41235,6606,994

107,649

47,71934,057806,1198,350

13,55826,79368,85142,71047,18249,8631,222,856

73,85931,30843,52276,38422,071

58,40690,50286,62650,03823,95734,68822,36424,510

23,6791,07137,63631,533177,80353,68811,57770,726

26,52829,11978,18844,82813,19934,49044,03028,76574,41012,86436,78415,774

87,128

47,60538,344771,2795,427

19,83622,43964,31841,30227,90737,4241,707,827

145,74443,4581,99281,99123,780

51,97697,80948,61348,09115,17534,15830,98426,166

25,5332,85930,46643,587164,37057,84813,84675,553

23,15822,46444,43837,55818,13813,63838,53419,25647,4456,20530,51714,685

51,640

34,16618,848696,06912,039

34,11923,83172,17156,99330,67653,2351,659,932

22,95532,2491,52579,47125,903

59,939172,93532,66139,74313,59140,74034,47031,112

*66 Non-metallic mineral682 Copper*6 Manuf. classed by material752 Computers762 Radio-broadcast receivers763 Sound or video recorders*76 TVs, VCRs radios & telecom773 Equipment for distributing778 Other electrical machinery793 Ships, boats & floatingstructures*7 Machinery & transportequipment821 Furniture*84 Clothing851 Footwear897 Jewellery*89 Miscellaneous manuf. articles971 Non-monetary gold988 Confidential itemsOther

34,6563372,23327,53820,28710,93013,63130,97828,99255

50,665

81,36153,72744,546175,013

J>4,385419,42342,77631,140

35,2329,14267,76336,26016,31122,24115,33232,64925,8278,322

57,262

81,50347,60143,5642,75776,505261,92376,98324,340

38,21610,71271,90959,05022,67249,62328,03848,73123,24232,072

98,716

79,42748,84844,6574,52761,824332,195103,74946,835

34,64146,11696,61344,54430,99056,93036,09043,65822,727288

82,711

85,57950,74337,6823,76460,709476,070189,35240,013

42,722100,24679,98952,45435,10394,76843,6733,47937,72245,135

86,755

100,75051,96433,7683,18261,354

^83,845192,93032,289

Australian Merchandise Trade with Thailand

A$'000Total exportsTotal importsBalance of merchandise trade

Principal exports (a)022 Milk and cream023 Butter048 Cereal preparations*5^Ve^tabte_&_fruit081 Animal feed*0 Food & live animals211 Hides, skins (excl furskins)263 Cotton268 Wool282 Ferrous waste & scrap287 Other ores333 Crude petroleum334 Refined petroleum533 Pigments, paints, varnishes542 Medicaments (incl. veterinary)591 Insecticides,, rodenticides,*59 Chemical materials & prod.,nes*5 Chemicals & related products611 Leather672 Ingots of iron or steel673 Uncoated flat-rolled steel*67 Iron & steel682 Copper684 Aluminium685 Lead686 Zinc*69 Manufactures of metals, nes*6 Manuf. classed by material*71 Power generating machinery*72 Industry specific machinery741 Heating & cooling equipment743 Pumps for gas*74 General industrial machinery*75 Office machines & computers764 Telecommunications equipment*77 Electrical mach. & appliances781 Passenger motor vehicles784 Motor vehicle parts882 Photographic supplies894 Toys, games & sporting goods*89 Miscellaneous manuf. articles

1998-99

1,305,972

1,902,078

-596,106

105,53922,92120,1549,9225,32835,07014,044186,87446,8603,35955,0566,9005,93420,13530,2626599,912

41,14815,60530,81013,01812,35615,485136,6405,2484,34912,22326,8555,42412,2958,4483,8368,20010,3626,66015,6487,2297,12620,7061,21615,286

1999-00

1,703,312

2,422,326

-719,014

100,93427,25724,7219,73413,18133,6904,619188,18765,32411,37259,91788,7384,20629,54453,01981113,978

43,47734,63654,0498,36220,76442,727211,4336,3917,6077,46231,4233,13813,18310,1571,9429,1759,61424,70810,84941,5198,71121,5801,84815,772

2000-01

2,222,209

2,779,896

-557,686

110,64519,78533,62517,68019,81449,50718,881271,32373,3426,16595,835134,2553,40837,962101,5942,02219,298

59,92518,1824,1493,20613,116112,203305,83311,72612,05117,11047,1477,51028,0947,0972,40514,37213,14348,32327,61631,06112,1565,96229,77112,071

2001-02

2,295,746

2,885,569

-589,823

118,35723,02036,89420,79511,33352,9429,469190,33075,323

_42309_J

69,656199,7045,02544,64585,3349,79916,654

55,89418,985011,35013,29699,430364,57211,73220,4088,34536,5274,23021,71510,6504,23115,6947,36720,10225,2319,06110,6616,17914,11015,887

2002 - 03

2,479,121

3,469,469

-990,348

80,917

13,20334,15318,83915,79839,200206167,77399,51230,55741,11759,16616,71039,11085,31416,96413,156

50,48112,14318917,9635,667110,303358,94719,48922,53714,61828,84314,28118,40716,24715,27721,70012,64010,14418,28024916,26714,15230,44715,915

*8 Miscellaneous manufactured931 Special transactions971 Non-monetary gold988 Confidential itemsOther

Principal imports (a)036 Crustaceans037 Prepared seafood042 Rice048 Cereal preparations058 Preserved fruit and preparations*05 Vegetables & fruit081 Animal feed098 Other food products*0 Food & live animals251 Pulp & waste paper333 Crude petroleum334 Refined petroleum553 Perfiimery & cosmetics571 Polymers of ethylene, primary575 Plastics, primary, nes*57 Plastics in primary forms*5 Chemicals & related products625 Rubber tyres641 Paper & paperboard651 Textile yarn*65 Textile yarn & fabrics*66 Non-metallic mineral676 Iron & steel bars, rods, shapes*67 Iron & steel699 Other manufactures of basemetal*69 Manufactures of metals, nes*6 Manuf. classed by material*71 Power generating machinery741 Heating & cooling equipment743 Pumps for gas*74 General industrial machinery752 Computers*75 Office machines & computers761 Televisions764 Telecommunications equipment*76 TVs, VCRs radios & telecom775 Household type equipment*77 Electrical mach. & appliances781 Passenger motor vehicles782 Motor vehicles for trans, goods784 Motor vehicle parts*7 Machinery & transportequipment

10,90810,820128,528118,22022,394

100,099121,16225,85414,31022,30117,50035,71030,35829,9064,87213,36321,44910,9295,4302,19917,36841,20421,64112,32826,95739,74348,3224,18822,6429,530

20,39356,3701,293146,0558,8449,965112,317

13,57795,68242,70114,3126,67037,10759,702288,0628,62813,131

12,93025,763136,634122,82135,405

105,860115,76626,96619,82725,73416,31930,71031,91330,65727,21396,694377,19814,3733,92428,87349,983_23,24325,19624,99444,32759,79910,29239,96910,829

22,00258,1265,632142,20612,72615,337104,83413,68899,33447,81513,1008,11642,83559,396549,33114,50316,380

13,56313,46285,926214,77335,115

90,628140,26931,33925,61822,90119,66035,40131,50926,91135,412159,98210,2336,86012,0225,64732,57053,47330,01714,92019,72554,91556,07614,23736,48311,640

27,98567,77319,392191,70114,00816,27790,78815,56173,45663,03620,48013,93752,86680,415623,10318,48617,524

19,01795,982178,897190,55332,050

71,137153,61528,32524,29319,91319,16238,32335,26521,25518,193274,06822612,08213,5008,99529,69056,93838,89020,21814,61561,84160,84814,13135,80914,539

30,31261,65918,583228,74619,31618,37790,44219,64245,19159,95521,82614,87839,82881,125527,54120,82320,605

17,095111,365391,255306,53135,996

63,703168,55331,97925,18717,17625,94739,57636,98126,88324,494201,2368,05528,31537,86228,43317,61659,99352,81131,03816,33761,89765,49531,67244,64841,284

36,93751,96732,830268,36945,41626,554129,51131,99141,959108,66525,04526,94756,425110,022620,04163,11624,508

821 Furniture*84 Clothing893 Other articles of plastics897 Jewellery*89 Miscellaneous manuf. articles*8 Miscellaneous manufactured971 Non-monetary gold988 Confidential itemsOther

20,97034,97727,21228,85232,10131,867069,75622,171

58,93938,36030,36932,90434,61035,137072,58523,365

69,30943,53238,76438,43438,59343,899091,65130,478

69,78153,21540,97545,55941,78752,79048,395104,05324,291

67,23658,58242,59051,90347,66755,733149,25669,00140,025

(a) Commodity groups do not include any item classified as confidential. * denotes"Remainder of category"

2. As no comprehensive study of undertaking an FTA with Indonesia has been conducted, itis not possible to advise if a negotiation would be more or less difficult than the oneconducted with Thailand.

Written question

DFAT said in its submission to the inquiry, 'Australia has encouraged sound Indonesianmanagement of its debt and supported multilateral debt relief for Indonesia, including throughthe Paris Club. Australia agreed to significant rescheduling of Indonesia's sovereign debt inthe first, second and third Paris Club debt re-schedulings. At the Paris Club 11 April 2002,Australia agreed to reschedule US$220 million in Indonesian debt and was a strong advocateof a Paris Club outcome that met Indonesia's objectives. While Indonesia's debt situationpresents a significant challenge, the IFIs and Paris Club creditors consider that it ismanageable with appropriate debt relief and the implementation of economic reforms'.

Then at the public hearing on 13 October, DFAT commented as follows;

"So we are a very significant player but certainly not the biggest aid donor. In terms ofour assistance on debt, as a member of the Paris Club, we have been providing debtrescheduling to the Indonesian government. Again, we are certainly not the country withthe largest exposure of public debt to Indonesia but it is certainly a significant nationalinterest of ours. Our policy is that any assistance on debt would come through the ParisClub rather than other bilateral arrangements. As the Indonesian government has decidednot to renew its IMF program next year, that precludes them from receiving assistancefrom Paris Club countries."

(1) What it the level of Indonesian debt to Australia? Is it all through the Paris Club?

(2) Can the department provide more background to the comment that 'as the Indonesiangovernment has decided not to renew its IMF program next year, that precludes themfrom receiving assistance from Paris Club Countries.'?

Answer:

(1) The level of Indonesian sovereign debt to Australia as at 31 October 2003 was equivalentto AUDI,374.7 million (all loans are written in either US dollars or Euros). No, it is notall through the Paris Club.

(2) Debt relief through the Paris Club is based on a number of principles including"conditionally" whereby debt treatments are only granted to countries with a genuinefinancing need and that are prepared to implement reforms aimed at resolving theirpayment difficulties, m practice, conditionality is provided by the existence of anappropriate programme supported by the IMF, which demonstrates the need for debtrelief. As Indonesia has announced its intention to graduate from its IMF program at theend of 2003, it will no longer be eligible for further Paris Club debt treatments. ShouldIndonesia qualify for MF assistance in future, it would again be eligible to approachParis Club creditors for debt relief.