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Trade pact with Indonesia

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(Statement by the Deputy Prime Minister and Minister for Trade, Mr. J. McEwen).

The Deputy Prime Minister and Minister for Trade (Mr. McEwen)

announced today the signing in Djakarta of the first formal trade

agreement which Australia has negotiated with the Republic of

Indonesia. The Agreement which will operate initially for a period

of twelve months was negotiated in Djakarta by officials of the two

countries early this year.

Mr. McEwen said that the signing of the Agreement followed

consideration by the two Governments of a report· on the negotiations.

The Agreement re-affirms the intention of both countries to

promote an expansion of mutual trade and establishes a framework for

trade development.

Mr. McEwen stated that Australia had until the last few years

supplied about 90% of Indonesia's flour imports. However, a

deterioration in Indonesia's balance of payments position and

competition from subsidised flour had led to a serious deterioration

in our flour exports. Because of this it was reassuring to secure

in the Agreement a recognition of the importance of the flour trade

from Australia.

An undertaking was given in the Agreement that the Indonesian

Government would work towards ensuring a greater predictability in

the flour trade. Regular consultations would occur on flour and

other matters through formal machinery provided in the Agreement,

Both Governments, as important exporters of primary products,

have agreed to the urgent need for greater stability in international

commodity markets

to trade in primary industry commodities. They have agreed to

support international action which will in their opinion reduce

price fluctuations in these products.

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The Indonesian Government has recognised Australia

as a source of supply of a wide range of manufactured products

in addition to the traditional foodstuffs and metals. Goods

specified in the Agreement include iron and steel products,

motor vehicles and parts, railway equipment, "building materials,

industrial and agricultural machinery, drugs and pharmaceuticals,

and radio and electrical equipment.

The import of all commodities from Australia will

enjoy import treatment as favourable as that accorded any other


Mr. McEwen said that Australia confidently expected

that, as soon as there was an improvement in Indonesia's

foreign exchange position, Indonesia would become an increasingly

important market for Australian manufactured goods,

Australia's valuable trade in foodstuffs could also

expect to be expanded.

As recently as 1956/57 Australia's exports to

Indonesia were valued at nearly £7 million, half of which

was flour. Since that year, under the stringent restrictions

which, for balance of payments reasons, the Indonesian Government

has been obliged to place on imports and because of the

increasing competition from subsidised flour our exports have

fallen. In 1958/59 they were valued at only £2 million.

Australian imports from Indonesia last year were

valued at £32 million, of which petroleum and its derivatives

accounted for over £25 million. Other products of importance

were tea, sisal, molasses, coffee, bauxite and undressed timber*


December,17th, 1959. 149/59T.