Canada, Indonesia to Extend Their Economic Partnership Through CEPA
Despite the ongoing global economic uncertainties and instabilities, this new agreement sends a strong message and demonstrates how collaboration can improve trade and build stronger economies. It comes with a mutual commitment to rules-based trade, open markets, and inclusive economic growth.
On December 2, 2024, Indonesia and Canada concluded negotiations for the Comprehensive Economic Partnership Agreement (CEPA) in Jakarta. Set to be signed in 2025 and to take effect in 2026, the agreement marks a significant advancement in economic relations between the two nations.
This historic bilateral trade and investment agreement, which took three years and ten rounds of negotiations, is expected to drive sustainable economic growth.
It lays a foundation for advancing trade cooperation across various sectors, empowering small and medium-sized enterprises (SMEs), promoting women’s economic participation, and addressing labour rights.
Additionally, the agreement is a step forward in addressing climate change and sustainable resource management—areas that are mutually important for both countries.
Canada has committed to offering a package of technical assistance and capacity building to support the implementation of the CEPA.
The CEPA will help Canada strengthen its ties with Southeast Asia’s largest economy and give Canadian exporters and businesses better access to Indonesia’s growing consumer market.
Indonesia’s youthful population and rapidly growing economy over the last 10 years present exciting opportunities for Canadian businesses.
As a leader in sustainable mining, Canada will collaborate with Indonesia to develop best practices in environmentally responsible resource management. This cooperation emphasizes a shared commitment to climate action and supporting environmentally responsible industries.
On the other hand, Indonesia, the world’s largest nickel ore producer, views this agreement as an opportunity to attract greater investment in processing key minerals like bauxite, copper, and tin.
The country’s vast reserves of critical minerals have been a key driver of the partnership. The agreement includes provisions that encourage investment in mineral processing, which supports Indonesia’s ambition to become a global hub for electric vehicle (EV) batteries.
“Together, we advance sustainable critical mineral management, supporting Indonesia’s net-zero target by 2060, and fostering Canadian investment while driving green growth in both nations,” Indonesia’s trade minister, Budi Santoso, said in a joint press conference.
In 2023, merchandise trade between Canada and the Indo-Pacific was valued at $257 billion, of which bilateral trade between Indonesia and Canada reached $5.1 billion.
Canada mainly exports agricultural products and fertilizers to Indonesia, whereas Indonesia’s exports to Canada include electrical equipment, machinery, garments, and footwear.
Canada’s cattle industry was part of the discussions during Canadian International Trade Minister Mary Ng’s visit to Jakarta.
When asked about U.S. President-elect Donald Trump’s proposed 25% tariffs on Canadian goods, Ng told Reuters, “We need to work with the Americans, and we’re committed to doing that, and that work will certainly continue.”
She emphasized the benefits of the newly negotiated agreement with Indonesia, stating, “The good news here is that Canada and Indonesia, in the negotiating of this trade agreement, means that we are creating a predictability of our trading relationship, bringing down tariffs.”
The CEPA is expected to boost trade exchanges by removing trade barriers, promoting regulatory alignment, and creating new investment opportunities.
Please reach out to one of our trade professionals to learn more about the CEPA and its potential impact on your business.