Canada and Indonesia Forge First Bilateral Trade Agreement with ASEAN Member
On September 24, 2025, a new chapter began for Canada and Indonesia. In the ornate halls of Parliament Hill in Ottawa, Canadian Prime Minister Mark Carney and Indonesian President Prabowo Subianto looked on as their respective trade ministers, Maninder Sindhu and Budi Santoso, signed the Canada-Indonesia Comprehensive Economic Partnership Agreement (CEPA). For Canada, this marks its first-ever bilateral trade pact with a member of the Association of Southeast Asian Nations (ASEAN)—a significant strategic milestone in its Asia-Pacific outreach.
According to an official statement from Carney’s office, the CEPA aims to eliminate or reduce both tariff and non-tariff barriers, creating a more transparent and predictable environment for trade and investment. For Canadian businesses and workers, new opportunities will open in sectors like clean technology, agri-food, infrastructure, critical minerals, and financial services. The agreement is more than an economic document—it’s a blueprint for a new phase of collaboration, resilience, and prosperity.
Tariff Cuts Promise Immediate Impact for Key Industries
The heart of CEPA is its sweeping tariff reforms. Canada will eliminate tariffs on over 90 percent of Indonesian products, giving a competitive edge to exports like textiles, footwear, processed foods, furniture, light electronics, and automotive goods. For Indonesia, the deal covers 6,573 product categories—everything from natural fiber handicrafts to granite and marble—many of which will see tariffs disappear immediately once CEPA comes into force in 2026.
On the other side, Indonesia will remove tariffs on 85.54 percent of Canada’s priority exports, including frozen beef, wheat, potatoes, seafood, and processed foods. Canadian staples like wheat, potash, wood, and soybeans, long staples in Indonesia’s import basket, will become far more competitive. The removal of these barriers promises not just greater choice for consumers, but also lower costs for businesses and families in both countries.
Strengthening Investment and Supply Chain Resilience
The trade agreement is reinforced by parallel efforts to deepen investment ties. During the Ottawa visit, Carney and Subianto announced a market leader partnership between Export Development Canada (EDC) and the Indonesia Investment Authority (INA). Under this new arrangement, EDC will make up to $825 million in debt financing available to INA, targeting infrastructure, digital services, renewable energy, and advanced manufacturing.
This financial commitment signals a joint intention to attract investment and generate fresh business opportunities for Canadian exporters and investors throughout Indonesia. It’s a move designed to make supply chains not just stronger, but more resilient in a world where economic uncertainty often disrupts established patterns.
Additionally, a new agreement between the Business Council of Canada and Kadin, Indonesia’s Chamber of Commerce and Industry, was signed to further strengthen trade and investment ties. These partnerships go beyond paperwork—they aim to foster practical cooperation and shared growth.
Bilateral Trade Snapshot: Growth Amidst Imbalances
From January to July 2025, bilateral trade between Indonesia and Canada reached $2.72 billion—a jump of nearly 30 percent from $2.09 billion in the same period last year, as reported by Jakarta Globe. Despite this impressive growth, Indonesia ran a trade deficit, exporting $1.01 billion while importing $1.71 billion from Canada.
Indonesia’s top exports to Canada include natural rubber, footwear, cocoa, vegetable oils and fats, and textiles. Canada’s key exports to Indonesia are wheat, fertilizers, soybeans, chemical pulp, and gold. These numbers reflect the dynamic yet uneven nature of current trade, with Canada exporting more to Indonesia than vice versa. CEPA could be the catalyst that helps rebalance this relationship by making Indonesian goods more competitive in the Canadian market.
Opening Doors: Economic Opportunity and Strategic Diversification
For Indonesia, this agreement is historic. It is its first comprehensive trade deal with a North American country, coming just weeks after concluding nearly a decade of CEPA negotiations with the European Union. President Prabowo Subianto described the signing as only the beginning, emphasizing the need to ensure the agreement delivers real benefits to people, businesses, and investors.
For Canada, the agreement is a strategic move in a shifting global landscape. With traditional trade routes facing disruptions, diversifying partnerships has become essential. “Canada and Indonesia are unlocking major new economic opportunities together. Our new trade agreement is a game-changer for our workers and businesses, opening new markets and driving more investment between our growing economies,” Carney stated, as reported by Fibre2Fashion.
The CEPA is also expected to empower Canadian workers, providing high-quality career opportunities and making supply chains more robust. By opening access to Indonesia’s fast-growing market, Canadian exporters gain a foothold in Southeast Asia—a region with rising consumer demand and industrial potential.
Challenges and Next Steps: Delivering Tangible Results
While the signing of CEPA is a landmark moment, it is not the final destination. Trade Minister Budi Santoso noted, “This signing is only the beginning. Our next task is to ensure that this agreement delivers tangible benefits for our people, businesses, and investors.” The real test will come as both countries work to implement the deal, navigate compliance, and help businesses adapt to new market realities.
In practical terms, that means educating exporters about new opportunities, ensuring regulatory alignment, and monitoring the impacts on local industries and employment. It also means keeping lines of communication open between governments, business councils, and industry leaders.
For many small and medium-sized enterprises in both countries, the deal could be transformative. Suddenly, a Canadian wheat farmer or Indonesian textile manufacturer can look beyond their traditional markets and compete on a global stage. But with opportunity comes competition, and both sides will need to innovate and invest to stay ahead.
Looking Forward: A Blueprint for Sustainable Growth
The Canada-Indonesia CEPA stands as a symbol of what strategic partnership can achieve. By reducing barriers, strengthening investment, and building resilient supply chains, both countries are setting the stage for sustainable, long-term growth. As global trade continues to evolve, agreements like this provide a roadmap for nations seeking to thrive amid uncertainty.
For now, the focus shifts from negotiation rooms to boardrooms and factory floors. The next chapter will be written by the entrepreneurs, workers, and consumers who stand to benefit from this historic deal. The CEPA, poised to come into force in 2026, promises not just increased trade, but a deeper, more dynamic relationship between Indonesia and Canada.
Assessment: The Canada-Indonesia CEPA is more than a tariff-cutting exercise—it’s a strategic pivot that positions both countries for greater resilience and growth in a volatile global economy. Its success will hinge not just on the elimination of barriers, but on the ability of businesses and governments to turn new opportunities into lasting prosperity.