On November 15, 2024, Indonesia and Canada officially announced the substantial conclusion of negotiations of the Comprehensive Economic Partnership Agreement (CEPA). This is an important milestone in the bilateral relationship between the two countries, and is likely to contribute positively to the negotiation process of the ASEAN-Canada Free Trade Agreement (ASEAN-Canada FTA).

The CEPA between Indonesia and Canada not only focuses on trade in goods but also covers many other areas such as trade in services, investment, and sustainable development, including labour, environment, and women’s economic empowerment, and co-operation on critical minerals.

With CEPA, Indonesia expects to take advantage of accessing the large North American market, while Canada will increase its presence in the ASEAN region - one of the fastest growing economic centers in the world.

Two-way trade turnover between Indonesia and Canada in 2023 reached 5.1 billion USD, with strong growth potential in the fields of agriculture, energy, and manufacturing. CEPA is expected to increase this turnover through both tariff reduction and elimination of non-tariff barriers.

Indonesian Trade Minister Zulkifli Hasan emphasized that CEPA is an important stepping stone for Indonesia to become a hub in the global supply chain. Minister of Export Promotion, International Trade and Economic Development of Canada Mary Ng also assessed CEPA as a demonstration of Canada's strategic commitment to the Asia-Pacific.

In the context of ASEAN and Canada negotiating a Free Trade Agreement (in which Indonesia plays the role of Co-Chair), the CEPA between Indonesia and Canada can be used as a reference for the provisions in the ASEAN-Canada FTA, especially new issues that ASEAN has not committed to in the bloc's current FTAs, thereby indirectly promoting the progress of negotiations between ASEAN and Canada. In addition, Canada's successful signing of CEPA with Indonesia will create a positive signal for other ASEAN countries, especially ASEAN countries that do not have an FTA with Canada, about the possibility of promoting extensive economic cooperation with Canada.

The successful negotiation of the CEPA will not only benefit the Indonesia-Canada bilateral relationship, but will also help shape ASEAN-Canada relations in a rapidly changing global geopolitical and economic context. As a comprehensive strategic partner of ASEAN, Canada has the opportunity to expand its economic engagement with the entire region while strengthening its presence in the Asia-Pacific.

The ASEAN-Canada Free Trade Agreement (ACaFTA) was officially launched at the 10th AEM-Canada Consultations held in November 2021. After 09 rounds of negotiation, ASEAN and Canada have made some progress in traditional areas such as trade in goods, trade in services, investment, but further discussions are needed on the scope and level of ambition in negotiations on non-traditional areas such as labor, inclusive trade, state-owned enterprises and the environment. Currently, ASEAN and Canada aim to substantially conclude negotiations of ACaFTA by 2025.