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Canada, Indonesia Trade Talks Begin for Comprehensive Economic Partnership Agreement

The CEPA would benefit Canadian exporters and importers as it will improve access to ASEAN’s largest economy and the world’s fourth most populous country.

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Canada, Indonesia Trade Talks Begin for Comprehensive Economic Partnership Agreement

On January 11, 2021, Canada’s Minister of Small Business, Export Promotion, and International Trade, Mary Ng, announced that the country has launched public consultations on a Comprehensive Economic Partnership Agreement (CEPA) with Indonesia. 

This public consultation is a regulatory process that takes into account the public’s input for large-scale projects, policies, and laws, among others. Canadians will have until February 23, 2021, to submit their response to these consultations.

The CEPA would benefit Canadian exporters and importers as it will improve access to ASEAN’s largest economy and the world’s fourth most populous country.

Bilateral trade between Canada and Indonesia remains small — amounting to just over US$3.7 billion in 2019 — compared to its neighbor, the US, whose total bilateral trade with Indonesia reached US$30 billion in the same year.

Canada is a major exporter of wheat and meslin products to Indonesia, valued at over US$500 million and although demand dipped in 2020 due to the COVID-19 pandemic, it is expected to increase again in 2021, presenting scalable business opportunities for Canadian suppliers.

Indonesia imports over 11 million tons of wheat annually — making it one of the world’s largest importers of the crop — as the country’s tropical climate makes it difficult to grow the crop.  Rising per capita income as well as the growing middle-class have been attributed to the increased consumption of wheat-based products.  

Canada roughly holds a 16 percent market share, exporting over 2.28 million tons to Indonesia and thus making the country Canada’s largest export market for the crop. Canadian durum wheat is especially popular in Indonesia, as it is used to make bread and noodles. Indonesia is the world’s second-largest instant noodle market only after China with demand reaching over 12 billion servings yearly.

The country does face competition from Australia, which accounts for between 40 to 60 percent of Indonesia’s annual wheat imports, valued at over US$1.2 billion. Australian businesses have also another advantage in this sector the Indonesia and Australia ratified the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA), which was ratified in February 2020. The IA-CEPA will improve market access for goods and nearly all goods exported from each other’s market will have reduced tariffs or will be tariff-free.

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This article was first published by AseanBriefing which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in in China, Hong Kong, Vietnam, Singapore, India, and Russia. Readers may write to info@dezshira.com.

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