Indonesia and Canada formalized a Comprehensive Economic Partnership Agreement (CEPA) on Monday, marking a significant milestone in strengthening economic ties between the two G20 nations. The agreement, signed in Jakarta by the trade ministers of both countries, comes after three years of negotiations and is set to take effect in 2026, as reported by several news agencies.

Indonesia’s trade minister, Budi Santoso, emphasized the importance of the partnership in advancing the country's economic and sustainability goals. He expressed gratitude for Canada’s support in prioritizing Indonesia’s critical minerals sector, which plays a vital role in the nation’s sustainable development. “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,” Santoso stated during a joint press conference.

Indonesia, known for its vast reserves of natural resources, is the world's largest supplier of nickel ore and boasts significant deposits of tin, copper, and bauxite. The CEPA agreement is expected to bring substantial benefits to Indonesia by liberalizing 90.5% of tariffs on goods entering Canada, encompassing a trade value of $1.4 billion.

Trade between Indonesia and Canada has been steadily increasing in recent years. According to Indonesia’s trade ministry, bilateral trade reached $3.4 billion in 2022. Canada, however, estimated the total trade volume between the two nations at $5.1 billion in 2023, showcasing a growing economic relationship. Canada’s principal exports to Indonesia include agricultural products and fertilizers, while Indonesia primarily exports machinery, electrical equipment, garments, and footwear to Canada.

In addition to enhancing trade in goods, the partnership opens avenues for collaboration in various sectors. Canada’s international trade minister, Mary Ng, highlighted the participation of Canada’s cattle industry during the Jakarta visit. The industry is exploring opportunities to contribute to Indonesian President Prabowo Subianto’s flagship program, which aims to provide free school meals starting next year. This initiative reflects the broader scope of cooperation facilitated by the CEPA, extending beyond traditional trade and into areas of shared social and economic development.

The CEPA represents a forward-looking approach to economic relations, aligning with global sustainability goals. By leveraging Indonesia’s resource wealth and Canada’s advanced industries, the agreement aims to foster mutual growth, drive green economic initiatives, and enhance investment flows between the two countries. The partnership not only strengthens bilateral trade but also underscores a shared commitment to sustainable development and economic resilience, setting the stage for deeper collaboration in the years to come.