Indonesia and Canada sign trade pact amid US pressure – What you need to know
Indonesia and Canada have signed a trade pact that expands economic and security ties at a time when the United States is reshaping its global trade relationships.
The Canada–Indonesia Comprehensive Economic Partnership Agreement (CEPA), which was signed during Indonesian President Prabowo Subianto’s state visit to Ottawa, is Canada’s first-ever trade deal with an ASEAN nation. The agreement, set to take effect in 2026, eliminates tariffs on more than 95% of Canadian exports, boosting competitiveness for wheat, potash, and agri-food products in Indonesia’s fast-growing market.
Canadian Prime Minister Mark Carney hailed the pact as “game-changing,” stressing its role in securing investment in critical minerals, clean technology, and financial services. In 2024, merchandise trade between the two countries totalled US$5.6 billion, with Canadian exports reaching US$2.3 billion, making Indonesia Canada’s largest export market in Southeast Asia (Government of Canada trade data).
The deal comes alongside a new defence cooperation agreement covering maritime security, cyber defence, and peacekeeping, a move Carney called a “critical step” in Canada’s Indo-Pacific Strategy.
Canada is also backing Indonesia’s sovereign wealth fund, with Export Development Canada pledging up to CAD$825 million (US$594 million) in financing for infrastructure, renewable energy, and agriculture projects.
The agreement positions Canada as a deeper player in Asia’s economic networks, while Indonesia, projected by PwC to be among the world’s five largest economies by 2050, gains a powerful Western partner beyond Washington.
This story is written and edited by the Global South World team, you can contact us here.
