ICA-CEPA Is Indonesia's Solution To Revoke The Trade Deficit With Canada

Minister of Trade, Budi Santoso. (Mery Handayani / VOI)

JAKARTA - Indonesia-Canada Comprehensive Economic Partnership Agreement or Indonesia-Canada Comprehensive Economic Partnership Agreement (ICA-CEPA) is a solution to overcome Indonesia's trade deficit towards Canada.

Based on data from the Ministry of Trade (Kemendag), the total value of Indonesia-Canada trade in the last five years for the 2019 to 2023 period increased by 11.24 percent with a trade value in 2023 of 3.4 billion US dollars.

Meanwhile, the total value of Indonesia-Canada trade in the period January to September 2024 was 2.6 billion US dollars, an increase of 4.07 percent compared to the same period in 2023. However, Indonesia is still experiencing a deficit with Canada.

The Minister of Trade, Budi Santoso said last year, Indonesia's trade balance deficit with Canada touched 1.7 billion US dollars. But for this year, according to Budi, the trade balance deficit with Canada has dropped dramatically.

"Indonesia-Canada indeed we are now a deficit of 846 million US dollars. Last year we had a larger deficit, 1.7 billion US dollars. So now our deficit has decreased," he said at a press conference at the Mulia Hotel, Jakarta, Monday, December 2.

Therefore, the government plans to change this trade deficit to a surplus by taking advantage of the Indonesia-Canada Comprehensive Economic Partnership Agreement (ICA-CEPA).

For your information, the Indonesia-Canada Comprehensive Economic Partnership Agreement (CEPA) negotiations will finally be completed after 2.5 years of rolling. The trade agreement will be implemented in 2026.

"What will happen in the future? Yes, of course, we hope for a surplus, because with CEPA, we get a lot of market access, a lot of goods or products that we can enter, not only to Canada, but also to other countries through Canada," he said.

With this ICA-CEPA, Budi hopes that Indonesia's market access to North American countries will be wider open. He said that with this collaboration, Indonesian products could be marketed through Canada.

"In fact, with Indonesia-Canada CEPA, we hope that it will be easier for us to enter North American countries through Canada. So this is an access that we can use to make it easier for us to access or market our products to North America," said Budi.

Budi explained that with the ICA-CEPA, Indonesia achieved liberalization of up to 90.5 percent of Canada's total import duty rates with a trade value of 1.4 billion US dollars.

Some of Indonesia's priority products that get access from Canada are textiles, paper and its derivatives, wood and its derivatives, processed foods, swallow's nest, and palm oil.

As for the service trade sector, this agreement guarantees preferential treatment for Indonesian service providers including service sectors such as business services, telecommunications, construction, tourism, and transportation.

Meanwhile, in terms of investment, there is an opening of market access in the manufacturing, agriculture, fisheries, forestry, mining, and excavation sectors, as well as energy infrastructure.

"Four, other commitments are intellectual property rights, good regulatory practices, e-commerce, business competition, MSMEs, women's economic empowerment, the environment, and employment," he explained.

Therefore, Budi also requested that Indonesian business actors take advantage of this economic cooperation, before there were trade barriers to other countries.

"So this is precisely one way how we accelerate our market process, and to avoid new obstacles from other countries. We can enter other gates through other countries, to enter the country next to it," he added.