Indonesian Exports To Canada Are Predicted To Increase By 78.71 Percent Thanks To ICA-CEPA

Import exports (photo: Antara)

JAKARTA - The Institute for Economic and Community Research, Faculty of Economics and Business, University of Indonesia (LPEM FEB UI) projects that Indonesia's export surge to Canada will be up to 78.71 percent when the Indonesia 'Canada Comprehensive Economic Partnership Agreement (ICA-CEPA) agreement is officially enforced.

Quoting Antara, the research team consisting of Christina Ruth Elisabeth, Mohamad Dian Revindo, Andreas Alfonsus Saragih, Yoshua Caesar Justinus and Amardita Nur Fathia stated that the liberalization of trade in the CEPA scheme opens up great opportunities for Indonesian manufacturing and agricultural products to penetrate the North American market.

In a report received in Jakarta, Thursday, LPEM FEB UI said, although the average rate imposed by Canada is already low, which is around 4 percent, the ICA-CEPA scheme can still provide additional tariff margin benefits of 3-4 percent for a number of superior Indonesian products.

This is because the agreement, which was signed in September 2025 in Ottawa, Canada, includes the abolition of more than 90 percent of the trade rates between the two countries.

Economic simulations carried out also show that the elimination of tariffs on 209 Indonesian products has the potential to create additional exports worth US$504.6 million (Rp8.44 trillion, exchange rate 1 US$ = Rp16,722).

This figure consists of a potential new trade value of 400 million US dollars (Rp 6.69 trillion) and the rest is a transfer from suppliers to other countries.

LPEM FEB UI said that Indonesia's products most positively affected by ICA-CEPA are finished clothes, T-shirts, pants, and sports shoes, which have faced a high tariff in Canada, reaching 10'18 percent.

In addition to the textile and garment sectors, agroindustrial products, processed foods, beverages, cosmetics, chemicals and wood furniture are also projected to benefit greatly from the agreement.

Nevertheless, there are non-tariff (Non-Tariff Measures/NTMs) obstacles in the Canadian market which are still a challenge for Indonesian products. More than 88 percent of Canada's import value and 95 percent of import product classification posts are subject to non-tariff policies.

These obstacles include product safety standards, food sanitation regulations, and environmental provisions.

For example, textile and footwear products exporters need to fulfill the ISO 17025 standard chemical test, provide a label of English and French language information, and attach evidence of material origin in detail.

To optimize the benefits of ICA-CEPA, the LPEM FEB UI research team recommended that the government seek Mutual Recognition Agreement (MRA) to simplify certification and strengthen domestic test laboratory capacity.

LPEM FEB UI stated that the full utilization of ICA-CEPA could not only make Canada the main export partner country alternative, but also technology source, green investment, and diversification of Indonesia's export market in North America.