October 19, 2022
JAKARTA – Ottawa strengthened its trade relationship with Jakarta and the Indo-Pacific region as Canada Small Business, Export Promotion and International Trade Minister Mary Ng concluded her two-days long visit to Indonesia to advance at least two economic agreements.
Ng’s visit sought to promote the Indonesian-Canada Economic Partnership Agreement (ICA-CEPA), whose third round of negotiations will commence at the end of the month, as well as the Canada-ASEAN Free Trade Agreement (FTA).
During her visit, Ng met with Coordinating Maritime Affairs and Investment Minister Luhut Binsar Pandjaitan, Coordinating Economic Minister Airlangga Hartarto, Industry Minister Agus Gumiwang and Foreign Minister Retno LP Marsudi. Ng explained that the ICA-CEPA will enhance trade and investment between the two countries, especially products with halal certifications from Jakarta to Ottawa.
The first round of the ICA-CEPA negotiations was launched in mid-2021 to facilitate the elimination or reduction of tariff and nontariff barriers and the enhancement of access to Southeast Asian supply chains.
“Under the [ICA-CEPA], Indonesia’s GDP can increase by US$1.04 billion while Indonesian businesses can increase exports to Canada by $851 million in the long term,” Ng told reporters on Wednesday.
“The areas of negotiation that we will get into will just be areas where we know there are strengths. We know that Indonesia [is] building a strong digital economy. We know that Canada has some of the best agricultural products.”
Besides the ministers in Jakarta, Ng also took the opportunity to speak to some ASEAN officials.
“Just two months ago at the ASEAN Foreign Ministers Meeting, I announced the creation of a $1 million Canada-ASEAN trust fund to further strengthen Canada’s collaboration with [ASEAN],” said Ng to reporters on Wednesday.
“Meeting with ASEAN Secretariat Dato Lim Jock Hoi yesterday, we discussed Canada’s 45-year-long partnership with ASEAN and the key role that Indonesia plays in that relationship,” she added “
The ten member states of ASEAN make up for Canada’s sixth largest trading partner in 2020, with a total merchandise trade reaching $26.7 billion. The Canada-ASEAN FTA, first announced in late 2021, was meant to enhance commercial relations and strengthen Canada’s presence in the fast-growing market of the Indo-Pacific,” she said.
A 2018 Joint Feasibility Study for the agreement projected that the FTA can increase Ottawa’s GDP by $2.54 billion and advance ASEAN exports to $2.67 billion.
A new strategy
The Canada-ASEAN FTA has previously been described by experts as a “capstone” for Ottawa’s Indo-Pacific strategy, which sought to strengthen Canada’s presence in the region outside of its association with the United States.
In early June, Canada’s commitment to the region was seemingly set with Canada Foreign Minister Melanie Joly’s announcement that a new Indo-Pacific Advisory Committee had been formed.
Consisting of representatives of Ottawa’s private sector, civil society and the government, the committee aimed to “support the launch of an Indo-Pacific strategy for Canada”.
“We live in a world with increasing threats to global stability. Canada is actively investing in the Indo-Pacific region to support a free, open and inclusive Indo-Pacific that contributes to a rules-based international order,” said the release then.
Dafri Agussalim, an international relations expert from Gadjah Mada University (UGM) noted that Canada’s interest in the Indo-Pacific is consistent with the current trend of non-superpowers asserting their own stance outside of the US’ geopolitical policies. In navigating the superpower rivalry between Washington and Beijing, securing a safe position in the Indo-Pacific is quintessential, he added.
“For the most part, the bigger countries who are interested in the Indo-Pacific are actually interested in balancing out China’s influence in the economy and trade. But even so, not all countries could agree wholeheartedly with the strategies of, say, the US,” he explained to The Jakarta Post on Friday.
“Australia, for example, is faced with a dilemma. It wants to have a strong alliance with the US when it comes to security, but needs China economically. This is something that I’m guessing is happening to Canada as well.”
Canada’s relatively recent interest in the Indo-Pacific may be a little too late, Dafri suggested, noting that other countries like Australia have spent years asserting their presence in the area. Despite the non-ideal timing, the expert said he believed that Canada’s strategy will bode well with its national interest.
“[Ottawa] understands that if they are too reliant on the geopolitical framing of bigger nations, they will find it difficult to get any gains from the Indo-Pacific. Having their own strategy will prove useful.”