ASEAN, Canada A Step Closer to Concluding Trade Deal by 2025

Jayanty Nada Shofa
October 2, 2023 | 9:49 pm
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President Joko "Jokowi" Widodo shakes hands with Canadian Prime Minister Justin Trudeau after the ASEAN-Canada Summit in Jakarta on September 6, 2023. (Photo Courtesy of the 43rd ASEAN Summit)
President Joko "Jokowi" Widodo shakes hands with Canadian Prime Minister Justin Trudeau after the ASEAN-Canada Summit in Jakarta on September 6, 2023. (Photo Courtesy of the 43rd ASEAN Summit)

Jakarta. ASEAN and Canada are aiming to conclude the negotiations on a free trade deal by 2025, and both sides have recently moved a step closer to that goal.

The Indonesian province of Bali last week hosted the fifth trade negotiating committee for the ASEAN-Canada Free Trade Agreement (ACAFTA) talks. Djatmiko Bris Witjaksono, a director-general at the Indonesian Trade Ministry, was the lead negotiator for ASEAN. Djatmiko said that both sides had agreed to wrap up the negotiations within 2 years.

“The ACAFTA will become ASEAN’s first FTA with the Americas. Negotiators must work towards the substantial conclusion of its negotiations by 2025,” Djatmiko was quoted as saying in a recent press statement.

Djatmiko said the fifth round of the ACAFTA talks discussed several outstanding issues, including on “labor and environment”. The Bali meeting also brought together a number of working groups, among others, on investment, intellectual property, and trade in goods. The recent negotiating round also had working groups in the services sector.

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“In this round, we have agreed on many articles and paragraphs,” Djatmiko said.

ASEAN and Canada agreed to launch the ACAFTA negotiations in 2021. Canada called the 10-membered ASEAN grouping its fourth-largest merchandise trading partner in 2021. Last year, Canada-ASEAN merchandise trade totaled $40.7 billion. 

A joint feasibility study shows that a Canada-ASEAN FTA that liberalizes trade in goods reduces non-tariff measures, and improves trade facilitation can increase the Southeast Asian bloc’s gross domestic product (GDP) by $39.4 billion. The same study shows that Canada is expected to get a $5.1 billion in GDP gain. The same deal is expected to add $7.1 billion to Indonesia’s GDP.

The government reported that Indonesia-Canada trade rose from $3.1 billion in 2021 to $4.3 billion the following year. Indonesia, however, posted a $1.7 billion trade deficit with Canada in 2022. 

Indonesia and Canada are also currently trying to seal a bilateral comprehensive economic partnership agreement --also known as the ICA-CEPA-- by next year. Indonesia said the ICA-CEPA could boost its GDP by $1.4 billion. The deal is also expected to increase Indonesia’s exports to Canada by $851 million in the medium term.

Read More: UK Unveils $33m Grant for Indonesia's Green Growth During Trevelyan's Visit

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