Canada, Indonesia launch trade pact talks

First round of negotiations expected later this year

File photo of containers at a seaport in Jakarta. (Leolintang/iStock/Getty Images)

Canada has formally declared it will start negotiations this year on a trade pact with Indonesia, a move ag exporters hope will stabilize and strengthen their market access to the Asia-Pacific region.

Canada’s Trade Minister Mary Ng and her Indonesian counterpart Muhammad Lutfi on Sunday declared the launch of negotiations on a comprehensive economic partnership agreement (CEPA).

In a statement, they said they’ve “instructed officials to hold the first round of negotiations at the earliest opportunity,” expected in late 2021.

Canadians “expressed a high level of support for a possible Canada-Indonesia CEPA” during public consultations earlier this year, the government said in a release.

About 78 per cent of respondents to those consultations, launched in January, were deemed supportive of a free trade agreement.

Of those, about a third came from the agriculture and agri-food sectors, listing market access, dealing with technical trade barriers, investment and sanitary and phytosanitary measures as priorities. Environment, inclusive trade and labour issues ranked lower.

Meat exporters want challenges of entering the Indonesian market addressed. Particularly, they mentioned challenges from importing products with Halal certification, and issues stemming from how Canada’s meat inspection system meshes with packaging or labelling requirements in Indonesia.

Supply-managed sectors expressed support for a deal, so long as the federal Liberals uphold a commitment to not provide any more market-access to supply managed goods.

Across the board, there is broad support for Canada to pursue a bilateral deal with Indonesia at the same time it seeks a broader pact with the 10-nation Association of Southeast Asian Nations (ASEAN), which is headquartered in Indonesia.

Canada and the ASEAN group held two rounds of exploratory talks, in 2018 and 2019, toward a possible trade pact. Four ASEAN nations — Vietnam, Malaysia, Singapore and Brunei — are already parties to the Trans-Pacific Partnership (CPTPP) trade pact with Canada.

“References were made to the fact that pursuing a trade agreement with Indonesia would complement Canada’s other trade policy priorities, such as Canada’s overall trade diversification strategy, expansion of the (CPTPP) through accessions, and deepening commercial ties with the fast-growing Indo-Pacific region,” a consultation report from Global Affairs Canada said.

Indonesia has expressed a desire to negotiate a broader deal in parallel with a bilateral one.

“We see the benefit of both (deals),” Iffah Sa’aidah, a trade attaché in Ottawa with the Indonesian government, said. “There will be a benefit of both of the trade deals, usually the bilateral trade deal is more broad and deeper, maybe more technical and economic co-operation.”

Indonesia is a co-ordinator of ASEAN’s pursuit of a trade deal with Canada, for which formal negotiations are expected to begin in early 2022.

By itself, Indonesia is “one of the top destinations for Canadian cereal crops and a gateway into the rapidly growing Asia Pacific region,” Dean Dias, CEO of Cereals Canada, said in a release Monday hailing the two countries’ announcement.

Indonesia, he said, “is a major market and source of growth, especially for Canadian wheat exports. Consumers there buy 11 per cent of Canada’s wheat exports to the world, bringing over $600 million in value on average to Canadian farmers and exporters each year.”

Cereals Canada, he said, expects the CEPA negotiations to “strengthen the stability of market access over the long-term. For Canadian farmers and exporters, promoting science-based policies that elevates the trade and business environment is a real priority.”

Global Affairs Canada, meanwhile, said in its report that a bilateral pact with Indonesia could “contribute significantly to Canada’s overall economic, social and environmental priorities, in line with Canada’s commitment to an inclusive approach to trade.”

Including issues such as the environment or labour rights in trade deals are relatively new to Indonesian negotiators, who have expressed caution over Canada’s insistence on including such measures.

Despite such issues ranking as a lower priority, Global Affairs noted in its report “many submissions indicated support for Canada’s inclusive approach to trade, which aims to ensure that the benefits of trade are more widely shared. A few submissions mentioned that Canada is well-placed to ensure that any future agreement promotes equality, non-discrimination and human rights in both Canada and Indonesia.”

Some stakeholders suggested labour standards and human rights issues be addressed through a dedicated chapter in the trade agreement.

“Several stakeholders mentioned that poor health and safety regulations, low compensation and forced child labour in Indonesia are all factors that Canada should consider when negotiating an agreement,” read the report from Global Affairs.

Environmental concerns, including Indonesia’s limited environmental regulations, were also raised as a concern.

In Sunday’s announcement, the two countries’ trade ministers said jointly that “without prejudice to the final outcomes, the negotiations would cover mutually agreed areas of interest to both Indonesia and Canada, including market access, rules to facilitate trade and investment, and co-operation.”

Those talks, they said, would take into account “each other’s sensitivities and different levels of development.”

— Includes files from Glacier FarmMedia reporter D.C. Fraser in Ottawa.

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