Key Points
- Landmark CEPA signed with Indonesia
- Over 95% of Canadian exports to benefit
- Agreement includes defence cooperation
- Implementation expected in 2026
ISLAMABAD: Canada has signed its first-ever bilateral trade agreement with a member of the Association of Southeast Asian Nations (ASEAN), concluding a Comprehensive Economic Partnership Agreement (CEPA) with Indonesia to enable tariff cuts and investment expansion.
Prime Minister Mark Carney, in a statement issued by his office in Ottawa, called the pact “a historic breakthrough” and said it “will give Canadian businesses new tools to compete and succeed in one of the world’s fastest-growing economies. The agreement would support Canada’s Indo-Pacific Strategy by opening doors in a key Southeast Asian market,” he maintained.
The Prime Minister’s Office said that, more than 95 per cent of Canadian exports to Indonesia will see tariffs reduced or eliminated once the CEPA takes effect in 2026. “This agreement will create good jobs at home while supporting sustainable growth abroad,” Carney added.
Learn more: https://t.co/mRIoZpHxgX
— Mark Carney (@MarkJCarney) September 25, 2025
According to Indonesian officials, Jakarta sees the deal as “a new chapter in bilateral ties,” particularly in agriculture, energy, and clean technology. Luhut Binsar Pandjaitan, Indonesia’s Coordinating Minister for Maritime Affairs and Investment, told Reuters the agreement “underscores Indonesia’s role as Canada’s strategic partner in the Indo-Pacific region.”
Alongside the trade deal, Export Development Canada and the Indonesia Investment Authority signed a Market Leader Partnership, enabling up to CAD 825 million in debt financing to support trade and investment projects. The agreement was formally signed in Ottawa during the state visit of Indonesian President Prabowo Subianto, who met Prime Minister Carney at Parliament Hill. The two leaders witnessed the signing ceremony, which Canadian officials described as the highlight of the Indonesian president’s first official trip to Canada.
In a further step, Canada and Indonesia also unveiled a Defence Cooperation Agreement covering maritime security, cyber defence, peacekeeping, and military education. Canadian officials told Reuters the defence component reflects Ottawa’s aim to deepen strategic ties in Southeast Asia amid shifting global dynamics.
The CEPA is considered a monumental breakthrough in Canada’s efforts to diversify trade away from its heavy reliance on the United States. “Diversifying our trade is not just smart economics, it is smart geopolitics,” Carney said in the Ottawa statement. Analysts told Reuters that Indonesia’s large and rapidly growing economy makes it a crucial partner as Ottawa seeks stronger footholds in the Indo-Pacific region.
Canada is also negotiating a free trade agreement with the Association of Southeast Asian Nations (ASEAN) as a bloc. Officials told Reuters the bilateral deal with Indonesia was prioritised to secure faster market access. Trade analysts noted that while the ASEAN talks are ongoing, the CEPA with Indonesia marks Ottawa’s first concrete breakthrough in Southeast Asia, offering a model that could shape future agreements with other ASEAN members.
