Explaining the Driver Factors Behind Indonesia’s Decision on the Indonesia-Canada Comprehensive Economic Partnership Agreement

Abstract

This article explains Indonesia’s decision to sign a Comprehensive Economic Partnership Agreement with Canada by assessing how economic and political motives interact. The study uses a qualitative descriptive design with a desk review of official trade and tariff data and policy documents from 2009 to 2025. The findings show strong complementarity between Indonesia’s export structure and Canada’s demand in manufacturing and the light industry. Before the agreement, most-favoured-nation tariffs on apparel of about 17.3 percent and on leather goods of about 16.1 percent created a price gap relative to suppliers that already enjoyed preferences. The agreement narrows this gap through staged tariff elimination and clearer operational rules that facilitate the use of preferences. Politically, the partnership broadens Indonesia’s cross-regional network, adds a direct link to a G7 economy, and supports Indonesia’s standing in ASEAN. The study concludes that Indonesia’s choice reflects mutually reinforcing economic and political drivers that are expected to reduce tariff discrimination and increase the predictability of market access.