Jakarta. Indonesia is intensifying efforts to diversify its export markets following the United States' implementation of reciprocal tariff policies targeting several of its trading partners, including Indonesia. Spearheaded by the Trade Ministry, the initiative aims to sustain export growth by expanding into non-traditional and emerging markets.

The new US tariffs are expected to suppress demand for various Indonesian exports, prompting the government to seek alternative markets to maintain trade momentum.

"We have been exploring alternative, non-traditional markets even before these tariffs were introduced," said Djatmiko Bris Witjaksono, Director General of International Trade Negotiations at the Trade Ministry, during a press briefing in Jakarta on Monday.

One milestone is the signing of a Joint Statement on the Conclusion of the Indonesia-Canada Comprehensive Economic Partnership Agreement (CEPA). The agreement extends beyond trade in goods, offering preferential treatment for Indonesian service providers in sectors including business services, telecommunications, construction, tourism, and transportation.

On the investment front, the deal aims to ease market access for Indonesian investors across manufacturing, agriculture, fisheries, forestry, mining, and energy infrastructure sectors.

The CEPA also encompasses broader commitments covering intellectual property rights, regulatory best practices, e-commerce, competition, small and medium enterprises (SMEs), women’s economic empowerment, environmental sustainability, and labor rights.

"Canada offers promising potential as an alternative market, especially within North America. It will serve as a strategic export destination supported by both tariff and non-tariff mechanisms," Djatmiko said.

Last December, Canadian Trade Minister Mary Ng visited Jakarta to mark the substantive conclusion of the CEPA negotiations. It took the two G20 economies around three years to wrap up talks on the agreement, which is expected to remove significant trade barriers. The official signing is scheduled this year, with implementation targeted for 2026, pending ratification by both countries' legislatures.

Bilateral trade between Indonesia and Canada reached $2.9 billion from January to October 2024, up from $2.8 billion in the same period the previous year. Although Indonesia currently imports more from Canada than it exports, the trade deficit has narrowed from $799 million to $574 million by the end of October. Trade Minister Budi Santoso had said the CEPA would help Indonesian palm oil and paper products penetrate the Canadian market and contribute to a more balanced trade relationship. The agreement includes liberalization of up to 90.5 percent of Canada’s tariff lines for Indonesian goods.

The CEPA is also expected to facilitate investments in sectors such as mining, manufacturing, and agriculture. Canadian foreign direct investment (FDI) into Indonesia totaled $357.4 million across 614 projects during the first nine months of 2024.

In addition to Canada, Indonesia recently restructured its trade relationship with the United Arab Emirates (UAE), turning a trade deficit into a surplus.

The government is also pursuing a Preferential Trade Agreement (PTA) with Tunisia, which Djatmiko said could serve as a gateway for Indonesian exports to North Africa.

Looking ahead, Indonesia is eyeing new trade ties with South America --particularly Peru-- the European Union, and the Eurasian Economic Union, which includes Russia, Belarus, and Kazakhstan.

“Eurasia holds immense potential. If we can secure trade agreements with this bloc, it would open up significant opportunities for Indonesia,” Djatmiko said.

The Indonesia-EU Comprehensive Economic Partnership Agreement (EU-CEPA) has been under negotiation since July 2016. Indonesia currently enjoys a trade surplus with the EU, which surged to nearly $4.5 billion in 2024, up from $2.5 billion in the previous year.

Indonesia has also sought Australia's support in gaining broader access to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), as Jakarta aims to deepen trade relations with Mexico and other South American economies.

The CPTPP currently includes Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore, the United Kingdom, and Vietnam.

Under former US President Donald Trump's sweeping trade policies, Indonesian exports face a 32 percent export tax as part of broader tariffs targeting countries with substantial trade surpluses against the US. The Central Statistics Agency (BPS) reported Monday that Indonesia recorded a $4.32 billion surplus in the first quarter of 2025, up from $3.61 billion a year earlier.

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