Canada's Objectives for Negotiations for a Canada-Indonesia Comprehensive Economic Partnership Agreement
On June 20, 2021, Canada and Indonesia jointly announced the launch of negotiations toward a Comprehensive Economic Partnership Agreement (CEPA). The Government of Canada submitted to Parliament its notice of intent to enter into these negotiations on June 21, 2021, in accordance with the amended Policy on Tabling Treaties in Parliament.
In negotiating a CEPA with Indonesia, the government’s objective will be to create new opportunities and meaningful benefits for Canadian businesses, workers and families through the elimination of tariff and non-tariff barriers. The government will seek to ensure that the CEPA promotes sustainable prosperity and that the benefits and opportunities of trade with Indonesia are widely shared, including with traditionally underrepresented groups, such as women and women‑owned businesses, Indigenous peoples, and small and medium-sized enterprises (SMEs). Through a CEPA, Canada will seek to enhance access to Southeast Asian supply chains and establish a more transparent and predictable environment for trade and investment.
A Canada-Indonesia CEPA has the potential to unlock new market access for Canadian goods and services to Canada’s largest merchandise market in the region, as well as create new opportunities for two-way investment. Economic modelling estimates that a CEPA with Indonesia could increase Canada’s GDP by $328 million and grow Canada’s exports to Indonesia by $447 million across a broad range of sectors.
In addition to seeking new commercial opportunities, Canada will seek to uphold labour rights and standards, promote environmental sustainability and promote gender equality, as well as preserve the right of governments to regulate in the public interest, including in areas such as public health and safety, education, social services and the environment. In addition, the government will seek to preserve flexibility to adopt and maintain measures related to Canada’s cultural sector, to fulfill Canada’s legal obligations to Indigenous peoples, including Aboriginal rights as recognized and affirmed by Section 35 of the Constitution Act, 1982, and the rights set out in self-government agreements. The government will also seek to preserve the supply management system for dairy, poultry and eggs, including by not conceding any additional market access for supply-managed goods.
In pursuing the CEPA, the government will continue to be guided by feedback obtained from Canadians during public consultations. This includes feedback received during public consultations made in early 2021 as well as ongoing engagement with a broad range of stakeholders that will be conducted throughout the negotiating process. Canada’s approach to negotiations will also be guided by a comprehensive Gender-based Analysis Plus and an initial environmental assessment.
The government is fully committed to a high level of transparency throughout the negotiation of a Canada-Indonesia CEPA. In this spirit, the government has agreed to publish a summary of its specific negotiating objectives for the negotiation of new comprehensive trade agreements.
In line with the considerations listed above, Canada will seek to negotiate a CEPA that:
Trade in goods
National Treatment and Market Access
- Delivers commercially meaningful market access, achieved through the elimination of tariff and non-tariff barriers, and addresses the concerns of certain sensitive Canadian sectors. This includes fully defending Canada’s supply-managed sectors.
- At a minimum, reaffirms key international market access commitments, and includes provisions and mechanisms to prevent non-tariff barriers, but addresses them if they arise.
Rules of Origin and Origin Procedures
- Includes rules of origin and product-specific rules that allow for cumulation of materials and production. Canada will seek to establish criteria for determining the origin of goods that are clear, as simple as possible, leave little room for administrative discretion, and take into account the existing production patterns and regional integration.
- Sets out the procedures to be used by customs administrations to both administer the rules of origin and to enable the trading community to take advantage of the preferential tariff treatment afforded under a CEPA. These procedures will support the evolving trade environment and allow certification of origin by the exporter with verifications performed on a risk-managed basis after the good is imported.
Customs and Trade Facilitation
- Affirms and builds upon the WTO Agreement on Trade Facilitation. This will include seeking provisions that promote a transparent and predictable border environment that facilitates legitimate trade in goods through the modernization, simplification and standardization of trade-related customs procedures. Such provisions will include advance rulings and risk management.
- Reaffirms the rights and obligations of parties under the WTO agreements in respect of global safeguard, anti-dumping and countervailing measures.
Sanitary and Phytosanitary Measures
- Affirms and builds upon the WTO Sanitary and Phytosanitary Measures (SPS) Agreement to enhance transparency, strengthen cooperation and facilitate trade through science-based measures, while preserving the right to take measures necessary for the protection of human, animal or plant life or health, and to establish a bilateral mechanism to address SPS issues.
Technical Barriers to Trade
- Incorporates and builds on the key commitments of the WTO Agreement on Technical Barriers to Trade and sets out provisions that prevent and address disruptions created by regulations and associated testing or certification requirements.
- Promotes regulatory transparency and predictability while preserving each party’s right to regulate in the public interest to achieve legitimate public policy objectives.
Investment and trade in services
- Includes rules regarding the promotion and protection of investment and investors subject to a negative list of reservations, as well as transparent and predictable rules and disciplines relating to investor-state dispute settlement.
Cross-Border Trade in Services and Domestic Regulation
- Sets out comprehensive commitments subject to a negative list of reservations to secure market access, address barriers, and substantially improve predictability, certainty and transparency with respect to trade in services between the parties. Canada will seek to address disciplines on domestic regulations and provisions to facilitate trade in professional services, including non-binding guidelines for the negotiation of mutual recognition agreements.
- Includes specific trade and investment protection commitments for financial services that reflect the specialized and highly regulated nature of the sector, while safeguarding the parties’ ability to take prudential measures.
Temporary Entry for Business Persons
- Seeks to enhance transparency and to facilitate the temporary movement of certain types of business persons in support of bilateral trade in goods, services and investment.
- Maintains a competitive telecommunications marketplace through transparent and effective regulations.
- Facilitates e-commerce as a means of trade and drives inclusive economic growth.
- Encourages transparency and cooperation in government procurement and provides reciprocal access to government procurement markets.
- Sets out competition policy and consumer protection commitments to ensure that the benefits of trade liberalisation are not offset by anticompetitive business activities or misleading or deceptive commercial activities.
State-Owned Enterprises and Designated Monopolies
- Ensures that large commercial state-owned enterprises (SOEs) and designated monopolies generally operate in accordance with market principles, while recognizing the role of SOEs in the public domain.
- Supports efficient, predictable and transparent intellectual property (IP) systems that balance the interests of rights holders, intermediaries and users, and consider broader public policy objectives. To reduce barriers to trade and investment, the CEPA will seek to promote and build international and regional standards in the administration, protection and enforcement of IP rights, including through cooperation between Canadian and Indonesian IP officials.
- Includes comprehensive and enforceable labour commitments to help ensure that trade and investment do not come at the expense of workers’ protections. Canada recognizes that promoting fundamental labour rights supports equitable growth and stability.
- Includes comprehensive and enforceable environment commitments to help ensure that environmental protection is upheld as trade and investment is liberalized and to promote the mutual supportiveness of trade and environment. Canada recognizes that the promotion of trade and the protection of the environment are interconnected and mutually beneficial goals, rather than mutually exclusive.
Good Regulatory Practices
- Supports the development of predictable and evidence-based regulations by encouraging widely accepted good regulatory practices in Canada and Indonesia.
Transparency, Anti-Corruption and Responsible Business Conduct
- Facilitates a transparent and predictable environment for trade and investment by promoting transparency, anti-corruption and responsible business conduct.
Trade and Gender
- Includes dedicated provisions on trade and gender that will seek to address the specific interests, needs and unique challenges that women and other underrepresented groups face when participating in international trade and investment, and to ensure that they have access to the benefits and opportunities that may flow from bilateral trade and investment relations between Canada and Indonesia.
Trade and Indigenous Peoples
- Includes dedicated provisions on trade and Indigenous peoples that will seek to address the specific interests, needs and unique challenges that Indigenous peoples face when participating in international trade and investment, and to ensure that Indigenous peoples have access to the benefits and opportunities that may flow from bilateral trade and investment relations between Canada and Indonesia.
Small and Medium-Sized Enterprises
- Includes provisions dedicated to SMEs to recognize the significant contribution of SMEs to economic growth and development, and to ensure that SMEs are able to utilize and benefit from the opportunities accruing from bilateral trade and investment relations between Canada and Indonesia. Provisions will address the specific interests and unique challenges that SMEs face in doing business in foreign markets, and will seek to reduce barriers to their participation in international trade and investment.
- Provides for fair, transparent, efficient and effective means of resolving differences relating to the agreement that arise between the parties, including consultations and binding dispute settlement.
Institutional and General Exceptions
- Includes detailed provisions relating to the implementation and ongoing functionality of the agreement, including the creation of an institutional body to oversee implementation and general exceptions. Exceptions will ensure that the parties retain the right to regulate in the public interest, including for a party’s essential security interest and other public welfare reasons.
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