Canada’s lumber could be headed for Southeast Asia—and not the United States—after International Trade Minister Maninder Sidhu signed a Comprehensive Economic Partnership Agreement (CEPA) with Indonesia late last week. The new deal promises duty-free access for up to 95 per cent of Canadian exports within the next eight to 12 months, opening new avenues for Ottawa’s push into fast-growing Asian markets.
Under Prime Minister Mark Carney’s export diversification drive, this is Canada’s first trade pact in the Indo-Pacific region. “I see a lot of opportunities in agriculture, in energy and telecom, in defence and aerospace,” Sidhu said, highlighting the full spectrum of goods Canadian businesses can offer. As it stands, bilateral trade between Canada and Indonesia reached just over C$5 billion last year—a figure that is dwarfed by Canada’s C$1 trillion trade with the United States. However, Sidhu predicts ratification of CEPA within a year and expects two-way commerce to more than double to over C$10 billion within six years.
Canada already ships cereals, oilseeds, wood pulp, fertilisers and machinery to Indonesia. In 2023, Indonesia imported 2.4 million tonnes of non-durum wheat, making it Canada’s second-largest buyer of that grain. With preferential duties soon to apply, Canadian exporters anticipate even greater demand for staples and industrial inputs.
The timing comes after Wood Central reported that the timber export industry has so far successfully withstood tariff and duty uncertainty, with output jumping 2.5 per cent in July—1.2 per cent above forecasts—primarily driven by a surge in mass-timber beam exports from British Columbia. In Delta, B.C., workers “were even driving screws into mass timber beams,” according to Thomas Ryan, an economist for Capital Economics. “The increases in manufacturing and wholesale sales in July suggest tentative signs of a recovery in two of the sectors hardest hit by U.S. tariffs.”
Sidhu says Canada will build on the momentum in Indonesia by pursuing CEPA in the Philippines and intensifying outreach in Malaysia, South Korea, and Japan. In November, he and Prime Minister Carney will travel to Beijing for “constructive” talks with Chinese Premier Li Qiang aimed at easing trade tensions. Discussions on broader economic ties with India are also underway, although they are still in the early stages.
- To learn more about Canada’s plans to become a global leader in exporting mass timber to the world, including Asia, click here for Wood Central’s special feature from June 2024.
