INDONESIAN INROADS
BY DANIEL RAMAGE • PHOTO BY PIXABAY
The announcement this June of the launch of free trade negotiations between Canada and Indonesia has put a spotlight on the Asian market. For Canadian wheat farmers and exporters, the prospect of greater trade with Indonesia is worth close attention.
Most importantly, these negotiations offer an opportunity to build on the trading relationship with one of our largest global customers while positioning Canada for future benefits from improved trade conditions. This is why Cereals Canada has been a leading advocate for the advancement of this agreement.
Indonesia is already a major destination for Canadian wheat with room to grow. Wheat exports to this market have grown substantially over the past decade. Exports tripled from roughly 750,000 tonnes in 2010 to more than 2.3 million tonnes by 2020.
This underscores the importance of the Indonesian market to the Canadian wheat value chain. Against the backdrop of a stronger and more predictable trade environment enabled by a free trade agreement, Canadian export competitiveness could continue to advance.
Indonesia has a population of 275 million people, which is expected to grow rapidly as the country urbanizes and its economy expands. Its recent demographic shift has generated demand for wheat-based products against staples such as rice. This change has been driven by the convenience and affordability of popular products such as instant noodles and Western-style breads. These trends have made Indonesia one of the world’s largest wheat importers, and Canadian wheat is the perfect ingredient to make these products, whether on its own or blended with lower protein wheats from elsewhere.
Keeping tariff-free access is important for our industry, but our competitiveness can be bolstered through improved predictability and transparency of trade.
In agriculture, this means the establishment of clear science-based rules and a strong capacity to prevent or quickly resolve non-tariff trade barriers. Canada can make the most of trade agreements by ensuring market access issues are proactively monitored and resolved.
The creation of a positive trade environment underpinned by greater dialogue and co-operation will ultimately improve our competitive advantage. Australia is now the only major wheat competitor operating under a trade agreement with Indonesia. The Canadian agreement could potentially put the country on even footing with Australia or create advantages that would put it ahead of the curve in this key market.
Despite recently concluded trade deals such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Comprehensive Economic and Trade Agreement with the European Union, non-tariff trade barriers have created significant obstacles to Canadian agricultural exports in these markets. As Canada establishes the Indonesian agreement and future deals, we must ensure these can provide quick solutions when unwarranted barriers arise.
Securing a successful deal with Indonesia will also set the stage for even larger opportunities and deeper regional connections across Asia. By upping our game with a market leader such as Indonesia, Canada can create a blueprint for future dialogue with additional Association of Southeast Asian Nations partners. Such connections strengthen our sector’s prospects for new trade opportunity and market diversification.
Daniel Ramage is director of market access and trade policy for Cereals Canada.
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