On this page
- Wood, pulp, and paper opportunities in Indonesia
- Current tariff landscape and tariff outcomes under the CEPA
- Technical barriers to trade
- Customs procedures and trade facilitation
- Rules of origin and origin procedures
- Trade in services
- Temporary movement of natural persons
- Trade and sustainable development
- Provincial and territorial interests
Wood, pulp, and paper opportunities in Indonesia
Indonesia is a leading exporter of paper products, pulp, plywood and furniture in Asia while relying on imports for high-quality softwood pulp, recovered paper and specialty paper products. In 2024, Indonesia imported $5.5 billion worth of wood, pulp, and paper products, with Canada contributing $390.3 million worth of wood pulp, $4.9 million in paper and paperboard products, and $12.2 million in wood products.
Indonesia’s rapid urbanization and industrial expansion have increased demand for forest product imports. Canadian exporters are well positioned to supply softwood pulp for premium paper production, sustainably sourced softwood for construction materials, softwood and hardwood for furniture production, and specialty coatings for high-end printing applications.
Current tariff landscape and tariff outcomes under the CEPA
Before the CEPA, Canadian wood, pulp, and paper exports were subject to the World Trade Organization (WTO) most-favoured nation tariff rates, with most products ranging from 0% to 5%, creating a disadvantage for Canadian businesses competing against Indonesia’s free trade partners. Coated and specialty paper exports were subject to a 5% tariff, limiting their ability to compete in Indonesia’s packaging sector and restricting market opportunities. Engineered wood products carried a 5% tariff, making it more difficult for Canadian manufacturers to access Indonesia’s rapidly growing construction industry.
Under the CEPA, Canadian wood, pulp, and paper exports receive preferential tariff treatment, improving cost competitiveness and market access:
- Specialty paper – 5% tariffs eliminated over 5 years.
- Newsprint – 5% tariffs to be eliminated over 5 years.
- Engineered wood products, including oriented strand board – 5% tariffs eliminated upon entry into force or over 10 years.
- Prefabricated buildings – tariffs of 12.5% or 15% to be eliminated in 5 or 15 years, with a couple of lines being subject to a tariff reduction of 75% over 10 years.
- Wood pulp – tariff free treatment locked in providing greater predictability and stability for this important market.
Technical barriers to trade
The CEPA encourages Indonesia to ensure that technical regulations for wood, pulp, and paper products align with international standards, which could reduce duplicative testing requirements for Canadian exporters.
Customs procedures and trade facilitation
With the World Trade Organization (WTO) Agreement on Trade Facilitation as a foundation, the CEPA establishes commitments that promote greater predictability, consistency and transparency in customs matters. Through provisions that include, among others, automated border processing, risk-based border inspections, and advance customs rulings for the tariff classification, customs valuation and origin of goods, Canadian exporters to Indonesia in the wood, pulp, and paper industry will benefit from customs processes that ensure their goods spend the least amount of time at the border.
Rules of origin and origin procedures
The CEPA provides clear and simple origin criteria to ensure Canadian exporters of qualifying forest products benefit from preferential tariff treatment while minimizing administrative burdens. The Agreement simplifies origin documentation requirements for wood and pulp shipments, streamlining the process for businesses and reducing compliance challenges. It also introduces advance rulings on origin, helping to reduce the risk of disputes in Indonesian customs and promoting predictable trade operations.
Trade in services
The CEPA enhances predictability and regulatory transparency for Canadian forest product-related service providers. Canadian wood, pulp, and paper-related industries are likely to benefit from the CEPA in related services sectors such as engineering services including process engineering, mechanical and electrical engineering, environmental engineering, chemical engineering and research and development.
Temporary movement of natural persons
The CEPA simplifies visa access for Canadian forest sector management advisors by improving the transparency of entry procedures. Business delegations negotiating wood, pulp, and paper agreements benefit from transparent processes, allowing for smoother collaboration and market expansion. Additionally, executives overseeing investment projects in Indonesia’s pulp and paper industry will experience fewer restrictions, enabling them to manage ventures more effectively and strengthen partnerships within the sector.
Trade and sustainable development
The Trade and Environment Section of the CEPA’s Trade and Sustainable Development (TSD) chapter promotes high levels of environmental protection and responsible business practices, ensuring that trade and investment activities do not undermine environmental protection efforts. The Agreement commits both Parties to effectively enforce environmental laws and not lower them as a means to attract trade or investment. The TSD chapter also contains provisions that promote sustainable forest management including initiatives to combat illegal logging and associated trade.
Provincial and territorial interests
British Columbia has a significant forest industry and a global reputation for sustainable forest management. The province exports softwood lumber, wood pulp, and engineered wood products, all of which align with Indonesia’s import needs. CEPA’s tariff elimination on specialty paper, newsprint, and oriented strand board directly supports British Columbia’s export ambitions.
Quebec specializes in softwood pulp, paperboard, and engineered wood, which are in high demand in Indonesia. CEPA’s locked-in tariff-free access for pulp and phased elimination for specialty paper and engineered wood products will enhance Quebec’s competitiveness.
Ontario’s forest sector has strengths in value-added wood products, paper manufacturing, and engineered wood. CEPA’s tariff elimination on coated paper supports Ontario’s export potential in Indonesia’s packaging and construction sectors.
Alberta exports wood panels, pulp, newsprint, and engineered wood products, many of which face tariffs in Indonesia. Eliminating tariffs on these goods and increasing Indonesia’s alignment with international standards will help Alberta’s exporters compete more effectively.
Manitoba’s forest sector is anchored in northern communities and includes pulp mills, wood panel manufacturing, and logging operations. CEPA’s tariff elimination on engineered wood products and specialty paper supports Manitoba’s export ambitions. The province’s interest in expanding sustainable forestry and biomass innovation aligns with CEPA’s provisions on environmental standards and trade in services.
Saskatchewan’s forest sector includes pulp production, softwood lumber, and wood chips, with exports primarily to Asia. CEPA’s locked-in tariff-free access for pulp and phased elimination for engineered wood products will help Saskatchewan maintain and grow its market share in Indonesia. The province’s interest in expanding exports of processed goods and leveraging natural resource strengths is supported by CEPA’s trade facilitation and investment protections.