Canadian industry wants India to expedite trade agreement

Live Mint, March 30, 2010

The Canadian government is putting pressure on India to fast-track a bilateral trade deal at a time when both countries are negotiating a nuclear deal.

A Canadian business delegation headed by two former ministers is in the country seeking support of the local business community for a comprehensive economic partnership agreement (Cepa) with India.

The delegation is openly critical of the Indian government’s attitude towards the trade deal. John Manley, president and chief executive of the Canadian Council of Chief Executives, said they have received lukewarm response from India so far.

“When we started talks with the Indian government about Cepa, we took the view that the benefits of free trade are so obvious that it is unnecessary to engage in a study. But (the) Indian government, on its part, wanted to have such a joint study,” he said. “We presented our papers towards completion of the study. We had set the target of May; it is almost April and there is no response.”

However, a commerce ministry official involved in the process said both the sides have exchanged chapters. He also said he was surprised at the impatience shown by the Canadian delegation.

Joseph Caron, Canada’s ambassador to India, said the impatience of the Canadian delegation is because it wants to maintain a positive momentum in the relationship between the two countries.

“There is a very positive dynamics between the two countries at present. These things do not last forever,” he said. “We want to keep pushing this (Cepa) as much to the top of the agenda as we can.”

Caron added that Canada wants the joint study report to be concluded at least prior to Prime Minister Manmohan Singh’s visit to Canada in June for a meeting of the Group of Twenty major economies (G-20). “Then we can get on the negotiating track,” he said.

Bilateral merchandise trade between India and Canada stood at $3.8 billion (around Rs17,100 crore) in 2008-09 and is growing at 17.7% every year.

India and Canada are also negotiating a civil nuclear cooperation deal, as well as a foreign investment protection agreement. Roy MacLaren, chairman of the Canada-India Business Council, said he was dissatisfied with India’s lack of enthusiasm about these two treaties.

“There is not much more work needed to be done on the nuclear deal front. (The) Indian government says it is entirely supportive of these two agreements, but nothing has happened,” he said.

Asked if Canada would make Cepa a precondition for any nuclear deal with India, Caron replied in the negative.

“Our nuclear cooperation agreement is already negotiated. The lawyers are looking at it now… We just need to sort out this administrative arrangement,” he said.

Rajan Sudesh Ratna, professor at the Centre for WTO (World Trade Organization) Studies, said the impatience of the Canadian delegation is understandable as most bilateral trade liberalization agreements between a developed and a developing nation tend to benefit the former because their tariffs are already low.

“Hence, the consequential cost is very less for a developed nation while the market access opportunity is very big,” he said.

“We should evaluate the pros and cons. While we are opposing drastic cuts in duties at WTO vis-a-vis the developed nations, we are going to commit equal trade liberalization in bilateral deals with such nations,” he added.

Manley admits India presents a significant market opportunity as the economy of Canada’s traditional market—the US—is in a bad shape.“The US economy may be out of recession, but it is going to take some time before it recovers. So we see India as an opportunity,” he said.

Pradeep S. Mehta, director general of CUTS (Consumer Unity and Trust Society) Institute for Regulation and Competition in New Delhi, said Canada doesn’t want to be left out of the India growth story.

He apprehends India may drag matters as it lacks the negotiating capacity because the commerce department is over-stretched.

“We had in the past advocated for a separate international trade department to deal with trade deals, which has so far not seen any headway,” he said.

This news item can also be viewed at: