Financial Express - 25 April 2022
India, Canada resume FTA talks, eye interim deal
By Banikinkar Pattanayak
After a gap of almost five years, India and Canada resumed negotiations for a free trade agreement (FTA) last week and are eyeing an interim trade deal first to bolster bilateral commerce and investment, sources told FE.
Both the sides have agreed to intensify work towards ensuring market access for Indian farm products, such as sweet corn, baby corn and banana, etc and recognising Canada’s systems approach to pest risk management in pulses, which would ease the inflows of Canadian pulses to India.
Canada has also agreed to examine expeditiously the request for conformity verification body status to APEDA (Agricultural and Processed Food Products Export Development Authority) to facilitate Indian organic export products. While India also wants greater market access for AYUSH products, Canada has sought access for its cherries and lumber.
While no time-frame has been firmed up yet for hammering out the interim agreement, official sources indicated that it could be concluded in 6-9 months; the broader FTA will follow. It will likely include high-level commitments in goods, services, rules of origin, technical barriers to trade, and dispute settlement.
The stage was set for the revival of negotiations after commerce and industry minister Piyush Goyal held talks with his Canadian counterpart Mary Ng here last month, as part of the fifth ministerial dialogue on trade and investment.
New Delhi and Ottawa launched negotiations for the Comprehensive Economic Partnership Agreement (CEPA), as the FTA is formally known, in 2010 and held the last round of formal talks in August 2017. During this period, they held ten rounds of negotiations on a broad range of issues, including goods and services, e-commerce, telecommunications, sanitary and phytosanitary measures, and technical barriers to trade.
The negotiations are a part of India’s broader strategy to sign “balanced” trade agreements with key economies and revamp existing pacts to boost trade. The move gained traction after New Delhi pulled out of the Beijing-dominated RCEP talks in November 2019. India signed an FTA with the UAE in February, its first with any economy in a decade, and a “substantial” interim trade deal with Australia in April. Similarly, London and New Delhi are eyeing a trade deal by Diwali in October.
The resumption of negotiations with Ottawa comes at a time when bilateral trade is running below potential and several Canadian companies — including Canada Pension Plan Investment Board (CPPIB) — have either announced multi-billion-dollar investments in India or enhanced focus on the country. Last year, CPPIB invested $800 million in Flipkart Group.
Although Indian goods despatches to Canada are less than 1% of its exports, a joint study before the FTA talks started in 2010 had estimated fairly symmetric gains for both the nations. Annual export gains for Canada were estimated to range between 39% and 47%, and for India, between 32% and 60%.
India’s merchandise exports to Canada rose 26% until February last fiscal from a year before to $3.6 billion, while Canada’s rose 14% to $2.9 billion. Major Indian exports to Canada include drugs and pharmaceuticals, iron and steel, marine products, cotton fabrics and readymade garments, and chemicals, while key Canadian exports to India comprise pulses, fertilisers, coal and crude petroleum.