The Hindu | 3 March 2017
Let’s talk investment treaty before free trade pact, Canada tells India
by AMITI SEN, NAYANIMA BASU
Canada is throwing its weight behind an early “progressive” bilateral investment treaty (BIT) with India before it concludes a bilateral free trade agreement (FTA) to ensure a stable and predictable environment for its investors.
“Canadian pension funds and other investors feel that the absence of an FIPPA (Foreign Investment Promotion and Protection Agreement), popularly referred to as BIT, is kind of restricting the scope and volume of investments they can make in India. For me it is very important that we work to put that in place very quickly,” Canadian Minister of International Trade François-Philippe Champagne said in an interview with BusinessLine.
This means that India will have to soon sort out Canada’s apprehensions on certain provisions of the model BIT such as the Investor State Dispute Settlement (ISDS) mechanism — which lays down that a foreign investor cannot go for international arbitration without exhausting all domestic options — if it wants progress on the FTA.
Champagne is in India to take forward talks on the proposed FTA, formally known as the Comprehensive Economic Partnership Agreement (CEPA), and the FIPPA. He met Finance Minister Arun Jaitley and Commerce & Industry Minister Nirmala Sitharaman on Friday.
The Canadian Minister pointed out that while his country recognises the importance of signing both agreements as soon as possible for trade relations to reach their full potential, the FIPPA is a simpler agreement and can be signed earlier. “We are closer with respect to FIPPA because it is a more simple agreement (compared with the CEPA). In terms of timing we may have one before the other, but we are very committed to both,” he said.
With the US, under President Donald Trump, pulling out of the ambitious Trans Pacific Partnership (TPP) agreement which also included Canada, the latter is focussing on intensifying its trade ties with Asia, specifically India and China.
While not getting into the technicalities of Canada’s problems with India’s model BIT based on which New Delhi wants to draft the FIPPA, Champagne said that Canada wants the agreement to be “progressive”, like all its international pacts including the one with the European Union.
“Canada has been very clear that in every agreement we do we want to see progressive elements. Yes, we are talking with India about progressive elements in our pacts. That is what people expect from us,” he said.
In the last bilateral meeting with India’s trade team earlier this year in Vancouver, Canada had reportedly said that the ISDS in India’s model BIT is a cause of concern as there is no guarantee when a dispute will get resolved in Indian courts.
Canada has become a big source of investments for India with over $12 billion pouring in from companies such as Scotiabank, Sun Life Financial and McCain Foods in the last two years alone. It holds huge potential for India, as the country’s outward investments crossed $750 billion in 2015.