New Indo-Canadian CEO group talks free trade
Embassy, Canada
New Indo-Canadian CEO Group Talks Free Trade
Following their governments’ lead, business leaders in Canada and India are studying a future free trade pact, but experts say Canada won’t have the resources to do anything soon.
By Lee Berthiaume
11 July 2007
On the heels of an investment agreement between the two countries, Indian and Canadian business leaders are studying the feasibility of a free trade agreement, with the results expected by the end of the year, India’s high commissioner said.
The Conservative government has made the strengthening of economic relations with the quickly emerging economy one of its main priorities.
It appears intent on taking the relationship to the next level, continuing down the path started by the Jean Chrétien and Paul Martin governments following decades of strained relations over India’s use of Canadian technology to construct its nuclear weapons program.
The two countries have already signed a science and technology co-operation agreement, and the first Canada-India CEO roundtable was held in March when the Canadian Council of Chief Executives led a trade mission to the country.
When International Trade Minister David Emerson and his Indian counterpart, Kamal Nath, then announced last month the completion of a Foreign Investment Promotion and Protection Agreement, a second roundtable was held.
With the FIPA complete, the CEOs agreed in Montreal to establish a task force to study the feasibility of a free trade agreement, Indian High Commissioner Rajamani Lakshmi Narayan said. It was unclear how the task force will report back to government
"With a FIPA on the table now, it’s a free trade agreement we’ll be looking at," Mr. Narayan said last week. "We have a CEOs’ forum with Indian and Canadian CEOs. They are going to do a study. In other words, the industry is going to look at it and see what’s in it for us on both sides. And once that is done, then I think the governments will get together."
Trade between the two countries reached $3.6 billion last year, a 54 per cent increase over 2005, while bilateral investment continues to increase significantly, though primarily with Indian companies buying Canadian businesses.
Both countries have committed to increase bilateral trade to $20 billion and investement to $5 billion by 2012.
Canada has recently committed itself to free trade negotiations with a number of countries in Latin America and the Caribbean, including Peru, Colombia and the Dominican Republic. It is also in the midst of negotiations with South Korea, Singapore and a four-country bloc in Central America.
As a result, it’s unclear when Canada and India, could begin negotiations on a deal, and it’s expected there could be large stumbling blocks in such areas as agriculture and financial services.
With the world scrambling to get a piece of India’s economic boom, which includes a huge domestic market, Mr. Narayan said the Canadian government has made clear its intent to take part, despite continuing issues over India’s nuclear weapons and refusal to join international nuclear treaties.
While Mr. Narayan noted that other countries, such as the United States, Australia and Russia, have taken steps to move past India’s nuclear program and failure to adopt non-proliferation treaties, Canada’s position will be more difficult because it’s believed Canadian technology was used to build the program.
Yet successive Canadian governments have taken baby steps to re-engagement, with the Conservatives appearing to be pushing the hardest as India has been named a key priority.
Companies Keen on Indian Trade Deal
Mr. Narayan described the CEO forum, which is led on the Canadian side by the Canadian Council of Chief Executives under Thomas d’Aquino, and Tarun Das, chief mentor of the Confederation of Indian Industry, as "new but it’s also quite active."
"So the idea is there and there is some progress," he said of improving relations.
Debra Steger, director of the Emerging Dynamic Global Economies Network at the University of Ottawa, said seeing Canadian companies taking an active role in pushing for a trade deal with India is reminiscent of the Canada-United States free trade negotiations.
"This really hasn’t happened since then," she said, noting an apparent lack of interest on the part of most businesses for the agreements Canada is working to sign.
"It may be because India is such a huge market and there’s such huge potential opportunities," she added. "It probably demonstrates that the business community is more interested in India than in Colombia or Peru."
With Asia awash with bilateral and regional negotiations, Ms. Steger said Canada is at risk of being left out, but inking a deal with India would be a big boost.
However, she worried that with the government dedicated to finishing its negotiations with South Korea and the Central American Four, as well as recently announced negotiations with the Dominican Republic, Colombia and Peru, Canada may not have the resources to really push for a deal with India anytime soon.
She also worried that having the CCCE leading the study may not produce a good result that would apply to an adequate cross-section of Canadian business.
One business official said its no secret that India is more exciting to the private sector than many of the countries identified by the government for trade agreements.
However, he said a deal with India is unlikely anytime soon, while it’s hoped the deals with the Latin American countries will proceed quickly and easily.
Either way, the official added, investment opportunities and rules are currently more important to Canadian businesses than the trade potential.
