India and Canada: A New Era of Cooperation Notes for Remarks by Sam Boutziouvis, Vice President, Economics and International Trade to the Public Policy Forum
Canada and India face a number of global security and prosperity challenges. This is all the more reason, in my view, to expand our bilateral relationship, to cooperate and collaborate more closely through these difficult times.
In its November Throne Speech, the Government of Prime Minister Harper signaled its intention to pursue new economic agreements in Asia. This was music to the ears to those of us who see India as one of the pillars of the Canadian Government’s international trade strategy.
OVERVIEW OF CEO ROUNDTABLE ACTIVITIES
The most recent round of private sector work on the Canada-India bilateral relationship began in 2005, when our Prime Ministers recommended the creation of a CEO Roundtable to provide options for strengthening economic ties. The second India-Canada CEO Roundtable in Montreal focused on investment promotion and the potential for enhanced private sector exchanges. As well, business leaders were asked by Ministers to provide advice on the possibility of launching negotiations toward a free trade agreement.
Both the Canadian Council of Chief Executives (CCCE) and the Confederation of Indian Industry (CII) examined the bilateral trade context and exchanged information on a set of recommendations. Draft reports were circulated to reference groups composed of CEO Roundtable participants and experts, who provided valuable advice.
India-Canada CEO Roundtable participants released a report in early September that outlined the major areas where there is a need for closer cooperation between policymakers and business leaders in each country.
The report’s conclusions and recommendations are now being assessed by both governments.
TOWARD A NEW ERA OF COOPERATION
CEO Roundtable participants concluded that Canada and India should enter into a new era of cooperation, and should move quickly to deepen and accelerate the growing ties between our countries.
They recommended that existing bilateral agreements and understandings should be augmented if necessary and combined into a single, modern, high-quality and comprehensive Free Trade Agreement.
Given the broad scope to bolster and deepen our partnership and to cooperate more closely, Ministers were encouraged to begin such negotiations as soon as possible.
The success of this strategic endeavour will depend in large measure on the commitment of leaders in the political, business and non-government communities.
More active engagement and support is needed at the highest political levels, in particular by our Prime Ministers. Summits should be organized on an annual basis to maintain and add momentum to issues and respond to developments. The importance of direction from the top cannot be understated.
Ministers should continue to meet at least annually, but should also engage directly with Indian and Canadian business leaders. It is our hope that Ministers Day, Cannon, Clement, Flaherty, and others, will be able to visit India as soon as possible.
Business leaders are committed to sustaining the India-Canada CEO Roundtable and to providing ongoing advice to senior government and elected officials on the bilateral economic relationship. Indeed, Canadian and Indian CEO participants suggested the establishment of rapid-action business groups on high-priority issues.
TOWARD A COMPREHENSIVE MARKET ACCESS AGREEMENT
India and Canada would benefit from an agreement to eliminate tariffs on a substantial majority of their bilateral trade in goods. Exporters and supply-chain participants would benefit directly from the opportunity to develop their businesses and diversify the export base. Importantly, negotiating an FTA will raise awareness in Canada of the opportunities created by greater engagement with India.
A market access agreement should include the following:
- Elimination of duties on substantially all trade in non-agricultural products within 10 years.
- Recognition of, and sensitivity to, the impact on India’s agricultural sector, but also an awareness of the opportunities created by improved market access.
- Reciprocal but flexible commitments to negotiate rules of origin.
- A binding dispute-settlement mechanism.
- Agreement on a flexible mechanism to eliminate non-tariff barriers such as import licensing, safeguard mechanisms, disciplines on subsidies and countervailing duties and anti-dumping measures.
- Transparency in customs rules and procedures and clear, concise and legally enforceable rights and obligations in this and other regulatory areas.
BEYOND MARKET ACCESS – TRADE IN SERVICES
Expanded trade in services between Canada and India should build on current efforts at the World Trade Organization (WTO) and should be fully compatible with the WTO’s General Agreement on Trade in Services. The goal should be to liberalize trade in services progressively while ensuring extensive coverage. All modes of supply should be included in the negotiations. In particular, CEO participants pointed to the need for progress on the mutual recognition of professional qualifications and greater regulatory transparency on services trade.
Business leaders have expressed concerns about difficulties encountered in applying for a Canadian business visa, as well as other travel-facilitation challenges. Canada may wish to consider a fast-track program for business visa approvals.
Business leaders from India also questioned the residency rules for provincial incorporation of Boards of Directors.
Could a future FTA incorporate the India-Canada Foreign Investment Protection and Promotion Agreement into an investment chapter? This would further strengthen investment promotion and respect for national treatment in the rules of establishment. It would also improve transparency of regulatory frameworks and the free flow of payments and capital movements.
At both Roundtables, and in other fora, private-sector leaders raised concerns beyond the scope of a traditional FTA. They concluded that a more aggressive approach to the bilateral relationship is needed to produce benefits for both India and Canada in the form of new markets for goods and services, opportunities for investment and stronger economic growth.
Areas of cooperation have already been outlined in science and technology, education, energy and the environment, and various sectoral initiatives. In addition to considering private-sector participation in the aforementioned, greater cooperation should be considered in less traditional areas such as culture, security, infrastructure, competition policy, intellectual property, double taxation, visa matters, standards testing and certification, trade facilitation, public/private partnerships, nuclear energy and public procurement.
As you can see, the CCCE and the CII do not see the Canada-India relationship as simply an economic proposition. Former High Commissioner David Malone concluded yesterday that India is seeking a “total relationship”. Business leaders support that objective.
No country has been spared from the global recession caused by the financial crisis. We are all connected and interdependent.
Governments have stepped into the breach in a major way and it is likely that more action will be necessary if the economic situation continues to deteriorate. Of equal importance is the need to further protect our countries and our people from terrorist threats.
We also face electoral issues and timetables in both of our countries.
Still, this is not the time to step back or to circle the wagons. It is vital that we continue to move forward, deliberately and strategically.
The joint view of the CEO Roundtable participants, which is supported by both the CCCE and the CII, was not timed to coincide with such distress and events. But the recommendations and advice offered by the participants resonate even more today than when the report was written.
I hope that our governments consider the recommendations with all due haste – and act boldly.