The joint report claims India is indispensable for Canada’s strategy in the Indo-Pacific region
The joint report claims India is indispensable for Canada’s strategy in the Indo-Pacific region
Canada should capture the trade opportunity that India’s fast-growing economy provides, and become one of the biggest commercial partners of India in the next few years, a new report on Canada-India trade has said. The joint report brought out by the Business Council of Canada and the Canada India Business Council argues India is indispensable for Canada’s strategy in the Indo-Pacific region.
“Canada has powerful incentives to diversify its trading relationships. The U.S., which accounts for the bulk of our trade, has become more protectionist in recent years — under both Democratic and Republican administrations. And our second largest trading partner, China, has become a much riskier place to do business amid deteriorating bilateral relations,” said the report titled “Why India: Unlocking Canada’s Opportunity in the Indo-Pacific”. The report pointed out that Canada has not joined the recently launched Indo Pacific Economic Framework for Prosperity and argued that the country can benefit from having a Comprehensive Economic Partnership Agreement (CEPA) with India.
The joint report by two of Canada’s important trade bodies emphasised that Ottawa needs to reach a trade pact with India soon as that will give Canadian companies “a leg up” over rivals from other countries. Canada and India have resumed dialogue for a Free Trade Agreement earlier this year and the negotiations on the pact are expected to conclude by 2023 when India is scheduled to host the G20 summit here.
‘Relatively robust trade’
The report calculated that Canada-India trade appears “relatively robust” as goods exports to India increased on an average 12% every year between 2001 and 2019. During this period, Canada’s exports to India rose from U.S.$517 million to U.S.$3.9 billion. But these numbers do not provide the “full picture”, the report argues.
It says that India has been diversifying its economy and its “trading orbit” has been moving away from north America and Europe and getting closer to the United Arab Emirates, China, southeast Asian economies like Singapore, Vietnam, Indonesia and the Philippines. Because of this shift, Canada has failed to capture great deal of trade that India had to offer.
“Over the past two decades, Canada has captured just one per cent of the growth in global exports of goods, services and intellectual property destined for India. Bilateral investment is also under-developed, a worrying sign at a time when India is poised for an investment boom,” stated a press release issued by the Canada India Business Council
A Comprehensive Economic Partnership Agreement with India is therefore expected to help Canada return to the trade orbit that New Delhi has shifted away from and help Canada compete with economies like the UAE, China and Vietnam that are emerging as key trade partners of India. The joint report says that a Comprehensive Economic Partnership Agreement could nearly double bilateral trade to U.S.$8 billion.
Cautionary note
In this regard, the report cites the advantages that Australia is receiving because of the trade pact that it has signed with India in April this year. The report, however, struck a cautionary note saying that a trade pact with India alone would not help as it would require Canadian side to step out of its “comfort zone”.
“There is opportunity but also urgency in India. Canada’s peers, including the U.K. and Australia, are moving aggressively to secure a trade advantage. Canada has a chance to be right there with them with a trade deal that, done right, could pay economic dividends for decades to come,” the report stated.