Report urges Canada to follow Australia and sign trade pact with India

The joint report claims India is indispensable to Canada’s strategy in the Indo-Pacific region

The joint report claims India is indispensable to Canada’s strategy in the Indo-Pacific region

Canada needs to capitalize on the trade opportunities offered by India’s burgeoning economy and become one of India’s largest commercial partners in the coming years, according to a new report on trade between Canada and India. The joint report of the Business Council of Canada and the Canada India Business Council states that India is indispensable to Canada’s strategy in the Indo-Pacific region.

“Canada has strong incentives to diversify its trade relationships. The US, which accounts for most of our trade, has become more protectionist in recent years – under both Democratic and Republican governments. And our second-largest trading partner, China, has become a much riskier place to do business amid deteriorating bilateral relations,” according to the report titled “Why India: Unlocking Canada’s Opportunities 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 could benefit from a Comprehensive Economic Partnership Agreement (CEPA) with India.

The joint report from two of Canada’s major trade organizations stressed that Ottawa should quickly conclude a trade pact with India as it gives Canadian companies “an edge” over rivals from other countries. Canada and India resumed dialogue on a free trade agreement earlier this year, and negotiations on the pact are expected to conclude in 2023, when India will host the G20 summit here.

‘Relatively robust trading’

The report calculated that trade between Canada and India appears “relatively robust” as exports of goods to India grew by an average of 12% per year between 2001 and 2019. During this period, Canadian exports to India increased from $517 million to $3.9 billion. But these numbers don’t provide the “complete picture,” the report says.

It says India has diversified its economy and moved its “trade lane” away from North America and Europe and closer to the United Arab Emirates, China, Southeast Asian economies such as Singapore, Vietnam, Indonesia and the Philippines. Because of this shift, Canada has failed to capture much of the trade that India had to offer.

“Over the past two decades, Canada has accounted for just one percent of India’s growth in global exports of goods, services and intellectual property. Bilateral investment is also underdeveloped, a worrying sign at a time when India is poised for an investment boom,” said a press release from the Canada India Business Council.

A comprehensive Economic Partnership Agreement with India is therefore expected to help Canada return to the trade lane New Delhi came from and help Canada compete with economies such as the UAE, China and Vietnam, which are emerging as major trading partners of India. The joint report says a comprehensive economic partnership agreement could nearly double bilateral trade to $8 billion.

Warning:

In this regard, the report cites the benefits Australia enjoys from the trade pact it signed with India in April this year. However, the report made a cautionary note that a trade pact with India alone would not help, as the Canadian side would have to step out of its “comfort zone”.

“There is an opportunity but also an urgency in India. Canada’s colleagues, including the UK and Australia, are moving aggressively to secure a trade advantage. Canada has a chance to be with them with a trade deal that, if done right, could yield economic dividends for decades to come,” the report said.

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