India and Canada resume FTA talks, mull interim deal
After a nearly five-year hiatus, India and Canada resumed negotiations for a free trade agreement (FTA) last week and are first considering an interim trade deal to boost bilateral trade and investment, sources told FE.
The two sides agreed to intensify work to secure market access for Indian agricultural products, such as sweet corn, baby corn and bananas, etc., and to recognize Canada’s systemic approach to Pest Risk Management in Pulses, which would facilitate the influx of Canadian pulses to India. .
Canada has also agreed to expeditiously consider the application for Conformity Verification Body status with APEDA (Processed Food and Agricultural Export Development Authority) to facilitate the export of Indian organic products. While India also wants better market access for AYUSH products, Canada has requested access for its cherries and timber.
Although no deadline has yet been set for the drafting of the interim agreement, official sources have indicated that it could be concluded in 6 to 9 months; the wider FTA will follow. It will likely include high-level commitments on goods, services, rules of origin, technical barriers to trade and dispute settlement.
The stage was set for the relaunch of negotiations after Trade and Industry Minister Piyush Goyal met with his Canadian counterpart Mary Ng here last month as part of the fifth ministerial dialogue on trade and investment.
New Delhi and Ottawa launched negotiations on the Comprehensive Economic Partnership Agreement (APEC), the official name of the FTA, in 2010 and held the last round of formal talks in August 2017. During this period, they have held ten rounds of negotiations on a wide range of issues, including goods and services, electronic commerce, telecommunications, sanitary and phytosanitary measures and technical barriers to trade.
The talks are part of India’s broader strategy to sign “balanced” trade deals with key economies and revamp existing pacts to boost trade. The move gained momentum after New Delhi pulled out of Beijing-dominated RCEP talks in November 2019. India signed an FTA with the United Arab Emirates in February, its first with an economy in a decade, and a “substantial” interim trade deal with Australia in April. Similarly, London and New Delhi are eyeing a trade deal by Diwali in October.
The resumption of negotiations with Ottawa comes at a time when bilateral trade is below its potential and several Canadian companies, including the Canada Pension Plan Investment Board (CPPIB), have either announced billions in investments dollars in India, or focused on the country. Last year, CPPIB invested $800 million in Flipkart Group.
Although shipments of Indian goods to Canada represent less than 1% of its exports, a joint study before the start of FTA negotiations in 2010 estimated fairly symmetrical gains for the two countries. Annual export gains for Canada have been estimated between 39% and 47%, and for India between 32% and 60%.
India’s merchandise exports to Canada rose 26% through February from a year earlier to $3.6 billion, while Canada’s rose 14% to $2. .9 billion dollars. Major Indian exports to Canada include medicines and pharmaceuticals, iron and steel, marine products, cotton fabrics and ready-made garments, and chemicals, while major Canadian exports to India include pulses, fertilizers, coal and crude oil.