The report urges Canada to follow Australia in signing a trade deal with India

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

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

Canada should seize the trade opportunities offered by India’s fast-growing economy and become one of India’s largest trading partners in the next few years, says a new report on Canada-India trade. The joint report by the Business Council of Canada and the Canada India Business Council argues that India is essential to Canada’s strategy in the Indo-Pacific region.

“Canada has strong incentives to diversify its trading relationships. The US, which accounts for the bulk 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 ties,” reads the report, titled Why India: Unlocking Canada’s Opportunity in the Indo-Pacific. Noting that Canada has not joined the recently launched Indo-Pacific Economic Framework for Prosperity, the report argued that the country could benefit from a Comprehensive Economic Partnership Agreement (CEPA) with India.

The joint report from two of Canada’s top trade organizations stressed that Ottawa must soon strike a trade pact with India as it gives Canadian companies “a head start” over competitors from other countries. Canada and India resumed dialogue on a free trade agreement earlier this year, and negotiations on the pact are expected to be completed by 2023, when India is due to host the G20 summit here.

“Relatively robust trade”

The report calculated that Canada-India trade appears “relatively resilient” as exports of goods to India grew at an average annual rate of 12% between 2001 and 2019. During this period, Canada’s exports to India increased from US$517 million to US$3.9 billion. But these numbers don’t paint the “full picture,” the report argues.

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

“Over the past two decades, Canada has captured just 1 percent of the growth in world exports of goods, services and intellectual property to India. Bilateral investment is also underdeveloped, a worrying sign at a time when India is poised for an investment boom,” read 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 orbit from which New Delhi has moved and help Canada compete with economies such as the United Arab Emirates, China and Vietnam, which are developing into important trading partners for India. The joint report says a comprehensive economic partnership agreement could nearly double bilateral trade to $8 billion.

warning notice

In this regard, the report cites the benefits Australia is receiving as a result of the trade deal it signed with India in April this year. However, the report cautioned that a trade deal with India alone would not help, as the Canadian side would have to get out of their “comfort zone”.

“There are opportunities, but also urgency in India. Canada’s competitors, including the UK and Australia, are moving aggressively to secure a trade advantage. Canada has an opportunity to be right there with a trade deal that, if done right, could pay off economically for decades to come,” the report said.

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