Canada’s economic and trade relations with India are expanding at a never-seen-before pace. And Canada’s Minister of International Trade François-Philippe Champagne was in India recently with an agenda to strengthen ties further. The Dollar Business caught up with him to understand how the two nations plan to intensify and boost bilateral trade.

By Aamir H. Kaki | May Issue 2017 | The Dollar Business

TDB: Your visit to India is the fifth by a Canadian cabinet minister in the past seven months. What does this reflect?

François-Philippe Champagne (FPC): Both governments are making efforts to build upon our excellent relationship. Canada and India enjoy a longstanding, diverse relationship which is rooted in the shared values of democracy, peaceful pluralism, tolerance, human rights and the rule of law. We also want to expand on our economic engagement and people-to-people ties. In recent months, our relationship has been further strengthened by several high-level visits, by Canadian ministers to India and by Indian ministers to Canada. In addition, people-to-people ties play a central and dynamic role in the Canada-India partnership, particularly because of the growing community of more than 1.3 million Canadians of Indian origin and their contributions to our societies.

Canada considers India a high-priority trading partner. Bilateral trade and foreign direct investment (FDI), which have increased dramatically over the last few years, are expected to continue to do well in the coming years. Both countries are looking to conclude the bilateral free trade agreement (FTA) negotiations and ensure that the Foreign Investment Promotion and Protection Agreement (FIPA) is inked and brought into force at the earliest.

TDB: Apart from FIPA and FTA, what else is being discussed?

FPC: We had discussions regarding the Canada-India Comprehensive Economic Partnership Agreement (CEPA), in view of increasing bilateral trade and investment. Canada-India CEPA involves liberalisation of trade in goods and services by bringing down tariffs and investment barriers and it also has a separate chapter on investments.

The two sides made significant progress towards concluding negotiations on FIPA – which focuses exclusively on investments – that would serve to promote both India and Canada as ideal destinations for investment.

Indian Commerce and Industry Minister Nirmala Sitharaman raised the issue of reforms in our Temporary Foreign Workers Programme (TWFP), which apparently impacts the services trade from India. To that, we assured that Canada has taken several steps to facilitate the ease of movement of professionals into Canada. We also discussed the potential benefits of business-to-business interfaces and, therefore, the importance of a CEO Forum to provide the required perspective for improvement in bilateral trade and investment. We agreed that business leaders from both sides should meet and provide key inputs for furthering our bilateral relationship. A resolution at the earliest would provide the way forward for continued access for Canadian goods into India.

We also met Indian business executives to discuss investment opportunities in Canada and took part in a round-table discussion with Canadian business executives active in India to celebrate their successes in the Indian market and highlight the Canadian government’s efforts to strengthen trade and investment opportunities with India.

I am confident that this visit will pave the way for future collaborations between Canadian and Indian companies that will further enhance our bilateral trade relationship.

TDB: Though bilateral trade between India and Canada has been growing at a fast pace, it is still below the potential. Will these trade and investment agreements help bridge the gap?

FPC: India is Canada’s largest trading partner in South Asia. However, at $8 billion annual trade, we have only touched the tip of the iceberg – of what is possible. But we see every reason to be optimistic about the ongoing growth in bilateral trade and investment. In fact, there remain significant opportunities for a greater cooperation between Canadian and Indian companies in sectors such as food and agriculture, energy and clean technology, education and skills development, infrastructure and aerospace to name a few. Indian Prime Minister Modi recently told Canadian Prime Minister Justin Trudeau, “Canada and India are made for each other.” I strongly believe that an early signing of the FIPA will further boost the confidence of Canadian investors in the Indian market.

"India and Canada are looking to conclude both CEPA and FIPA at the earliest"

TDB: Are you happy with the way the talks have progressed so far? Are Canadian companies enthusiastic about investing and operating in India?

FPC: I had very good meetings with Finance Minister Arun Jaitley and Commerce & Industry Minister Nirmala Sitharaman. We stressed on CEPA, in view of increasing bilateral trade and investment, which we believe will lead to better cooperation. Working together and partnering in business is one of the ways people learn from each other. There are now over 1,000 Canadian companies doing business in India, with approximately 400 Canadian companies and educational institutions already having a physical presence in the country. Canadian companies like Bombardier, Magna, McCain, Linamar have been ‘making in India’ for many years. Newcomers like Magellan Aerospace and Survival Systems are also now manufacturing here.

TDB: Canada is one of the biggest sources of FDI and FII into India. What opportunities do you see in various Indian government schemes like ‘Digital India’ and ‘Smart Cities’?

FPC: Canadian investment into India has skyrocketed to billions of dollars over the last few years, through large institutional investors like pension funds and private equity companies. When we factor in investments from large institutional investors such as pension funds, Canadian investment into India has taken off and currently stands at an estimated $13-14 billion. Canadian pension funds have been investing heavily in Indian infrastructure projects for quite some time now.

I see further potential for collaboration in this sector as Canada has had the experience of connecting its vast land, despite great expanses of inhospitable terrain, by developing physical and digital infrastructure. We have the experience of creating smart, livable cities, which have been consistently ranked among the best in the world. We are keen to share that experience with India and to collaborate through Canadian companies to contribute to the government of India’s ‘Smart Cities’ initiative.

Similarly, there is great potential for collaboration in the information technology (IT) sector. IT companies, the world over, are recognising that Canada is the centre for research and development in artificial intelligence (AI). Indian companies are no exception. That is why Paytm is undertaking all its research and development work in Toronto. Canadian companies are bringing these innovations to India and partnering with Indian organisations and thereby contributing to the Government of India’s ‘Digital India’ initiative.

TDB: In view of the US administration’s decision to pull out of the Trans-Pacific Partnership (TPP), of which Canada is also a member, an immediate CEPA with India seems to be the need of the hour. Why do you want FIPA to be signed before CEPA?

FPC: Canadian investors feel that the absence of a FIPA is restricting the scope and volume of investments they can make in India. For me, it is very important that we work to put that in place as quickly as possible. While Canada recognises the importance of signing both the agreements as soon as possible for trade relations to reach their full potential, FIPA is a simpler agreement and we see it as a positive step that we should take as soon as possible in the path towards deepening of our relations.

The fact that we may sign FIPA before CEPA should not be interpreted as a lack of interest in CEPA. In fact, we are very committed to working towards both the agreements. India and Canada are looking to set a time-frame for CEPA.

An aerial view of Port of Vancouver. The Port is Canada’s largest and North America’s third largest port, in terms of total tonnage, and offers one of the broadest range of cargo-handling options in the region.

In fact, the agreement we reached with the European Union (EU) was the most progressive trade agreement ever negotiated by Canada or EU, and it included provisions on environment, labour, rights of governments to regulate health and safety as well as protecting cultural diversity. So, we want to be at the forefront of promoting a progressive trade agenda.

During my meetings with my Indian counterpart, we both recognised that the agreements that are going to be concluded with Canada will have progressive elements in them.

Canada has been very clear that in every agreement it signs, it wants to include these progressive elements. This we believe is the way forward for trade treaties of the future.