Joint report says India essential to Canada’s Indo-Pacific strategy
Joint report says India essential to Canada’s Indo-Pacific strategy
Canada is set to seize trade opportunities offered by India’s rapidly growing economy and become one of India’s top trading partners in the coming years, according to a new report on trade between Canada and India. India. 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 powerful incentives to diversify its trading relationships. The United States, which accounts for the bulk of our trade, has become more protectionist in recent years – under 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: Unleashing Canada’s Opportunities in Indo -Pacific”. The report points out that Canada has not joined the recently launched Indo-Pacific Economic Framework for Prosperity and argues that the country can benefit from a Comprehensive Economic Partnership Agreement (CEPA) with India.
The joint report by two of Canada’s top trade bodies stresses that Ottawa must strike a trade pact with India as soon as it gives Canadian businesses a “head start” over rivals in other countries. Canada and India resumed dialogue for a free trade agreement earlier this year and negotiations on the pact are expected to conclude by 2023 when India is due to host the G20 summit here.
“Relatively robust trade”
The report calculated that trade between Canada and India appears to be “relatively robust”, with merchandise exports to India increasing by an average of 12% each year between 2001 and 2019. During this period, exports from Canada to India increased from US$517 million to US$3.9 billion. But those numbers don’t paint the “full picture,” according to the report.
It says India has diversified its economy and its “trade orbit” has moved away from North America and Europe and closer to the United Arab Emirates, China, the economies of Southeast Asia like 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 only one percent of the growth in global exports of goods, services and intellectual property to India. Bilateral investment is also underdeveloped, a worrying sign at a time when India is on the verge of an investment boom,” said a press release issued by the Canada-India Business Council.
A Comprehensive Economic Partnership Agreement with India should therefore help Canada return to the commercial orbit from which New Delhi has fallen away and help Canada compete with emerging economies like the United Arab Emirates, China and Vietnam. as India’s key trading partners. The joint report says a Comprehensive Economic Partnership Agreement could nearly double bilateral trade to $8 billion.
Caution
In this regard, the report cites the benefits Australia is enjoying through the trade pact it signed with India in April this year. The report, however, cautioned that a trade pact with India alone would not help as it would force the Canadian side out of its “comfort zone”.
“There is an opportunity but also an urgency in India. Canada’s peers, including the UK and Australia, are moving aggressively to secure a trade advantage. Canada has a chance to be there with them with a trade deal that, done right, could pay economic dividends for decades to come,” the report said.
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