India, Canada move a step forward towards FTA, India to allow Canadian Universities to set up campuses, improved air services stressed

India and Canada have made some advances towards resolving  some disputes delaying the signing of the Free Trade Agreement (FTA). The FTA has been pending for more than a decade as the bilateral trade, too, has failed to inch towards targeted $15 billion.

One of the major hurdles in signing the FTA has been the Canadian demand for security of investments that has been discussed at different levels without being resolved.

To continue the momentum of B2B engagement, both Canada and India will forward to the relaunch the Canada-India CEO Forum with renewed focus and a new set of priorities. Also, the CEO Forum could be announced at a mutually-agreed early date. Further, Canadian Minister Mary Ng announced that she looks forward to leading a Team Canada trade mission to India in October 2023 which was welcomed by Indian Minister Goyal.

As a part of the continuing dialogue Canada and India held their sixth Ministerial Dialogue on Trade & Investment (MDTI) in Ottawa on May 8. It was co-chaired by  Mary Ng, Minister of International Trade, Export Promotion, Small Business and Economic Development, Government of Canada and Piyush Goyal, Indian Minister of Commerce and Industry, Consumer Affairs and Food, and Public Distribution and Textiles. The Ministers emphasised the solid foundation of the trade and economic relationship between Canada and India and recognized the significant opportunity to deepen bilateral ties and economic partnership.

Among the most significant developments of this dialogue include In line with the announcement made in the National Education Policy 2020 of India for facilitating foreign universities and educational institutions, India has agreed in principle to  invite top Canadian Universities to set up their campuses in India.

India and Canada have also agreed to an expanded air services agreement in 2022 which enhances people to people ties through enhanced commercial flights by carriers of both countries. Though no specifics were given out, Canada has been demanding improved connectivity with North, especially Amritsar and Chandigarh.

A joint statement issued after the dialogue said  that the Ministers touched on the important discussions taking place at the various meetings of the G-20 being held in India this year under the Indian Presidency. In this context, Minister Ng noted India’s role as a global economy of the future and congratulated the Government of India and the Indian business organizations on the successes enjoyed so far at the G-20 events in India. She expressed her support for India as G20 Chair, and the priorities pursued by India in the G20 Trade and Investment Working Group. Minister Ng indicated that she is looking forward to participating in the upcoming G-20 Trade and Investment Ministerial meeting in India scheduled to take place in August 2023.

In recognition of the critical importance of the Indo-Pacific region for Canada’s prosperity, security, and its capacity to address environmental challenges, Minister Ng noted the rolling out of Canada’s Indo-Pacific Strategy and India’s importance in the region.

The Ministers also referred to the resilience of bilateral trade in 2022 following the challenges of the COVID-19 pandemic and the disruptions caused by the war in Ukraine. Canada-India bilateral trade in goods reached nearly C$12 billion in 2022, a substantial 57% increase over the previous year. (Target set was $ 15 billion by the end of 2010). The Ministers also underlined the contribution of the services sector in furthering the bilateral relationship and noted the significant potential for increasing bilateral services trade which stood at C$8.9 billion in 2022. Ministers recognized the significant growth of two-way investments and their contribution to deepening economic and trade ties, appreciative of the improvements made by both countries to facilitate business growth and attract investment.

The Ministers also noted that the trade-related strengths of Canada and India are complementary and real potential exists for trade in both goods and services to expand significantly in both traditional and emerging sectors. With that goal in mind, the Ministers called for boosting the commercial ties between the two countries through enhanced cooperation and by forging partnerships to take advantage of the complementarities in such sectors as agricultural goods, chemicals, green technologies, infrastructure, automotive, clean energy, electronics, and minerals and metals. The Ministers further asked their officials to discuss trade remedy issues of bilateral importance on a regular basis.

The Ministers emphasized the key institutional role that the MDTI can play to promote bilateral trade and investment ties and to strengthen economic cooperation between the two countries. Recognising the need for a comprehensive trade agreement to create vast new opportunities for boosting trade and investment flows between Canada and India, in 2022 the Ministers formally re-launched the India-Canada Comprehensive Economic Partnership Agreement (CEPA) negotiations. In pursuit of that goal, negotiations towards an Early Progress Trade Agreement (EPTA), as a transitional step towards the CEPA, have been underway and several rounds of discussions have already taken place. The EPTA would cover, among others, high level commitments in goods, services, investment, rules of origin, sanitary and phytosanitary measures, technical barriers to trade, and dispute settlement, and may also cover other areas where mutual agreement is reached.

The two sides also agreed to explore enhanced cooperation through measures such as coordinated investment promotion, information exchange and mutual support between the two parties in near future. This cooperation between Canada and India will be finalized by way of a Memorandum of Understanding (MoU) preferably in Fall 2023.

The Ministers noted that global supply chains remain under the threat of disruption from the fallout of the COVID-19 pandemic, as well as the effects of the ongoing war in Ukraine. In this context, they discussed the continued importance of working together to promote the international rules-based order and supply chain resiliency in critical sectors. They emphasised enhancing cooperation in sectors such as clean technologies for infrastructure development, critical minerals, electric vehicles and batteries, renewable energy/hydrogen, and AI.

Recognising the importance of critical minerals for the future economy and green economy, the Ministers agreed on the importance of government coordination to promote critical mineral supply chain resiliency. Ministers also agreed to explore options for business to business engagement on critical minerals between the two countries, and have committed to an annual dialogue between the appropriate points of contact at the officials level on the margins of the Prospectors and Developers Association Conference in Toronto to discuss issues of mutual interest.

Both sides discussed the potential for strengthening the cooperation in the field of science, technology and innovation in priority areas by building on the ongoing work in the Joint Science and Technology Cooperation Committee (JSTCC) and seeking enhanced collaboration in the areas of start-ups and innovation partnerships. The Ministers agreed that there is significant potential to strengthen such cooperation and to enhance collaboration between their research and business communities in support of a sustainable economic recovery and the prosperity and wellbeing of their citizens.

The Ministers recognised the value of further deepening the Canada-India commercial relationship through initiatives such as organized fora for SMEs and women entrepreneurs.

Minister Mary Ng appreciated the visit of the Indian business delegation at the side-lines of the 6th MDTI which has enhanced B2B engagement. To continue the momentum of B2B engagement, both Ministers look forward to the relaunching the Canada-India CEO Forum with renewed focus and a new set of priorities. The CEO Forum could be announced at a mutually-agreed early date. Further, Minister Mary Ng announced that she looks forward to leading a Team Canada trade mission to India in October 2023 which was welcomed by Minister Goyal.

The Ministers noted the significant movement of professionals and skilled workers, students, and business travellers between the two countries, and its immense contribution to enhancing the bilateral economic partnership and, in this context, noted the desire for enhanced discussions in the area of migration and mobility. Both sides agreed to continue to discuss ways to deepen and strengthen the bilateral innovation ecosystem through an appropriate mechanism to be determined. In addition, in accordance with Canada’s Indo-Pacific Strategy, further investments will be made to support industrial research and development partnerships.

In line with the announcement made in the National Education Policy 2020 of India for facilitating foreign universities and educational institutions, India also invited top Canadian Universities to set up their campuses in India.

The Ministers noted that India and Canada have agreed to an expanded air services agreement in 2022 which enhances people to people ties through enhanced commercial flights by carriers of both countries.

The Ministers reaffirmed their commitment to the rules-based, transparent, non-discriminatory, open, and inclusive multilateral trading system embodied by the World Trade Organization and concurred to work together to further strengthen it.

The Ministers agreed to remain engaged to provide sustained momentum including having an annual work plan which is reported on a regular basis to build linkages and strengthen cooperation across sectors to harness the full potential of the trade and investment relationship between India and Canada.