CIIT Committee Report

GOVERNMENT RESPONSE

SEVENTH REPORT OF THE STANDING COMMITTEE

ON INTERNATIONAL TRADE

REPORT ON A COMPREHENSIVE ECONOMIC PARTNERSHIP AGREEMENT

BETWEEN CANADA AND INDIA

INTRODUCTION:

The Government of Canada is pleased to respond to the Seventh Report of the House of Commons Standing Committee on International Trade (the Committee), entitled: Report on a Comprehensive Economic Partnership Agreement Between Canada and India. The Government shares the Committee’s commitment to ensuring that a Comprehensive Economic Partnership Agreement (CEPA) with India is in the best interests of Canadians and would contribute to the creation of jobs, growth, and long-term prosperity.

The Government welcomes the Committee’s analysis, views, conclusions, and recommendations resulting from its examination of the Canada-India CEPA negotiations. The Government Response addresses the important issues raised in the Report, and responds to each of the Committee’s recommendations. The Government would like to thank the Committee for their Report and interest in the progress of the Canada-India CEPA negotiations.

CANADA-INDIA CEPA NEGOTIATIONS IN CANADA’S ECONOMIC ACTION PLAN:

Given the importance of open markets to Canada’s economy, Canada’s long-term prosperity is intrinsically linked to expanding commercial opportunities beyond our borders. International trade and investment have improved the ability of Canadian businesses to attract capital and other resources, tap into global value chains, and create prosperity and growth. With low taxes, a highly-skilled and educated workforce, world-class financial and physical infrastructure, Canada is a natural and attractive trading partner.

Economic Action Plan 2013 highlights the importance of open markets to Canada as a source of jobs, growth, and long-term prosperity for Canadians. Today, trade is equivalent to over 60% of Canada’s Gross Domestic Product (GDP) and exports account for one in five jobs. Openness to trade, investment and global economic engagement are thus critical to Canada’s long-term prosperity. With this in mind, the Government is actively pursuing an ambitious pro-trade plan, seeking new trade and investment opportunities, particularly with large and dynamic economies. To that end, the Government is focused on deepening our economic relationships in the Asia-Pacific region, one of the world’s most dynamic regions with an economic growth rate of two to three times the global average. Since 2006, Canada’s goods exports to Asia have increased by 57%, but there remains much more room for growth. 

In this context, the Canada-India CEPA negotiations are a key priority for the Government of Canada. These negotiations with India also demonstrate Canada’s growing trade policy engagement in Asia, and complement Canada’s free trade negotiations with Trans-Pacific Partnership (TPP) members (Australia, Brunei Darussalam, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, Vietnam and Japan, expected to join in July 2013), and bilateral negotiations with Japan, Korea, and free trade agreement (FTA) exploratory discussions with Thailand.

SPECIFIC AREAS UNDER NEGOTIATION ADDRESSED BY THE REPORT:

The Report situates the negotiations in the context of broader Canada-India bilateral relations, and highlights the economic, political and business environment in India. The Report emphasises India’s economic potential, and notes that business opportunities in India, both now and in the future, are vast. The Report also touches upon the barriers to Canada-India trade and investment and on tariff and non-tariff barriers. Among the latter the Report mentions the following: bureaucracy and corruption; inadequate infrastructure; sanitary and phytosanitary measures; investment initiatives; and complexity of India’s federal system of government.

GOVERNMENT OF CANADA RESPONSE TO COMMITTEE RECOMMENDATIONS:

The Government has reviewed the recommendations in the Report and welcomes the opportunity to respond to each recommendation individually.

Recommendation 1: That the Government of Canada, as soon as possible, conclude a comprehensive economic partnership agreement with India that provides a net benefit to Canada.

The Government of Canada places great value in ever stronger Canada-India commercial relations. Already the world’s largest democracy, soon to be the world’s most populous country and as an important developing economy, India’s significance to the Canadian economy and Canadian commercial interests will only grow in the years and decades to come.

The Government of Canada recognises that a comprehensive free trade agreement with India has the potential to deliver commercial benefits to Canadian companies across many sectors of the Canadian economy.

A timely conclusion of the negotiations would provide Canadian companies with quicker access to India’s market; however, as in any free trade negotiation Canada’s ultimate guide for finalizing an agreement will be the quality of its content. The Government of Canada will only sign an agreement that is in the best interests of Canadians.

Recommendation 2: That the Government of Canada, in the negotiations for a comprehensive economic partnership agreement between Canada and India, emphasize the importance of including provisions to ensure greater access to government procurement.

Canada recognises the importance of India’s government procurement market and the tremendous potential it represents for Canadian exports. As indicated in its Five-Year Plan (2012-2017), India plans to invest roughly a trillion dollars in its infrastructure sector. This investment represents opportunities for Canadian companies in sectors such as transport, energy, engineering and architectural services. It is Canada’s intention to seek commitments ensuring greater access to government procurement in the Comprehensive Economic Partnership Agreement (CEPA) negotiations.

As a member to the World Trade Organization’s (WTO) Agreement on Government Procurement (GPA), it is Canada's objective that its free trade agreements should include provisions that liberalise the government procurement sector. India has yet to subscribe to similar international trade commitments in the area of government procurement. India is an observer to the WTO GPA, however, it has not signalled any plans to accede to the agreement. Likewise, India’s preferential trade agreements have only provided modest liberalisation in this sector.

While Canada and India have in the past signalled differing points of view in relation to the area of government procurement, both countries have nevertheless agreed to continue to discuss this issue as the CEPA negotiations advance. Canada’s objective in the CEPA negotiations continues to be the inclusion of commitments on government procurement that will provide an open and transparent set of rules that will apply to market access of commercial interest, thereby allowing both parties to benefit from the agreement.

Recommendation 3: That the Government of Canada ensure that, in a comprehensive economic partnership agreement between Canada and India, the provisions regarding rules of origin reflect the integrated nature of the North American economy.

In the CEPA negotiations, Canada continues to focus on ensuring that any rules of origin agreed to are clear, simple to administer and reflect Canadian production realities. This includes adhering to rules of origin provisions that reflect the integrated nature of the North American economy.

Within the CEPA context, Canada will seek rules of origin that reflect the structure of the Canadian economy, its unique attributes and comparative advantages, and the interests of Canadian producers, exporters and businesses. Moreover, Canada's rules of origin proposals have been developed in consultation with industry stakeholders to ensure that they reflect Canada’s export interests.

Recommendation 4: That the Government of Canada, in the negotiations for a comprehensive economic partnership agreement between Canada and India, adopt an ambitious negotiating position regarding the temporary entry of Canadian business persons to India and of Indian business persons to Canada.

Both Canada and India recognise the benefits associated with including a substantive chapter on temporary entry (TE). Canada's position is based on reciprocity (i.e., if Indian professionals obtain the right to provide services in Canada then Canadians must obtain the same rights in India) and seeks to protect the long-term integrity of the Canadian labour market by ensuring that covered business persons are appropriately educated, experienced, and compensated in line with prevailing labour market rates.  Canada is also mindful of the need to ensure that the provisions of the chapter are not abused and has proposed text to address this issue. Canada will only sign a deal that is in the best interests of Canadians.

Recommendation 5: That the Government of Canada establish a mechanism that will facilitate ongoing consultation with Canadians of Indian origin.

The Government of Canada places great importance on stakeholder consultations to inform Canada’s trade negotiations, and the CEPA is no exception. Prior to negotiations, throughout the Canada-India Joint Study Group Report: Exploring the Feasibility of a Comprehensive Economic Partnership Agreement process and during negotiations, Canadian trade officials have actively sought out the views and opinions of Canadian business interests and Canadian stakeholders, including Canadians of Indian origin.

Interested parties have had the opportunity to provide input to inform the negotiations through the Canada Gazette notice process, an online questionnaire on the website of Foreign Affairs and International Trade Canada. As well, the Minister of International Trade meets regularly and consults with Canadian stakeholders of Indian origin from the business, cultural and other areas. The CEPA Chief Negotiator has also established an Advisory Committee to facilitate ongoing and timely consultations and debriefs with Canadian stakeholders. Along with four prominent national business associations, this Committee includes four Indo-Canadian organizations that represent business as well as cultural and social interests.

The Government of Canada recognises the value and contributions of diaspora voices to advancing Canada-India relations. The broad consultative mechanisms put in place for CEPA ensures that Canadians of Indian origin are able to provide their views to inform the CEPA negotiation process.

Recommendation 6: That the Government of Canada, in partnership with Canadian postsecondary institutions, develop an action plan to attract more Indian students to Canada.

The Government of Canada recognises the importance and benefits of the exchange of international students. In November 2012, Prime Ministers Harper and Singh identified education as a key area of mutual interest and enhanced collaboration. The Government will continue to promote Canada as an education destination in India to attract more Indian students to Canada.

The Government of Canada plays a key role in attracting international students, promoting international research collaboration, and supporting internationalisation in Canada’s education sector. The August 2012 release of the report of the Advisory Panel on Canada’s International Education Strategy (IES) will inform the development of Canada’s action plan.

Efforts to attract more Indian students to Canada will include enhanced marketing campaigns, a sophisticated digital strategy to promote education in Canada and country-specific strategic initiatives in priority markets, such as India. The Government of Canada will continue to work closely with the associations in Canada's education community in support of their work in the Indian market and to ensure that more Indian students see Canada as a top-of-mind choice for their international studies.