Thursday, 10 Oct, 2024
By: Yash Gupte
As a preliminary step towards the CEPA, negotiations for an Early Progress Trade Agreement (EPTA) have been ongoing and have already included numerous rounds of discussions. Image Source: IANS
The Ministers underscored the strong basis of India and Canada's trade and economic relationship and acknowledged the enormous potential to expand these linkages and their economic collaboration.
Union Minister of Commerce and Industry Piyush Goyal and his Canadian counterpart Mary Ng, co-chaired the sixth India-Canada Ministerial dialogue on Trade and Investment (MDTI) in Ottawa on Monday, May 8, 2023. Apart from being the Minister of International Trade, Mary Ng also holds portfolios of Export Promotion, Small Business and Economic Development in the Government of Canada. India’s G20 presidency, India-Canada Comprehensive Economic Partnership Agreement (CEPA), Early Progress Trade Agreement (EPTA) and Joint Science and Technology Cooperation Committee (JSTCC) were some of the important matters discussed at the sixth India-Canada Ministerial Dialogue on Trade and Investment. The Ministers underscored the strong basis of India and Canada's trade and economic relationship and acknowledged the enormous potential to expand these linkages and their economic collaboration.
The Ministers went over the results of the seven rounds of discussions that have already taken place for the India-Canada Free Trade Agreement. The Ministers reiterated that the EPTA would include high level commitments in commodities, services, investment, rules of origin, sanitary and phytosanitary measures, technical trade obstacles, and dispute settlement, and that it might also include additional commitments if there is a mutual agreement. The India-Canada Comprehensive Economic Partnership Agreement (CEPA) negotiations were formally launched in 2022 by the Ministers after they realised the importance of a comprehensive trade agreement for opening up a wide range of novel possibilities for increasing trade and investment flows between the two countries. As a preliminary step towards the CEPA, negotiations for an Early Progress Trade Agreement (EPTA) have been ongoing and have already included numerous rounds of discussions.
The Ministers agreed on the importance of G2G coordination to promote critical mineral supply chain resiliency and committed to an annual dialogue at the official level on the margins of the Prospectors and Developers Association Conference (PDAC) in Toronto to discuss issues of mutual interest. Appreciating India’s G20 presidency, Mary 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. The bilateral trade in goods between Canada and India surpassed $12 billion in 2022, a significant 57 percent rise from the previous year.
India was Canada's sixth-largest trading partner in the Indo-Pacific region, its thirteenth-largest partner globally, and its fourteenth-largest export market in 2021. India is a crucial ally as Canada expands its economic ties to the Indo-Pacific as part of a new, all-encompassing regional strategy. A Comprehensive Economic Partnership Agreement (CEPA) between Canada and India is predicted to increase bilateral commerce between the two countries by US$4.4-6.5 billion (C$6-8.8 billion) and increase Canada's GDP by US$3.8-5.9 billion (C$5.1-8 billion) by 2035. Overall, India is Canada’s 9th largest export market and 10th largest trading partner. One of the important landmarks in the India-Canada relations was the elevation of bilateral relationship into a strategic partnership during PM Modi’s visit to Canada in April 2015. Also, during the dialogue, Minister Mary Ng announced that she would lead a Team Canada trade mission to India in October 2023. This will present an opportunity to further the trade and investment ties between the two countries as she is likely to bring a big business delegation for the same.
Source: Ministry of Commerce and Industry
The chart indicates that there has been a decline in the bilateral trade between India and Canada as the total trade decreased from $7.23 billion in 2017-18 to $6.89 billion in 2021-22. Therefore, the measures undertaken by the Governments of India and Canada to provide a boost to commerce and bilateral trade between the nations are extremely crucial and much needed. Looking at the trade in the year 2017-18, it is visible that India had a negative trade balance resulting in trade deficit as India imported more from Canada and exported less but the year 2019-20 changed the trade dynamics as the trade balance turned favourable for New Delhi. India exported goods worth $3.88 billion against the import of goods worth $2.85 billion. Since 2019-20, the trade balance has been in India’s favour with trade surplus.
Source: Consulate General of India, Toronto, Canada
Union Minister of Commerce and Industry Piyush Goyal also highlighted the huge foreign exchange reserves of India and the significant rise in overall exports of India from around $500 Billion two years ago to $770 Billion in FY 2022-23. He mentioned the target of achieving the overall exports target of $2 Trillion by 2030 and said that is an ambitious target but is achievable given the rapid growth of the economy.
Source: Consulate General of India, Toronto, Canada
Coming back to the Early Progress Trade Agreement (EPTA), before a comprehensive FTA (Free Trade Agreement) is reached, tariffs on the trade of specific items between two nations or trading blocs are liberalised through an interim or early harvest trade agreement. The government's reliance on temporary agreements may be an attempt to close a deal with the fewest obligations possible and leave open the possibility of later resolving challenging subjects. The issue, however, is that these early harvest strategies may target the easy pickings while delaying the more challenging products and services. Any early harvest agreements that do not develop into full-scale free trade agreements (FTAs) are subject to legal challenges from other WTO members.
The long-standing bilateral ties between Canada and India are strengthening and are based on a common heritage of democracy, pluralism, and close ties between people. With the Ministerial Dialogue on commercial and Investment already in place, it is anticipated that bilateral trade relations would continue to grow in the future. The consumer population of Canada has a plethora of opportunities because to India's expanding economy.
