Evidence of meeting #70 for International Trade in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was foreign.
A recording is available from Parliament.
4:20 p.m.
Conservative
4:20 p.m.
NDP
Annick Papillon NDP Québec, QC
Ms. Campbell, in its last budget, the government took India off the list of developing countries that receive a tariff reduction.
Isn't that decision at odds with the overall objective of reducing tariffs to facilitate international trade? In other words, at the very moment we are looking to negotiate lower tariffs with India, our government is increasing them.
Isn't that a contradictory move?
4:20 p.m.
Vice President, Policy, International and Fiscal Issues, Canadian Council of Chief Executives
I think that's a great question.
4:20 p.m.
Vice President, Policy, International and Fiscal Issues, Canadian Council of Chief Executives
We view tariffs, if you will, as the issue that we could deal with almost on day one of a trade negotiation, in the sense that we don't think this is the real barrier or focus for a CEPA or any other trade negotiation. We would like to see Canada move to 0% tariffs, because we do not feel that they're a necessary revenue source for our government. Frankly, the issues really go beyond this, in terms of involving non-tariff barriers and regulation and red tape.
Looking at the Indian example, we have to show some sensitivity to the fact that tariffs as a government revenue stream remain a much more important source of revenue for India than for us, along with taxation and levies and other revenue-raising items. But again, we would argue that these are not the areas that we should focus on in a trade agreement. We should show some sensitivity, I believe, particularly in light of Professor Su's remarks about the fact that more than 50% of India's economy is still agrarian. So there are some, shall we say, mutual sensitivities in agricultural products that I think we could quickly exchange views on.
But we would encourage negotiators and this committee to focus on issues well beyond tariffs.
March 27th, 2013 / 4:25 p.m.
NDP
Annick Papillon NDP Québec, QC
Thank you very much.
Mr. Su, as the member for Quebec City, I would obviously like to hear your comments from that perspective. I would also like you to comment on the business opportunities this free trade agreement with India could mean for Quebec. If possible, could you tell us whether other countries in Asia offer opportunities in that sense? The focus is really on BRIC nations, but there may be other, smaller countries with whom it would be worthwhile to build a relationship.
4:25 p.m.
Professor, Director of Stephen A. Jarislowsky Chair in International Business, Laval University, As an Individual
I'll start with your last question.
Canada has attempted to negotiate free trade proposals with a number of countries. It has signed agreements with some of them, and negotiations with others are still under way.
From my perspective, the issue for Canada is not increasing the number of agreements, but seeking out quality and profitability. That's why I am among those who support finding major partners we can strengthen our relationships with. India is one of those partners.
You're right in saying that, on the whole, Asia is a leading driver of global economic growth. Of course, we could certainly do a lot more with Japan and Korea. There is one player in Asia that we should be a little more careful of: China. Given the country's political system and the way its economy works, we aren't necessarily in a position today to manage or create a win-win situation. Because of that, I think we should start out in Asia by reaching an agreement with India. That alone would be a big step forward.
You asked about the opportunities. If you look at India's economic structure, you will see that it has a very prominent service industry made up of two parts. The first is traditional services. In that area, India has endeavoured to sell its medical expertise, its health services and so forth. The second and more important part is what are called modern services: a new economy, telecommunications and especially information technology. In that respect, we can see why the president of CGI is so worried; there is competition in that sector. But in all the other sectors, I see tremendous opportunity for Canada.
In terms of India's manufacturing industry and structure, things are still at a very basic level. There are, however, segments of the manufacturing sector we aren't involved in. The automobile sector is one where we excel.
4:25 p.m.
Conservative
The Chair Conservative Rob Merrifield
Okay. Thank you very much.
We'll move to the last questioner, Mr. Keddy.
4:25 p.m.
Conservative
Gerald Keddy Conservative South Shore—St. Margaret's, NS
Thank you, Mr. Chairman.
I welcome our witnesses. I didn't know if we were going to have time for a final round of questions or not.
I have a couple of points.
Ms. Campbell, I want to pick up a little bit on Ms. Papillon's question on preferential tariffs. To me, I think it's fairly simple, so maybe I'm missing some part of this equation. You have a preferential tariff rate for countries that are emerging economies, developing third world nations, and that gives them some opportunity and some protection, quite frankly, for their industries to be at a competitive advantage to sell into more mature economies. That's quite simply what it was.
Although parts of these countries may still be emerging economies, the fact is that India's middle class is somewhere around 350 million people—larger than the entire population of the United States. China is becoming the second-largest export destination for Canada, and is the second-largest economy in the world. Certainly, I don't think we can call them emerging economies any longer. To me, I think what we're giving them is an incentive. They've lost their 3% advantage. They now have an incentive to sign trade agreements with Canada and to look quite seriously at a free trade agreement. Do you have a comment on that?
4:30 p.m.
Conservative
4:30 p.m.
Vice President, Policy, International and Fiscal Issues, Canadian Council of Chief Executives
I agree.
4:30 p.m.
Voices
Oh, oh!
4:30 p.m.
Conservative
4:30 p.m.
Professor, Director of Stephen A. Jarislowsky Chair in International Business, Laval University, As an Individual
The U.S. president recently tried to sign a free trade agreement with the European Union in an attempt to bring down customs tariffs. No doubt it's important to know how to leverage that element. Parliament has long known that differences between countries have the potential to generate significant wealth. If we could eliminate as many tariff and non-tariff barriers as possible, everyone could come out a winner.
4:30 p.m.
Conservative
The Chair Conservative Rob Merrifield
Very good. I think that's all. I think our time is gone as well.
I want to thank the witnesses for coming here for this first hour of our final debate actually. This will be the final group of witnesses that we will have on an India-Canada partnership agreement.
For that, we thank you again for your time, Ms. Campbell and Professor Su.
We will suspend as we set up the next round of witnesses.
4:35 p.m.
Conservative
The Chair Conservative Rob Merrifield
I'd like to call the meeting back to order. I want to thank our witnesses for being here. We have with us in the room, Mr. Vidler, the director of international policy for the Canadian Chamber of Commerce. Then we have by teleconference—you can't see him—Mr. Bubber.
Mr. Bubber, can you hear us?
4:35 p.m.
Conservative
The Chair Conservative Rob Merrifield
Thank you, I'm glad that's working out.
By video conference, we have as an individual, Mr. Van Harten.
Mr. Van Harten, can you hear us?
4:35 p.m.
Dr. Gus Van Harten Associate Professor, Osgoode Hall Law School, York University, As an Individual
Yes, I can.
4:35 p.m.
Conservative
The Chair Conservative Rob Merrifield
Very good, we're all set to go. We'll start with Mr. Vidler, I believe you have a presentation, and Mr. Bubber is going to answer some questions if they're posed.
4:35 p.m.
Cam Vidler Director, International Policy, Canadian Chamber of Commerce
I'll be speaking first about the agreement more generally and then Mr. Bubber will join in on the financial sector stuff.
4:35 p.m.
Conservative
4:35 p.m.
Director, International Policy, Canadian Chamber of Commerce
He is part of the presentation.
4:35 p.m.
Conservative
4:35 p.m.
Director, International Policy, Canadian Chamber of Commerce
Thank you, Mr. Chair, for this opportunity to provide comments on the Canada-India comprehensive economic partnership agreement or CEPA.
I'm Cam Vidler, director of international policy at the Canadian Chamber of Commerce, which is one of Canada's most representative business organizations. Many of our members are active in India, including Scotiabank, which is represented here today by Nav Bubber, director of operations at Scotiabank Private Client Group, who will also be providing remarks after I do.
The Canadian Chamber is a long-standing supporter of increased trade and investment with India. In 2009 and 2010, we called on the federal government to undertake bilateral trade negotiations. Last November, our president and chief executive officer, the Honourable Perrin Beatty, travelled to New Delhi to meet with members of the business community there. Developing strategies for Canadian businesses to access new markets like India is one of the Canadian Chamber’s top 10 priorities for 2013.
Last year the Canadian Chamber produced a report called “Canada-India: The Way Forward”, which outlines the views of our membership, as well as policy recommendations to improve our relationship with India.
We believe that India is crucial to Canada’s global commercial engagement. Rapid economic growth and urbanization, combined with a young population of over 1.2 billion people, are boosting consumption and investment in India, and creating a booming market for Canadian goods and services—right at a time when our traditional markets are slumping.
In addition to the sales opportunities, India is establishing itself as a prime location for innovation and production, based on its growing pool of talent and emerging global companies. We all know about the IT clusters in Bangalore and Hyderabad, but India’s manufacturing sector is also becoming more sophisticated, with a number of local and foreign companies supplying the broader region from their bases in India.
Despite a recent slowdown in growth that has led to some skepticism by commentators, India appears to be turning a corner. A new wave of liberalization is under way, and economic confidence is returning.
Canada’s capabilities in areas of extreme need for India—including energy, infrastructure, agriculture, financial services, and education—make us very well placed to succeed there. Leading Canadian companies such as Bombardier, Sun Life Financial, McCain Foods, Research in Motion, SNC-Lavalin, CGI, CAE, and Scotiabank, to name only a few, have made significant inroads. Our SME presence in India is growing as well.
Despite these positive developments, the business relationship between Canada and India remains underdeveloped. Distance, language, and cultural differences certainly play a role, but a number of policy barriers in India also hold back Canadian companies.
The CEPA is an opportunity to address them. I’d like to outline four general priorities here. A more exhaustive list can be found in the report I mentioned earlier as well as the submission we made to this committee.
First, the CEPA should reduce and bind Indian tariffs on major Canadian exports, such as chemicals, wood products, manufactured goods, and especially food stuffs, where tariff rates can hover near 30%.
Second, these tariff reductions need to be accompanied by strong disciplines against non-tariff barriers. Licensing requirements, technical standards, and product certification procedures can often be onerous and insufficiently harmonized with international best practices. Companies also report local content requirements and government procurement practices that discriminate against foreign companies.
Third, the CEPA must extend Canada’s access to India’s services sector. There are, for instance, significant restrictions on foreign involvement in banking and insurance, some of which my colleague Nav Bubber will be able to speak to. Market access should also be complemented in the services sector by arrangements for the temporary entry and mutual recognition of professionals.
Finally, protections should be included in the agreement for Canada’s growing stock of foreign direct investment in India. A foreign investment promotion and protection agreement, or FIPA , was signed in 2007, yet India has yet to ratify it. This leaves Canadian investments potentially exposed to discriminatory or arbitrary regulations and taxes, and without recourse to investor-state dispute settlement procedures.
The Canadian Chamber applauds the government’s intent to complete the CEPA negotiations in 2013, but it is important that Canada not sacrifice quality for speed. An ambitious and comprehensive agreement that secures real, long-term market access for Canadian companies and their Indian counterparts is an achievement worth waiting for, albeit not forever.
With that, I’d like to pass the microphone to Nav Bubber.
Thank you, and I look forward to your questions.