Thank you very much, Mr. Chair.
As the chair mentioned, my name is Don Stephenson, and I am the Chief Trade Negotiator for the Canada-India Comprehensive Economic Partnership Agreement.
It's my pleasure to be here today to speak on the topic of the Canada–India comprehensive economic and partnership agreement, or CEPA.
With me from the Department of Foreign Affairs and International Trade is Luc Santerre.
Luc is the Director of Southeast Asia and Oceania Commercial Relations.
Also with me are Eric Robinson, the deputy chief negotiator for the CEPA negotiations, and Michelle Cooper, director, services trade policy division.
As the committee will know, MinisterFast was in India from November 3 to 9 and travelled to the cities of Delhi, Ahmedabad, Pune, and Mumbai to pursue Canadian interests in key sectors. I had the privilege of joining the minister on his mission, the purpose of which was to strengthen Canada–India trade and investment ties; to meet with Indian government ministers and advance key policy interests; to meet with Indian business leaders to showcase Canadian know-how and capabilities; to attract Indian investment to Canada; and to advance the commercial interests of Canadian businesses seeking new opportunities in this priority market.
Sectors that Minister Fast's mission targeted to generate expanded opportunities for Canadian businesses included agriculture and agrifood, where India's growing population and rising living standards present expanding opportunities for Canadian producers; infrastructure, where the Government of India has identified the need for investments of $800 billion, including roads, bridges, railways, ports, and airports, where Canadian businesses can participate and benefit; and education, where Canadian know-how can help bridge the large gap between the supply of and demand for educational facilities and address the shortage of qualified educators. There were several other key sectors, such as energy, manufacturing, and information and communications technology.
Overall, India's growing economy is increasing its demand for products, services and expertise. India's economy grew by an annual average of 8.2% between 2006 and 2010—an indication that India's economy is well on its way to becoming one of the largest in the world.
Let me now provide some context for the Canada-India Comprehensive Economic Partnership Agreement negotiations, an update on where we are in the talks, and our expectations in the coming months.
Canada is pursuing an ever more ambitious array of trade negotiations with partners around the world. The agenda is set out in the government's global commerce strategy. The driver is very much the state of play or, regrettably, the impasse in the multilateral negotiations in Geneva, and the multiplication of bilateral and regional FTA initiatives on the part of virtually all of our competitors.
In short, we have dramatically stepped up our game in the bilateral arena to try to get a leg up on our competitors wherever possible and to ensure a level playing field for our businesses around the world. Since 2006, Canada has concluded free trade agreements with nine countries: the four European Free Trade Association states of Iceland, Norway, Switzerland, and Liechtenstein, as well as Peru, Colombia, Jordan, Panama, and Honduras. Many more are in the works, including a free trade negotiation with the EU, Canada's most significant trade initiative since the signing of NAFTA nearly 20 years ago.
In addition to the most ambitious pursuit of free trade agreements in Canada's recent history, Canada is expanding its network of foreign investment promotion and protection agreements, science and technology cooperation agreements, and air services agreements. The overall objective for all of these initiatives is to solidify and expand Canadian access to global markets because they will create jobs and economic growth for Canadian workers and their families.
The decision to pursue economic partnership negotiations with India is also part of Canada's broader strategy of engagement with this increasingly important country.
India is, of course, a key global market, and Canada-India relations continue to deepen and strengthen. Engagement is increasing in the realms of science, technology, research and academic exchange. In addition to the bilateral science and technology agreement already in place, Budget 2011 provides $12 million over five years for a Canada-India research centre of excellence.
We are working to conclude a foreign investment promotion and protection agreement with India in the very near future. We are also finalizing the last details of the Canada-India Social Security Agreement. As Prime Minister Harper has indicated, we hope to sign both agreements as soon as possible.
Canada and India have also signed a nuclear cooperation agreement, which will allow for Canadian companies' participation in commercial civil nuclear power opportunities. We look forward to the conclusion of the administrative arrangement that will allow the agreement to be fully implemented.
India is clearly a priority market for Canadian commercial engagement. Fuelled by progressive liberalization since the early 1990s, its economy continues to grow rapidly, while maintaining high growth rates of over 6% even through the global economic crisis. The country has already established itself as a key player in global value chains, and its middle class has between 150 million and 250 million people, constituting a consumer market of some $400 billion. It is projected that India will have the world's fourth largest economy by 2025 and third largest by 2050, by which time it is also expected to become the world's most populous nation.
Both Canada and India have trillion-dollar economies, and bilateral trade and investment levels have been growing rapidly, with bilateral trade doubling over the past decade. As India becomes an integral part of global supply chains, Canadian companies such as Bombardier, Sun Life, and SNC-Lavalin have established and grown their partnerships in India, while Indian companies like Essar, Tata, and Birla have been equally active in the Canadian market.
Still, the Canada-India commercial relationship remains underdeveloped given the size of our economies, with bilateral investment at about $7 billion and bilateral trade at just over $4 billion last year. India is currently our thirteenth-largest destination for merchandise exports and our nineteenth largest source of imports. The potential, however, is enormous. Our two prime ministers have committed to tripling the two countries' trade by 2015 to $15 billion.
Clearly, a free trade agreement could generate much more two-way business by dismantling the significant tariff, regulatory, and other barriers to commerce that currently limit opportunities. India continues to maintain relatively high tariffs on most imports. In 2009, India's average tariff rate was 13%, while Canada's average rate was 3.7%. In terms of products of interest to Canada, India's tariffs, for example, are as high as 10% for fertilizers, chemicals, wood products, pulp and paper, and helicopters; 30% for fish and seafood; and 30% to 50% on pulses, which currently enter the Indian market duty-free under a temporary measure but could be subject to India's high tariffs in the future.
The elimination of tariffs therefore could generate substantial opportunities for Canadian producers and exporters in a wide range of economic sectors. As well, we believe there are opportunities for Canadian workers and companies in the services sector, where 80% of new jobs in Canada are created today. More specifically, Canadian companies and their employees would stand to benefit from further liberalization of the Indian market in many sectors, including energy, mining services, financial services, environmental services, and transportation and infrastructure services, including architecture and engineering.
In November 2009, prime ministers Harper and Singh announced the formation of a joint study group to examine the feasibility and benefits of an economic partnership agreement.
In September 2010, the joint study was publicly released. The study concluded that a free trade agreement could boost Canada's economy by at least $6 billion, increase bilateral trade with India by 50%, and directly benefit Canadian sectors ranging from primary agricultural, resource-related and chemical products to transport equipment, machinery and equipment, and services.
As I indicated earlier, Canada's pro-trade agenda is also driven by the need to ensure that Canadian workers and companies can compete on a level playing field. India has already negotiated several trade agreements, including those with Chile, ASEAN, Korea, and most recently Japan. They are currently negotiating with New Zealand, Australia, and the European Union, and the queue is likely to continue to grow.
So where do the negotiations stand? Following the release of the joint study last fall, the prime ministers formally announced the launch of CEPA negotiations in November 2010. Negotiating rounds were subsequently held in November and in July. A third round of negotiations is planned for mid-December.
In terms of structure, seven negotiating tables have been established, covering the key areas of the negotiation. These are: goods, services, technical barriers to trade, sanitary and phytosanitary issues, origin procedures, customs and trade facilitation, and institutional issues.
We have also agreed that other areas as identified in the joint study may be discussed in future rounds. We have exchanged trade data, tariff information, and model text. Negotiators continue to work intersessionally.
India typically conducts its trade negotiations with a very small team. As a result, rounds with India will be shorter, more focused and more frequent than Canada's usual model. They will consist of three- to four-day sessions every two months between now and summer 2012.
The negotiations are clearly still at a very early stage and will require a lot of time. They will also be challenging, given the differing approaches that we have in some areas.
Based on consultations to date, the economic partnership agreement negotiations with India enjoy strong support from stakeholders in Canada, including provinces and territories, and we will continue to consult with and seek advice from stakeholders as we proceed.
Our aim is to move forward with ambition to ensure a forward-looking agreement that captures our current trades and helps strengthen the Canada-India economic relationship into the future. The negotiations with India are a high priority, and our target remains to complete negotiations in 2013, as indicated in the 2011 Speech From the Throne.
In conclusion, free trade negotiations are increasingly important for promoting Canadian interests around the world and for creating jobs and economic growth in Canada.
The Canada-India relationship is critical to the prosperity of Canadian businesses, workers and their families.
As indicated by Minister Fast's visit to India, the government is committed to deepening Canada's trade and investment ties with India. Canada has an ambitious trade negotiations agenda and the CEPA is a key element of that.
I thank the committee for this opportunity. My team and I look forward to hearing your views, which will inform our negotiations, and to responding to any questions.
Thank you.
