Evidence of meeting #55 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 billion.
A recording is available from Parliament.
NDP
Don Davies NDP Vancouver Kingsway, BC
I hear that and I will bring this up at a different time so that I don't take more time from the witnesses.
But I will say, though, that you have reserved to yourself the right to schedule the witnesses, and you know in advance. I find out only when I show up here that you have three witnesses and that you're planning to give them 10 minutes apiece. It's a simple question of math that you know at the beginning we're not going to get our time.
Conservative
The Chair Conservative Rob Merrifield
When we ask the witnesses to come forward, we give them five minutes. Some of them go a little bit over that. In the last panel, they didn't all take 10 minutes. In fact, I believe the middle one was about five minutes and 30-some seconds. I don't remember exactly.
Nonetheless, this is a debate for another time. We have our witnesses with us and we're going to continue with our witnesses at this time.
November 20th, 2012 / 4:35 p.m.
Conservative
The Chair Conservative Rob Merrifield
Oh, a little slower...? Okay. Fair enough. That's a legitimate argument.
NDP
Don Davies NDP Vancouver Kingsway, BC
Mr. Chairman, I just have one other quick, quick question to raise here.
Conservative
NDP
Don Davies NDP Vancouver Kingsway, BC
Mr. Chairman, I have the right to be heard and to be recognized on this.
NDP
Don Davies NDP Vancouver Kingsway, BC
No, it's on a different line.
My question is that we also thought that we'd be hearing.... Traditionally, we have a briefing from the department as the very first...and I don't know why, but I came expecting a departmental briefing.
Conservative
The Chair Conservative Rob Merrifield
Yes, we'll take that up in business, but there's an explanation for that. Let's take that up in future business.
We have before us, from the Canada India Foundation, Mr. Sundaram and Mr. Shastri. Which of the two of you are presenting? Mr. Shastri?
The floor is yours, sir.
Rahul Shastri National Convenor, Canada India Foundation
Honourable Chair, distinguished members of the House of Commons Standing Committee on International Trade, and ladies and gentlemen, my name is Rahul Shastri. I am the national convenor of the Canada India Foundation. I am accompanied today by our executive director, Mr. Sundaram.
We thank you for the opportunity to share our views on behalf of the Canada India Foundation on the formal comprehensive economic partnership agreement currently under negotiation between Canada and India, and also on the broader issue of greater trade with India and stronger relations with India.
The Canada India Foundation was formed as a non-profit public policy organization for the express purpose of promoting stronger relations between Canada and India. During the past five years, we have been actively working towards this objective. We have been engaged with cabinet ministers, members of Parliament, senators, and members of the Canada-India interparliamentary friendship group, as well as Indian business and political leaders. Our charter members, either individually or collectively, have made substantial contributions to the creation and operation of Canada-India centres on public policy in Canadian universities, such as Waterloo and Carleton.
Our most significant initiative has been the organization of thematic Canada-India public policy forums, focusing on selected opportunity sectors. We have held three of these forums: energy in 2009; mining and metals in 2010; and, most recently in September, agriculture and food processing. The format of the forums has been identical. They have brought together leading authorities from academia, government, and business. We are in the process of finalizing our report on agribusiness and food processing. That forum was held in Vancouver and Saskatoon this past September. We would be pleased to share the report with your committee if you would like a copy.
Insofar as India, its demography, and opportunity are concerned, you heard this afternoon the reasoning for both the opportunity and the necessity of trade with India. This would include: the fact that 50% of India's population is under the age of 23; the high propensity of savings, as the average Indian is projected to save as much as 40% of his income in 2015; and the voracious appetite of the domestic consumer, as 80% of India' s GDP is due to domestic consumption.
According to the IMF, India's is the 10th largest economy in the world by nominal GDP and third by purchasing-power parity. India imports $461 billion worth of goods and exports $299 billion worth. Canada accounts for just $5.1 billion in bilateral trade, or less than 0.7%. Clearly these numbers are not defensible, given Canada's and India's considerable shared legacy, the English language, and the judicial and military system, and, most importantly—and I cannot emphasize this more strongly—the economically strong, vibrant Indo-Canadian community in this country. The GTA alone has over half a million persons of Indo-Canadian origin, and at least 500 of them, as Mr. Holder has told us, were in London at the Diwali celebrations.
It's not enough to engage India at the national level. You have to do it at the state level as well. The current—and likely to be sustained—geopolitical climate in India has been the importance of its states to assert themselves more and more, politically and economically. The excellent economic growth of Gujarat in the past decade, as you've heard from the representative of Bombardier, with its entry into Gujarat, is well documented and is acknowledged by Canada, as evidenced by its participation as a country partner in the Vibrant Gujarat event.
However, Gujarat is by no means India's only gem. Tamil Nadu just signed about 14 or 15 MOUs with a number of different partner countries, valued in excess of $4 billion, and Canada wasn't there. Canada was not at the table. We need to be at the table.
While the justification for the CEPA with India would be the creation of new jobs for Canadians and an increase in the average Canadian family's income, the trigger for its success would be in demonstrating the benefits that India would accrue from entering into such an agreement with Canada. There is a perception that the CEPA negotiations have not progressed as quickly as one would hope, that there is a lack of energy on the Indian side, and that there is the possibility of reaching an agreement that is much reduced in scope. The CIF does not support a half-agreed-to document. We look to the government to try to bring forward a comprehensive agreement covering all of the issues.
If we look to Australia, for example, in comparison to Canada, by 2020 its trade is benchmarked to be somewhere in the neighbourhood of $50 billion. In that context, our trade of $15 billion by 2015 is modest, given the fact that we have more natural resources than Australia, a greater population base, and a prosperous and more mature Indian diaspora. In reading some statistics earlier this week, I noticed that Germany has trade of approximately $26.5 billion with India. That is up by $3 billion from just the past year. So everybody is coming to the party, knowing that there is a massive market out there.
Insofar as issues of importance in CEPA and strategies going forward are concerned, our membership cites the following matters to be addressed.
You've heard some of this today: facilitate the temporary entry and legitimate delivery of professional services between our two countries to allow ease of temporary professional travel, a clearer breakdown of the taxes and levies to which Canadian businesses and their products will be subject, and the removal of tariff barriers that impede market access for Canadian exporters; phase in lifting of tariff barriers in those sensitive areas where Canadian businesses would be threatened if the gates were opened all of a sudden; tackle non-tariff barriers; where there are regulatory issues, invite Canadian businesses that would be directly impacted by those regulations to be involved in that process; include services as part of CEPA; and, as you've heard from Mr. Sierra today, look for and attempt to bring forward a high standard of intellectual property protection.
CIF believes that with a comprehensive approach to addressing the top five areas of the partnership reflecting both Canada's strength and India's need—that is, energy, agriculture, education, mining, and infrastructure—not only should the current target of $15 billion in bilateral trade be easily achievable, but frankly, we should rethink that figure and look at a number that is closer to $30 billion.
Insofar as energy is concerned, prominent among the recommendations made by CIF at its energy forum was the speedy conclusion of a civil nuclear agreement between Canada and India. We were pleased to note that the first step towards that agreement was taken shortly after the energy forum. Now that the administrative arrangements have been made and agreed upon, we hope that it won't be long before this important element in Canada-India trade will be in place, paving the way for uranium sales.
It's not just the uranium sales that we are looking to, but also, frankly, the export of our technology, which is going to allow for continuing trade beyond just the mere supply of the raw material. That will provide jobs. That will provide technology transfer. And that will provide development.
Natural gas and oil is another issue where we look to the future and to development and substantial strategic advantage from Canada.
Education and research have been touched upon earlier in these proceedings. Again, we have more than 12,000 students from India in higher education programs in Canada. We hope that number will increase.
In summary—I know my time is short—as an organization, we are here to assist the government in terms of its agenda with CEPA. We have tremendous contacts within the diaspora here and overseas. We invite members of the committee and the government to engage our membership in terms of matters going forward. We believe the government can take advantage of our networking and our relationships, which have been long-standing.
We are grateful for your time and attention today.
Conservative
The Chair Conservative Rob Merrifield
Thank you very much for your presentation.
Mr. Woo, you're here live this time. Last time, you were here via teleconference. I appreciate the opportunity to have you in town today to present to the committee. From the Asia Pacific Foundation of Canada, the floor is yours, sir.
Yuen Pau Woo President and Chief Executive Officer, Asia Pacific Foundation of Canada
Thank you, Mr. Chairman and members of the committee.
Good afternoon. The Asia Pacific Foundation of Canada is very pleased to have this opportunity to share some thoughts on the Canada-India closer economic partnership agreement.
You've heard from many of the witnesses about the desirability of the agreement and some of the specific measures that should be included. I won't go into these issues.
Conservative
The Chair Conservative Rob Merrifield
Excuse me. You may have to slow down a little bit.
Are we okay?
President and Chief Executive Officer, Asia Pacific Foundation of Canada
Yes.
You've heard from other witnesses already on the desirability of the agreement and on some of the priority sectors to be included in a deal. We fully support the agreement and agree with everything that my colleagues from CIF have said, as well as from previous presentations....
What I'd like to focus on instead is the broader context of the bilateral negotiations and what I consider to be one of the most important preparations that we need to make, which is the preparation for domestic understanding of the importance of a stronger Canada-India relationship.
You've already heard from other witnesses that the level of two-way trade and investment between Canada and India is really very low, compared with that of our other trading partners, at $5 billion a year two ways. India ranks quite low as one of our major trading partners, which really offers an opportunity for us to take advantage of.
What I'm trying to say here is that even without a free trade agreement, the opportunity for rapid growth in two-way trade is not difficult to achieve. We've seen this already in the education sector. I believe one of my colleagues has presented figures showing that the number of Indian students coming to this country has I think quintupled in the last five or six years.
Because we are starting from a low base in many other sectors, the prospect for rapid growth is very great indeed, and that can take place even while we are negotiating a free trade agreement. We should indeed have a very high level of ambition for the CEPA, but there is a feeling, which my colleague has articulated already, that the 2013 target may not be achievable, for a variety of reasons. That should not deter us from making efforts to expand the trade relationship, even outside of the trade agreement.
This brings me to what I think is the principal challenge we have right now in building the bilateral trade relationship, and that is to basically to get more companies and more Canadians interested in India in the first place. Even if we are successful in concluding a deal by 2013, if we don't have the companies, the people, the bodies, and the agencies that are able to take advantage of it, we won't be able to reach that target of $15 billion—or even $30 billion, as Rahul has suggested—so a lot of work is going to have to be done in the meantime to get our SMEs and our agencies involved and interested in India.
In addition, we need to think very hard about public support for an FTA with India, as well as the other trade and investment instruments that we're looking at; I'm referring also to the foreign investment protection agreement. As we all know, a similar deal with China had been floated—and has now passed, of course—but it generated a huge amount of public antipathy and even opposition. I think we need to do better on an India deal and explain to Canadians why a FIPA is essential, why it benefits Canada above all, and, likewise, why an FTA is important.
You may have heard from my colleague and board member that Canadians are wary of free trade agreements with Asian countries. In fact, only a minority of Canadians, based on our national opinion polling, support FTAs with Asian countries, and that includes both India and China, so we cannot let a bureaucratic negotiation process run ahead of the effort we need to work on with regard to public opinion.
Finally, on the question of domestic preparations, we also need to have a clear statement and understanding of the role of state-owned enterprises investing in this country. This is, of course, a very current issue with respect to China, but we know that the Indians, particularly in the energy sector, are also looking to invest in this country. ONGC is a state-owned enterprise and they will be watching the decisions on Nexen and Petronas very closely.
All of these issues are interlinked. Fundamentally, we need to get our domestic act in order so that we send the right signals and, even as we negotiate a treaty to facilitate greater trade, we have to make sure that we have the people, the companies, and the means to take advantage of that agreement.
Thank you, Mr. Chairman.
Conservative
The Chair Conservative Rob Merrifield
Thank you very much.
We'll now move to questions and answers. We'll start with Mr. Sandhu.
NDP
Jasbir Sandhu NDP Surrey North, BC
Thank you, Mr. Chair.
Thank you for being here this afternoon.
We had a trade surplus six years ago. Now we have a trade deficit of about $50 billion. I'm reading very carefully the submission by the Canada India Foundation. To see that we have only $5.1 billion in trade with India is—I'll use Mr. Shastri's word—indefensible. He goes on further to say in this particular submission that Canada is behind the game.
It seems that we're not doing something right here. We heard in previous testimony that the trade between Australia and India has grown sevenfold in the last 10 years, from $3 billion to $21 billion, so here's a general question: what is our government not doing right here with regard to India? I understand that we have a large first- and second-generation population of people of Indian origin. I include myself, and Mr. Shory is here, and you. Where has the government missed the boat in the last 10 years?
National Convenor, Canada India Foundation
I don't know if we've missed the boat. I think we've just been slow to get on the boat. I think part of the allure for Canada is that within 200 miles of 80% of the population you have had the largest consumer society in the history of the world. Frankly, up until 2008, it appeared that it was going to continue endlessly. In 2008, there came a cliff, and everybody seemed to fall off that cliff. That caused, I think in large part, a shift in paradigm and an opportunity to review things and view things differently.
So while we're sitting at $5.1 billion in trade with India, that's up substantially from the $2.6 billion that it was just a couple of years back. I think Canada is starting to engage with India. I think the Prime Minister's recent trip to India highlights the importance that Canada is placing on its relationship with India. However, I do think—and I think you've heard it before in these proceedings—that we need to better sell “Brand Canada”. We need to identify what Brand Canada is all about. We need to connect Brand Canada with people outside this country. I think if we do that we're going to have an easier time delivering our goods and our services overseas.
I can't speak to the view of the commonplace Canadian person, as my friend Mr. Yuen has indicated in regard to the survey, but I think that's an important part of it. If we're going to move forward with a comprehensive economic partnership agreement with India, we need to ensure that we have a population that is engaged. If that means there's an educational process that needs to be undertaken, then that's what we should be doing as well.
NDP
Jasbir Sandhu NDP Surrey North, BC
I agree with you. We need to have a brand to sell to India. From my calculations, we have two visa offices in India, one in Chandigarh and one in New Delhi, and we have a population of 1.2 billion people there, and a growing economy. Next year it is forecasted to grow by 5% or 6%.
On these trade offices or the visa offices, you talked about students, and I have got students or their relatives coming in to my constituency. They're wanting to sponsor students to come in and take advantage of our universities and colleges, but they're having difficulty in either obtaining visas or accessing the services of consulates in various parts of Canada.
Do you think that having more trade commissioners, more visibility at the ground level, will help develop the brand that we want to develop in India?
National Convenor, Canada India Foundation
Certainly, I think, the more resources that we put towards enterprise, the more visibility we will have, and the better that will speak to us—
NDP
Jasbir Sandhu NDP Surrey North, BC
What has been the experience of your members in regard to getting access to consular services or trade services from the Canadian government in India?
National Convenor, Canada India Foundation
I think the establishment of the commission in Bangalore is a step forward in terms of allowing companies both in Canada and out of India to partner up and to get information. I think that if you look at the countries doing substantial trade—some of the European nations and obviously some of the Asian nations—you'll see that they have a greater presence on the ground in India. I think that directly correlates to more business. If you know about a country, you're more inclined to do business with a country.
NDP
Jasbir Sandhu NDP Surrey North, BC
You mentioned that Australia is doing better than we are in India. What have they done right and what can we learn from them?
