International Trade Committee on Nov. 27th, 2012

[Luc Santerre, Director, South, Southeast Asia and Oceania Commercial Relations, Department of Foreign Affairs and International Trade]

Canada has a number of pension-sharing agreements with many countries around the world—over 50, if I'm not mistaken—and had been negotiating a similar pension-sharing agreement with India. It was just recently signed. It will be implemented in the coming months. We're just going through the details for that.

What it will allow is a number of things, but two main things, I would say. One is of interest to people who choose to move permanently to another country. Before they move, they likely will have made pension contributions in their home country. This will allow them, once they retire in the other country, to receive pension benefits that are blended, so that someone who starts afresh, either an Indian in Canada or a Canadian in India, doesn't, at the time of their retirement many years down the road, lose all the pension contributions they've made. That's more of a diaspora element.

Then, in the shorter term, for companies that employ people who might need to go to the other country for a few months, or maybe year or two, either as temporary workers or with a more long-term work permit validity, what this allows them to do, while they are in the other country on a temporary basis, is that they do not have to pay into the other country's pension scheme; they just continue to pay into the pension scheme of their home country. That is really quite a benefit to the Canadian companies doing business in India, and vice versa—to the Indian companies doing business in Canada—because their cost of having employees making double pension contributions, in the absence of the social security agreement, is a business cost that companies have been complaining about. With this agreement, that additional business cost is taken out of the equation.

[Jasbir Sandhu, NDP, Surrey North, BC]

Just to clarify the first part, let's say somebody has worked in India for a number of years and they migrate to Canada, or vice versa, and they are entitled to some years of pension here. Their pension from their home country will be counted here. Would it be taxed here?

[Luc Santerre]

That's right. As part of the agreement, what will happen is that they will receive only one pension in the country in which they retire, from the pension authority of that country, and the calculation of that pension entitlement will take into account contributions made in the other country.

[Jasbir Sandhu, NDP, Surrey North, BC]

I'm always amazed that India.... We've heard that India is a prosperous country, that it has grown, and that it has a growing population, yet the business we're doing with it is only $5 billion...it's like peanuts. What are the obstacles? Is CEPA going to be able to address some of those obstacles?

[Don Stephenson]

Well, I think there are many obstacles. The first is that it's far away. If you are exporting a hard good, the logistical problem and the cost of getting your good to the Indian market plays a role.

There's the consumer in India: very price-conscious; very concerned about certain foreign goods for servicing kinds of reasons; different tastes.

There's the uncertainty of the tariff; the caps that are placed on foreign investment; the sometimes obscure regulatory requirements.

All of these things make India a challenging place to do business, but all of the tools that the Government of Canada is trying to deploy in the Indian market will hopefully give Canadian companies, Canadian investors and exporters, more certainty, more transparency, and more comfort in terms of taking the initiative to try the Indian market.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Holder, for five minutes.

[Ed Holder, Conservative, London West, ON]

Thank you, Chair.

I would like to thank our guests for attending today. Welcome back to some of you.

I have several questions, but you know, it's rather interesting; I look at Canada, with half of the world's population, 18% of the land mass, rich in resources, and I look at India, rich in population, rich in various skills, with a need for Canada's resources. If I could ever imagine that there might be a fit, I could see the Canada-India free trade agreement, the CEPA, as being that response.

Mr. Sandhu asked a very interesting question, and I thought a good one, about the obstacles of doing trade between India and Canada.

I think, Mr. Stephenson, you outlined some of that, but let me ask you a question on tariff uncertainty. Will it be better with this free trade agreement, yes or no?

[Don Stephenson]

Yes.

[Ed Holder, Conservative, London West, ON]

Caps on foreign investment: will it be better with free trade agreement, yes or no?

[Don Stephenson]

It's certainly our hope and our objective in the negotiations. How well we do, well, it remains to be seen.

[Ed Holder, Conservative, London West, ON]

Is it closer to yes or no?

[Don Stephenson]

Well, it's closer to yes, but—

[Ed Holder, Conservative, London West, ON]

I'll take “closer to yes”.

[Voices]

Oh, oh!

[Ed Holder, Conservative, London West, ON]

The obscure regulatory requirements that you've discussed: will it be better with this free trade agreement?

[Don Stephenson]

Yes, including the opportunity to dispute matters regulatory—

[Ed Holder, Conservative, London West, ON]

We do business with India today. I think you mentioned some $5 billion. So will it be better, in your opinion, to have a system that handles disputes between two willing countries when in fact currently we do $5 billion, with the potential to do that much more? Will that be better with a free trade agreement?

[Don Stephenson]

Yes. That's why we do them.

[Ed Holder, Conservative, London West, ON]

So it strikes me that when I consider this.... I look at the several areas that are Canada's interests within a CEPA. Energy, agriculture, education, mining, and infrastructure are the ones that come to my mind.

You referenced McCain's success in India. Can you briefly explain what that means, that success?

[Don Stephenson]

McCain is a very interesting example of how to work in the Indian market. Number one, they spent six years researching exactly what variety of potato would grow best in the regions of India, recruiting local farmers and training them in how to farm those potatoes for McCain so that they meet the standard. In so doing, they dramatically reduced the fertilizer being used by the farmers on the land and the water required for irrigation.

When they got the first line of french-fried potato manufacturing going, I think they said they processed something like 30,000 tonnes of potato in the first year. At home in Canada, you buy 30,000 tonnes of potato from two or three farmers. In India, it's hundreds of farmers, so you benefit hundreds of families.

[Ed Holder, Conservative, London West, ON]

Just to clarify, then, coming back to the McCain example, are there any potato products going from Canada to India at this time?

[Don Stephenson]

No, not at this time, neither potatoes nor frozen french fries.

[Ed Holder, Conservative, London West, ON]

What concerns me is the Prince Edward Island potato. It strikes me that the Prince Edward Island potato has eyes to see but no voice to speak.

[Voices]

Oh, oh!

[Ed Holder, Conservative, London West, ON]

I think we need to be able to speak on behalf of that potato. Even if it's the culture of experience that McCain can offer the Indians, then I will acknowledge that this has benefit to McCain in Canada.