International Trade Committee on Nov. 29th, 2012

[Wayne Easter, Liberal, Malpeque, PE]

One area of major concern for us is tariff levels, and especially how they relate to agriculture, I mean, as high as 30%.

[Jason Langrish]

Absolutely.

[Wayne Easter, Liberal, Malpeque, PE]

On canola, yes, they're zero, but maybe, it depends.

[Jason Langrish]

Yes, and you know what? On some of that agriculture as well, one of the things is that in an agreement like this, the Indians are probably going to be open to removing the tariffs for the things they have a demand for. They're probably going to find technical barriers for the stuff they may not feel they have a demand for. I think there's enough there that they have a demand for that we could get rid of those tariffs and provide a real benefit for all of Canada.

That's the beauty. All the regions of Canada could benefit because of the different commodities, the types of commodities, agriculture and otherwise, that India could accept. Surely it's top of mind in India the vulnerability they have in some of these areas. It's a scramble in that part of the world. India has 1.2 billion. China has 1.3 billion. Indonesia has 200 million. They all need commodities over there. Canada can be a long-term reliable partner in that regard.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Shipley.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you very much, Mr. Chair.

Thanks very much to our witnesses for coming here.

I'd like to follow up on Wayne's comments and concerns regarding the labour mobility movement and temporary workers.

You talked about the length of the agreement. You mentioned it was in place and was suspended, and that is on the Canadian side. Can you help us on what caused that and what the solutions may be to bring that back in, outside of working through the agreement?

[Jason Langrish]

I don't know the exact reason why it was suspended.

Do you know, Satish?

[Satish Thakkar]

I'm also not too sure about it.

Recently the president of NASSCOM, the trade body out of India that represents the interests of the IT industry, was here to meet with officials. I'm not too sure about the exact reason why it was suspended.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

When was it suspended?

[Satish Thakkar]

I think it was within the last 12 months, maybe six or seven months ago.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Okay.

I'd like to talk about agriculture, as it is a significant part of every agreement that we have signed and the ones that we're working on. You mentioned what I call “demand tariffs”. You indicated that it may be easy to remove those on the ones they need but not on the ones they don't need. I think that's the way it was put. That, to me, is a technical issue in a non-trade tariff barrier.

How do we deal with that? Do you see it as a dealable issue so that we're not in tribunals all the time defending ourselves?

[Jason Langrish]

Technical barriers to trade, unfortunately even the most robust agreement is never going to completely eliminate these things, because there's no limit to the imagination in terms of being able to create these things. Also, sometimes it becomes the case of who's going to blink first. The degree to which someone will push against the technical barrier is based on the size of the opportunity that's being lost.

Really, in a trade negotiation, you just negotiate as hard as you can. You try to keep as many things on the table as long as you can. You try to find out what you can trade in return for it.

This is going to be tough because it's an emerging economy, but what you can do is you can put provisions into the agreement that any type of barrier that comes to light has to be based on sound science that's recognized by an impartial arbitrator, or panel, or something of that nature. You can actually build this into the dispute resolution mechanism, if you wish.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

In your comments about India, you mentioned its amazing numbers in terms of its telecommunications, for example, and the number of cellphones and data equipment. When you go to sound science, I'm hearing that it is a belief of the Indians that if you can prove yourself, substantiate yourself, as a country or as a technology industry, for example, if you can base that on sound science, then those are the things that will stand the test.

Would that be a fair comment?

[Jason Langrish]

Yes.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

You talked about win-wins. We talk about win-wins. We always talk about it: we're never going to sign an agreement unless it is good for Canada.

In your comments, Mr. Thakkar, you talked about the difficulty and the complexity. Size is one thing; a developing nation is another. We're coming into an agreement, though we have so much together, how....

We will always hear from individuals, and some in the opposition parties, that this is not going to be a win-win for Canada, that we're going to have all these things, whether it's labour or environment or whatever.

How do we see, in these difficult and complex negotiations, or how do we know that we're going to actually have a win-win? That is the objective of both sides. I'm assuming that would be the intent of the Indian government also.

[Satish Thakkar]

You see, in any period of negotiation there's always a balancing act. You know that you have to sacrifice to gain some other things. In a win-win situation, it all depends upon how we view it overall as the negotiation.

As I pointed out in my comments, it's a building up of a relationship rather than just a client-supplier relationship. As a partner, how do we partner together in creating a value? I'm talking about value that will sustain, in the future, for the generations to come, a system or an understanding whereby we not only gain economically but gain also in some of the other key challenges and issues facing both, with similar traits socially, economically, and culturally. How can we work together in addressing some of those key challenges also?

With regard to a win-win situation, if we look at it from that perspective, India needs what Canada has in terms of infrastructure, in terms of resources, in terms of technology, in terms of the education sector. There is a list of all these sectors where it's been already identified that Canada is going to gain.

For example, on the education front, our student migration has increased. Now we are sitting at 23,000 students of Indian origin in Canada. It was previously 12,000. It's a significant jump. International students are contributing close to $7 billion to $8 billion to the Canadian economy.

Whether it's a resource sector, or an energy sector, or an ICT sector, or a mining sector, on that front there is obviously a lot of gain for Canada. As well, India is one market, but through India there can be access to other markets as well.

India's key strength today is that half of the population is under the age of 25. If we look at China, China's average age is around 38 or 39. India's average age is around 25. It's less than 30. It's a young demographic. Looking to the future, how are we going to fill the needs of whatever skills shortages we are talking about? How are we going to fill that gap? If we look at it 20 or 30 years down the road, Canada has to rely maybe 70% or 80% on immigration skills coverage versus how we are filling that gap today.

I think overall this relationship has to be looked at with a holistic view rather than a stand-alone view.

[Jason Langrish]

I would add one thing: long-term play. When you go to different emerging countries, it's always interesting to see which automobiles they drive. It's almost always a reflection of who's been there first. The big car in China is the Buick. It's Audi for the members of the Central Committee. They take the Audi—they're selling them all now—but the Buick is a big name there. Why Buick, of all? They've been there the longest, and they've established brand equity there.

That's the key. We need to get in there so that the rest of Canada can follow.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you.

[The Chair, Conservative, Rob Merrifield]

Very good. That will take us to the end of the questioning in the first hour.

We want to thank you both for coming in and sharing with us. We appreciate it very much. We look forward to taking your advice and acting on it and getting in there and trying to get this completed as quickly as possible.

Again, thank you for being with us.

[Jason Langrish]

Thank you.

[Satish Thakkar]

Thank you.

[The Chair, Conservative, Rob Merrifield]

With that, we'll suspend until we set up the next panel.

[The Chair, Conservative, Rob Merrifield]

We'll call the meeting back to order.

We want to thank our witnesses for being here.

We now have on our panel the current president of the Canada-Indo Chamber of Commerce, Mr. Naval Bajaj. From Spirits Canada, we have Jan Westcott, chief executive officer, and Mr. Helie, executive vice-president.

With that, we'll start with you, Mr. Bajaj. Thank you for being here. The floor is yours, sir, and we look forward to your presentation.

[Naval Bajaj, President, Indo-Canada Chamber of Commerce]

Thank you, Rob.

Honourable members of the House of Commons, thank you for giving me the opportunity to present my views on a subject that is important to both Canada and India.

I am Naval Bajaj, president of the Indo-Canada Chamber of Commerce. I am a small business owner and a business consultant.

Our chamber is a 35-year-old Canadian institution whose two objectives are to foster bilateral economic relations between Canada and India and to create business and professional opportunities for the Indian diaspora in Canada. We are the oldest Indo-Canadian business organization in Canada, and we are the largest Indian diaspora organization in Canada. We are a privately funded, non-partisan entity.

In pursuit of our objectives, we are supported by the Canadian private sector through sponsorship. As a chamber, we believe that Canada and India have political, social, and cultural commonalities that should automatically spur economic cooperation. Economic ties haven't grown as rapidly as they ought to have, although, significantly, momentum has been activated in the last few years.

Closer economic relations between Canada and India will create opportunities for Canadian entities, not only in the Indian market, but through the Indian market, as these entities will be able to reach the rapidly expanding South Asian market. Similarly for Indian companies, access to the Canadian market can jump-start them into the much larger North American market.

In fact, during the last two years, our chamber has actively created a platform for interaction between our members and the Indian diaspora in Canada to interact with Don Stephenson, Canada’s chief negotiator of the CEPA with India. As a chamber we are convinced that the comprehensive economic partnership agreement between Canada and India will be immensely beneficial to businesses in both countries. It will kick-start economic relations and help in achieving the targeted $15-billion two-way trade between Canada and India. Our members have provided feedback about their concerns and gained knowledge on the opportunities that CEPA would create for them.

In India, too, we had a discussion in January 2012 with Mr. Anup Wadhawan, India’s chief negotiator on CEPA. We will have similar meetings in January 2013 during our chamber’s India trade mission. We will be taking over 50 Canadian small businesses to India to explore trade and business opportunities. The mayors of Markham and Brampton will be part of the Indo-Canada Chamber of Commerce’s delegation.

The CEPA negotiations focus on goods and services, and have reached a stage where both Canada and India have explained their positions to each other exhaustively. Now the process of agreement will begin.

CEPA is an agreement that comprises liberalization of trade in goods by cutting and/or eliminating tariffs on most or all goods on either side, besides easing of investment flows and special treatment to each other in such other areas as intellectual property rights. In all of these areas, there will be both opportunities and challenges. From a Canadian perspective, we understand the parameters within which the Indian establishment will operate in terms of granting of concessions. India may find it difficult to meet all Canadian demands for tariff reductions in view of domestic problems that may be created.

The same applies to foreign investment. It is indeed hard to comprehend the protracted delay on India’s part to finalize the foreign investment protection agreement, something that it has kept under wraps for the last eight years. As a chamber, our stand is that while Canada should, and does, take cognizance of the internal democratic dynamics with which India is governed, there has to be demonstrable political will on the part of the Indian establishment to commit itself to the path of liberalization and opening its financial sectors to Canadian entities.

In this regard, it might be a good strategy to adopt an incremental approach, whereby Canadian negotiators may agree to the common ground on the condition that India will be open for negotiations on the sticking points later on, when its internal situation may so warrant. Specific modalities, such as approach and level of commitments, should be discussed with Indians in the context of formal negotiations and their agreements sought to the maximum extent possible.

In terms of specific sectors, CEPA should include a chapter on telecommunications services, with the goal of promoting a pro-competitive regulatory environment that is vital to trade in telecommunications services, recognizing the mutual interest in facilitating the legitimate temporary movement of natural persons for enhancing bilateral trade and investment.

A separate chapter on temporary entry for natural persons should be included in the Canada-India CEPA. This would give a tremendous boost to the Canadian information technology sector by making it more competitive and more capable of competing in North America.

Internships and student exchange programs, people-to-people linkages, and arrangements for joint ventures or partnerships in third countries, such as in developing countries in Asia, Africa, and Latin America, may be considered for inclusion in CEPA.

The million-strong and growing Indian diaspora in Canada can, and wants to, play a significant role in developing economic relations. It will be useful if reference is made to the desirability of expanding people-to-people contacts and for making use of the Indian diaspora networks and resources, as its members know both the Canadian and Indian scenarios within which economic and commercial cooperation can best develop.

In this context, I want to emphasize that the Canadian establishment should take cognizance of the work that organizations such as ours are undertaking in this sphere. This is because governments may define the parameters of trade and extend boundaries of what can be done, but that alone is not enough. Finally, it is the entrepreneur who will put his money where his mouth is. Our chamber helps that entrepreneur take an informed decision on investing time, money, and expertise in a bilateral trade or investment deal.

In conclusion, I wish to state that economic partnership goes over and above trade and commerce. It is more than a mere enhancement in the trade of goods and services. Economic partnership includes all this and more. The important thing here is to define what we should include in the definition and to what extent.

In a world where geographical boundaries have become mere notions and where technological innovations are constantly creating economic opportunities, it has become imperative for governments to understand and adapt to these revolutionary changes. Canada and India have several political, cultural, and social commonalities. It is time now to create economic synergies, based on these commonalities, for the common good of its people.

Thank you.

[The Chair, Conservative, Rob Merrifield]

Thank you very much for that. We certainly appreciate your intervention.

We now look forward to Mr. Westcott from Spirits Canada. You represent an organization that knows a lot, and has learned a lot, about trade deals since the beginning of NAFTA. What a great success story. The floor is yours, sir.