Thank you very much, Mr. Chair. Good afternoon, everybody.
Thank you for inviting our association to appear before your committee once again. This time, we are here to take part in your consultations on the Comprehensive Economic Partnership Agreement with India.
I believe you are familiar with the association that I represent. Canadian Manufacturers and Exporters has been Canada's largest industry and trade association since 1871, so we've been around for some time now.
Thanks to our various initiatives, in particular the Canadian Manufacturing Coalition, CME represents more than 10,000 manufacturing and export companies in the country, and a number of businesses in the services sector that support manufacturing, innovation and international trade.
More than 85% of our members are small and medium enterprises. On the whole, they represent each industry sector in Canada.
The manufacturing sector is the largest industry sector in the Canadian economy. Last year, it generated $571 billion, 13% of GDP and over 1.7 million direct jobs.
Our members export most of their production. Manufacturers alone are responsible for nearly two-thirds of all goods exported from Canada. Our members compete with Canadian and foreign businesses, both on domestic and foreign markets.
The more our members become specialized, the more they can distinguish themselves by being agile and able to innovate in niche markets. This makes it more important for them to develop networks of clients, factories, suppliers and business partners around the world, in countries like India.
As our annual management issues survey conducted a few months ago indicates, more and more companies are looking at India as a place to grow business. In fact, 16% of our members responded that they expect to source from India in the next three years, up from 9% currently. The proportion of companies looking to export to India should also almost double in the next three years. Currently it's about 7% of respondents who sell to India, but in three years 13% expect to have customers in that market.
Our survey also indicates there is support for the comprehensive economic partnership agreement with India. A quarter of the companies expect it will have a positive impact on their business. The survey also shows there are 30% of companies that are not quite sure of the impact this agreement may have on their business, so I think we need to make some education efforts there.
CME is therefore supportive of the negotiations, to the extent that Canadian negotiators can deliver an agreement that will deliver a net benefit to Canadian manufacturers and exporters.
We have been having regular meetings with our chief negotiator and members of his team to ensure the needs and expectations of our members are being met in these negotiations. With regard to some of the issues we have raised with them, I think David mentioned some of them earlier in his remarks. Tariffs are frequently quoted as a significant barrier to growing Canadian exports to India.
In the case of our membership, market access for goods, especially for industrial goods, is a priority for us. India has generally applied what could be labelled as relatively high tariff rates. Most industrial tariff lines are currently around 10%, but in some sectors, such as the automotive or aerospace sectors, tariffs can be as high as 19%, and even higher if we're talking about processed food products.
Dealing with tariffs is important, but dealing with regulatory and non-tariff barriers to trade is also important. India is a rapidly growing market, and it's critical for companies doing business over there that there be more transparency, better predictability, and alignment on things, such as product standards, regulations affecting products, and following best regulatory practices. This includes pre-publishing new regulations, for example, such as is the standard here in Canada.
Another major issue for us is around government procurement. We have been told that India has not yet been willing to discuss government procurement in the context of these negotiations. Given Canadian business expertise in infrastructure projects, in engineering, manufacturing, construction and services, all those aspects of what you would call an infrastructure project, ensuring that Canadian businesses have guaranteed open access to government procurement contracts and ensuring more transparency in India's tendering process are also very important for our members.
Investment is also important. Canada has been engaged in separate discussions on a foreign investment protection and promotion agreement with India, and we hope those negotiations can conclude as soon as possible. It's somewhat separate from the CEPA, but it's also an important aspect of our trading relationship with India.
Finally, labour mobility, which our negotiators refer to as temporary entry, is another important chapter in these negotiations, and I understand it is one of India's main offensive interests. We support having this issue included as part of what would be a comprehensive agreement.
India has many suitors, and Canada is one of several countries trying to negotiate a trade deal with that country. While the CEPA could potentially eliminate barriers to trade, investment, and labour mobility, we support the government continuing to seek closer and deeper political and economic ties with India beyond the conclusion of this agreement.
The Prime Minister was visiting India recently with a group of CEOs, and our president and CEO, Jay Myers, was on this delegation. This is exactly the kind of forward-looking economic diplomacy that many of our members are looking for the government to provide. We hope these high-level meetings will continue to happen on a regular basis. We're willing to provide whatever support is needed to make those happen.
As for the pace of the negotiations, we support the objective of concluding the CEPA by the end of next year, although this probably means that the pace at which these negotiations are going will have to increase in the coming months. There is strong support from both Indian and Canadian business, as far as I am aware, for this agreement, so we hope that both governments will show the same level of political commitment and conclude negotiations sooner rather than later.
l'II end my comments on that note and will be pleased to answer any of your questions.