International Trade Committee on Dec. 11th, 2012

[Devinder Shory, Conservative, Calgary Northeast, AB]

I agree with you.

I came to Canada only in 1989, by the way.

You were talking about McDonalds. It was mentioned in the previous testimony that there are 300 million vegetarians living in India. McDonalds has its first two vegetarian franchises in India, which are very successful.

I was there with another delegation. We visited McCain and we did meet Viterra, and they are very successful. Other witnesses also told us that when you go to India for business, you have to have long-term goals there. You have to be on the ground. You have to understand the culture. You have to work with the culture within the legal meanings.

Would you agree with all that?

[Sachin Mahajan]

Yes, absolutely.

[The Chair, Conservative, Rob Merrifield]

That's very good. That's hard to argue with.

[Some hon. members]

Oh, oh!

[The Chair, Conservative, Rob Merrifield]

Mr. Easter.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Mr. Chair.

You asked me about motions. I'll put forward only one in order to save time later, and it'll be the one relative to supply management.

Mr. Mahajan, you raised the point that India was concerned with the net benefit test on investment in Canada. For a while we thought the FIPA was signed because it was on the International Trade website, but now it has come down, so obviously it's not signed. What's the view now with the FIPA still in negotiations and the announcement of CNOOC on Friday? Has that changed their view, do you know, because—

[Sachin Mahajan]

I haven't had direct conversations—

[Wayne Easter, Liberal, Malpeque, PE]

Sorry. The last witness kind of indicated that views might have changed as a result. What are your thoughts?

[Sachin Mahajan]

Look, there will obviously be two sets of views. One will be from organizations that are state-controlled and were trying to do business with Canadians in the past. In the mining sector, for example, NMDC has been here several times. ONGC Videsh has been trying to acquire oil sands for the last several years. Obviously, they will have a bigger issue with the statements that were made. I think private companies like Tata, Reliance, Essar, or Birla will probably view those comments—because they're not state-owned—as not really directed at them. I mean, at the end of the day we have to protect our jobs and we have to protect our industry, but they have successfully transacted in this country on a private scale.

But look, the Indians haven't done that in the past, so I think it will be a test coming up for them. They are state-owned; some of those companies are state-owned, and those are the ones that will actually have a bigger challenge, I think, and more scrutiny. I don't remember a large transaction done by the Indian state-owned companies in Canada, but I'm sure it will be an issue for them.

[Wayne Easter, Liberal, Malpeque, PE]

That is in fact helpful.

The other thing you mentioned was that there are concerns about the legal framework, arbitration, and the amount of time litigation takes in India. That's true. Do they have any concerns on our side about the legal framework? I don't think our system is all that fast either, but they don't have any concerns about our legal system...? Just as background?

[Sachin Mahajan]

No. In fact, I haven't heard anything. I've actually travelled a lot with the law firms from Canada, going to India and vice versa. It has always been an issue that Canadian law firms can't open up offices in India, and obviously the legal system is an issue, but I don't think it's the other way round. They are very happy with our legal system.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you very much.

Ron, welcome to you as well.

First off, I do have to ask a question, because I don't think the Indian trade agreement is of immediate priority, but the South Korean trade agreement may be. I wonder if you have anything you want to add on it that's of an urgent basis.

[Ron Bonnett]

Well, I think the South Korean one is extremely urgent, particularly for pork producers wanting access to that market. Now that the United States has an agreement in place, they're going to have preferential access all of a sudden, so anything that can be done to speed up that negotiation would be appreciated.

[Wayne Easter, Liberal, Malpeque, PE]

Okay. Thanks.

You mentioned in your paper that the tariffs have been temporarily eliminated for pulses, which we do know is true. Is that the major reason why we're doing so well in the Indian market on pulses and why it's a growing market? Because tariffs are lowered, because there are shortages there, or what...?

[Ron Bonnett]

I think the elimination of tariffs is one of the reasons, but I think the other reason is that we have really established ourselves as a reliable supplier with a high-quality market.

I think the problem with temporary tariffs and temporary tariff elimination is that it doesn't give you confidence to do the planning you need to put the infrastructure in place for the long term. If you look back at a number of commodities that have been traded to India, I think you'll see that their policy has been based on what they want to do domestically, as opposed to having some long-term rules and having an understanding of what you would be faced with when heading into that market.

[Wayne Easter, Liberal, Malpeque, PE]

So the bottom line—and you're the second or third one who's said that—is that even though we're in a market, if I could put it this way, without a trade agreement, the stability isn't there to ensure that we invest in the infrastructure, or indeed that farmers invest in further expansion of their level of production in order to target that market.

[Ron Bonnett]

I think the word I would use to describe it would be “predictability”. You don't have knowledge of what the rules are going to be. We can see that the Indian government has put a lot of effort into making sure they have domestic capacity. It's fine to have domestic capacity, but we also understand that there's going to have to be a lot of trade in agricultural products just because of the size of the marketplace. We need a rules-based system to make that happen so that people have enough confidence to make the investments that are necessary.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Cannan, you have seven minutes.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you, Mr. Chair.

Thanks again to our witnesses. Welcome back to Canada.

We did see each other—we were the two Ronnies—in Japan.

I just want to follow up on Mr. Easter's comment about the tariffs.

You mentioned that a lot of tariffs for lentils have been removed, but there's still 100% tariff on what product?

[Ron Bonnett]

I have to go back to my notes on that. As I said, I'm not specific in each sector.

I believe it was on lentils and other pulses. There's a 50% tariff on peas.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Okay.

We talk about free and fair trade, and we want to grow our agricultural opportunities. What are the agricultural opportunities for Indian farmers exporting to Canada?

[Ron Bonnett]

Indian farmers have had quite a bit of opportunity with some of the spices there. With some of the commodity-type products there is likely not as much opportunity. But some of the spices and specialty products would be the market opportunities for them.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

The pork association just testified, and they mentioned the refrigeration issue as a big concern. From your experience in your association, has that been a detriment as well for getting your product to market?

[Ron Bonnett]

It depends on the type of product. If you're talking meat products or vegetable products, refrigeration would be critical. When it comes to peas, lentils, and grain products, it's not as much of an issue. But there I think the issue would be making sure that you could get your product right to the final market. It's one thing to get it to the edge of the country, but you have to have the infrastructure, whether it be rail systems or storage systems, to make sure it gets right to the customer. It's that old situation of making sure the last mile is there to get it to the customer.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thanks.

Mr. Mahajan, thank you for being here today by video conference.

You said you've spent the last 13 years in Canada, so you still have a lot of activity back and forth with India. Have you done business in other countries outside of India, and how does that compare as far as the emerging markets go and accepting the contractual rule of law from a North American perspective?

I've been in business relationships with the Indian culture. There's a different way of doing business. I was just wondering how this.... You understand the premise of the question?