International Trade Committee on Feb. 25th, 2013

[Pradeep Sood]

To your second question about infrastructure, the roads and all have virtually been taken over by the Malaysians. Canada has looked after the automobile side and tried to do something there. We've already looked at the opportunity there, but China is going strongly in that area. Eventually it's a cost-benefit analysis. Who can do it cheaper? I can't tell you because I'm not the guy who is placing the orders or seeing those things.

I think that we eventually have to understand what we call “Indian innovation”. Indian innovation is very different from what we think of as innovation. I'll just give you two quick examples of Indian innovation. When the Nano was built, it had only one windshield wiper. They wanted to save on a second windshield wiper so they designed the first in such a way that it would cover the whole window without their having to put the second one in.

Let me give you a second example. In India the washing machine that China is supplying is only able to wash three shirts, because that's the way the water is acquired and consistent with its cost, and everything else. There, you have to be able to build a product that meets the market requirement without sacrificing quality. That Indian innovation is very critical.

Whichever way you look at it, eventually it comes to cost-benefit analysis. India is a very competitive market; they're going to go where they can get the best for their money.

So it's very important to understand—and I have actually put that point in my notes—that one of the things we probably have to do is to get people CEPA ready, so that when CEPA comes, our people are ready to move on with it because they are already prepared. They want us to know what Indian innovation is and they want us to know so many other things that are critical to your point about understanding the Indian market and to get there.

[Devinder Shory, Conservative, Calgary Northeast, AB]

Thank you, Mr. Sood.

Mr. Madan, do you also want to make a comment as you also have some experience in Indian markets, including a comment on our trade commissioner services there?

[Suresh Madan]

The trade commissioner services have been excellent.

In terms of services and cooperation, the information and communication technology is low-hanging fruit. Both of our countries are very strong in that area and there are huge opportunities for working together in that particular area.

Entrepreneurs, especially in the ICT area, consider building products and services for the global market. Whether they are based in India or Canada, we are projecting to sell these products and services in the global market. These entrepreneurs should be encouraged to take advantages of India's ecosystems, which we are building here in Canada so that we can attract these Indian entrepreneurs who are highly educated and very qualified and have creative ideas to build products that can then be sold in the global market and not just in Canada.

These highly qualified Indo-Canadians have actually set up businesses and started their own enterprises in a variety of ways, and not just in ICT, but within the health care industry, and even within retailing or in food services. There have been huge businesses started by Indo-Canadians as well as newcomers to Canada.

[The Chair, Conservative, Rob Merrifield]

Thank you very much, Mr. Shory. I'm going to have to shut you down there, and it has nothing to do with your accent.

[Some hon. members]

Oh, oh!

[The Chair, Conservative, Rob Merrifield]

Mr. Davies.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

There's no doubt that there is a lot of good news and bright prospects in the future, but I think it always behooves us to look as well at where some of the difficulties may lie in negotiations between our two countries. I want to turn to some of the difficult issues.

Mr. Sood, you talked about a lot of business coming down, quite properly, to cost-benefit analysis and purchasing goods and services based on what's cheapest. That's the way business works.

I want to turn to labour standards in India. I'd like to know what you can tell us about the minimum wage in India, what workers are paid, and whether businesses in India have to pay for public health insurance or unemployment insurance. I'd like to find out if you can tell us anything about the use of child labour, if that's a practice that's still being used in India in any part.

I'd also like to find out about safety enforcement. We've heard stories over the years of tragedies that have occurred in factories. There have been fires and workers have been killed in large numbers; they basically have been locked in the factories.

If we are to have a free trade agreement with India that reduces tariffs, I am wondering what you think of the playing field between Canadian businesses and Indian businesses, if there's such a wide differential between what those businesses have to contribute in meeting labour and human rights standards.

[Pradeep Sood]

If you had asked this question 10 years back, you would have been right on every count.

Today all I can say is that things are being regulated. They are better. Child labour has been abolished. Government-wise it's been abolished, but whether it's happening, it would be difficult for anyone to really say. But yes, it's not permitted.

Similarly, in the factory example you gave, it must have happened. I'm not going to say that it did not happen, but my point is that what we really need to look at is that India is growing and as we Canadians and other countries participate in India, we are having our own rules and regulations imposed. For example, I remember how Walmart would not buy from any factory in India that had child labour. There was a big article about it. They even stopped supplies. That factory had to stop.

These social norms come into being by working with a country and not totally because it's the onus of the country to abolish things. It's sometimes difficult; I will not for a second say that it's right, but everywhere they're trying to make progress.

So are your statements not true? No. You are absolutely right.

[Don Davies, NDP, Vancouver Kingsway, BC]

Well, it's heartening to know that they're on a trajectory. I'm glad about that.

I don't say this with any disrespect to India, but do you think that when Canada and India are negotiating, we should be putting into our agreements certain standards on labour and safety rights so that we can encourage that development between the two countries. Are you in favour of that?

[Pradeep Sood]

I would say yes. We stand for certain values, and I don't see why we should be compromising our values for anybody.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

I want to turn quickly to another statistic we have. The World Bank in 2013 ranked India 184th in the world in terms of enforcement of contracts. I'm not sure if that's out of 185, but I think it might be.

To me, that speaks to a serious problem and concern with the judicial system in India in enforcing contracts. Of course, for many businesses that's a lifeline.

Does anybody have any comments about how they would like Canada to approach this issue? Have you had any difficulties in getting contractual terms respected in India?

[Suresh Madan]

I think we should recognize these issues, and perhaps educate and groom our business people to design contracts and to take steps of a preventive nature so that there would be minimal opportunities for dispute. That way, things would be much clearer and less likely to be misinterpreted by someone else.

So in promoting business, that is something our own trade commissioners should be doing. Canadian business people should be educated to design contracts in such a way that there are minimal issues and chances for misinterpretation, so that contracts can be properly enforced because they're clear, they're watertight, and they're much shorter.

Going back to your earlier question on labour standards, especially on the innovation side of the economy, in ICT, in health care, and in many other similar sectors, I didn't see any evidence of India exploiting people in any way. I'm not aware of all the other segments of the economy there, but I think it may be prudent, from our negotiating point of view, to include clauses against the exploitation of labour.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Go ahead, Mr. Holder.

[Ed Holder, Conservative, London West, ON]

Thank you, Chair.

I'd like to thank our guests for being here this afternoon and sharing their insights on how they work in Canada and with India, as we study this pending CEPA arrangement.

I guess I take some comfort in knowing that in any free trade deals Canada has put in place, we've always put in pretty detailed labour and environmental agreements as part of them. It gives me some confidence as we go forward on those kinds of issues that you made reference to, Mr. Sood. I think some pride in how India is improving its own standing will go a long way.

The case for India is pretty clear, and I say this based on the obvious facts. You're looking at the second-largest population in the world and one that's predicted to be the largest in the next decade or so, and the tenth largest economy in the world. India has undertaken major economic reforms and is part of the WTO, so a lot of things are happening. What surprises me is the fact that we haven't done that much more in terms of trade given the growth that could have been.

It's interesting, Mr. Sood—and I'll ask you for a brief comment on this—that you said we should sign a CEPA as soon as possible and negotiate on an incremental basis. That's not the history of Canada's trade deals. We're completing one with Europe right now, and it's fairly clear, as we're now into what I call the crunchy bits—the tougher part—that some of these are emotional issues and some are maybe not even large economically, but they are things that certainly matter in various aspects of the agreement. But if you don't do these now while you're signing an agreement and trying to get all the big pieces done, I would suggest to you that they'll never be done. I think the example is with Korea, where there's a partial agreement, not a completely full agreement.

I'm just wondering if you could comment briefly on that, as far as why you seem very committed to just getting any deal done. Tell me that's not just for the sake of doing a deal.

[Pradeep Sood]

Mr. Holder, that was not my comment. I actually was of the view that we should take our time.

[The Chair, Conservative, Rob Merrifield]

I think that was Mr. Madan.

[Ed Holder, Conservative, London West, ON]

Oh, I apologize.

[Pradeep Sood]

I'm of the view—

[Ed Holder, Conservative, London West, ON]

And here I put your name to that.

[Pradeep Sood]

I agree with exactly what you are saying.

[Ed Holder, Conservative, London West, ON]

Thank you very much.

Mr. Madan, why are you in disagreement with Mr. Sood, then?

[Some hon. members]

Oh, oh!

[Suresh Madan]

I think negotiations have been going on for three and a half years, and I know there are some sticking points between the two countries that would take time to resolve. In the interest of goodwill, as well as of promoting and harnessing the benefits of a comprehensive trade agreement, especially for the benefit of small and medium-sized enterprises and more so, unlisted start-up companies, it is very important that we conclude the agreement as soon as possible.

Now, smaller companies and early-stage companies do not have a long runway. They cannot stay afloat for years and years without proper access to the market. They need to take advantage of the market opportunity as soon as possible; otherwise, they'll have to wind down and move somewhere else. For the entrepreneurial community, it's critical that what we started three years ago be concluded. Obviously, we cannot get everything. From the way the negotiations have been going, it seems that we will never be able to get everything we want. There has to be a compromise, but let's try to take advantage of what we have already achieved. Over these seven negotiating rounds, a number of things have already been achieved. I assume they would be beneficial, and we should conclude them.

[Ed Holder, Conservative, London West, ON]

Mr. Madan, I appreciate that clarification. From my perspective, you're quite correct that every negotiation is a give-and-take. The challenge is that we will never get agreement on those smaller things that are emotional, that are the highly charged on both sides of any agreement, unless we have a full agreement. That's certainly just my opinion.

Mr. McRonald, you're in an interesting business with livestock genetics. One thing that Canada has always argued is that we should follow the science when it comes to GMOs, when it comes to anything associated with the science of agriculture—and certainly livestock is part of that. We have found in our dealings with Europe on CETA that there have been some concerns about GMOs and the like.

In your industry, what's your sense of genetics as they relate to trade with India? Could you help us understand how that would play out?

[Rick McRonald]

First of all we're not talking about GMOs but normal animal breeding, which these days includes genomics. But we haven't got into really detailed discussions with India about genomics.

The problem in India is that they really have no genetic evaluation system, so it's very basic in establishing benchmarks, animal identification, and performance recording. You set benchmarks against which you can measure progress or develop breeding programs, and then measure how successful those breeding programs are. From that standpoint they're very open.

As I said, the problem we're encountering is with tradition and regionalism. There are a number of breeds of cattle in India and there are people who are dedicated to preserving those breeds. If they've got to improve milk production—and they've already stated they need to—they can't increase milk production to keep up with demand using the system they have. But if they have to protect every little breed that hasn't been efficient, then how are they going to do that?

Obviously, everywhere else we've increased milk production—not only us but our competitors—and it's pretty much been by the holsteinization of the dairy cattle population. If they don't want to do that then we have to take the genetic principles and apply them to the breeds they have.

In some cases they have been very open to that and in other cases not so much.