Thank you, Mr. Chair, for this opportunity to provide comments on the Canada-India comprehensive economic partnership agreement or CEPA.
I'm Cam Vidler, director of international policy at the Canadian Chamber of Commerce, which is one of Canada's most representative business organizations. Many of our members are active in India, including Scotiabank, which is represented here today by Nav Bubber, director of operations at Scotiabank Private Client Group, who will also be providing remarks after I do.
The Canadian Chamber is a long-standing supporter of increased trade and investment with India. In 2009 and 2010, we called on the federal government to undertake bilateral trade negotiations. Last November, our president and chief executive officer, the Honourable Perrin Beatty, travelled to New Delhi to meet with members of the business community there. Developing strategies for Canadian businesses to access new markets like India is one of the Canadian Chamber’s top 10 priorities for 2013.
Last year the Canadian Chamber produced a report called “Canada-India: The Way Forward”, which outlines the views of our membership, as well as policy recommendations to improve our relationship with India.
We believe that India is crucial to Canada’s global commercial engagement. Rapid economic growth and urbanization, combined with a young population of over 1.2 billion people, are boosting consumption and investment in India, and creating a booming market for Canadian goods and services—right at a time when our traditional markets are slumping.
In addition to the sales opportunities, India is establishing itself as a prime location for innovation and production, based on its growing pool of talent and emerging global companies. We all know about the IT clusters in Bangalore and Hyderabad, but India’s manufacturing sector is also becoming more sophisticated, with a number of local and foreign companies supplying the broader region from their bases in India.
Despite a recent slowdown in growth that has led to some skepticism by commentators, India appears to be turning a corner. A new wave of liberalization is under way, and economic confidence is returning.
Canada’s capabilities in areas of extreme need for India—including energy, infrastructure, agriculture, financial services, and education—make us very well placed to succeed there. Leading Canadian companies such as Bombardier, Sun Life Financial, McCain Foods, Research in Motion, SNC-Lavalin, CGI, CAE, and Scotiabank, to name only a few, have made significant inroads. Our SME presence in India is growing as well.
Despite these positive developments, the business relationship between Canada and India remains underdeveloped. Distance, language, and cultural differences certainly play a role, but a number of policy barriers in India also hold back Canadian companies.
The CEPA is an opportunity to address them. I’d like to outline four general priorities here. A more exhaustive list can be found in the report I mentioned earlier as well as the submission we made to this committee.
First, the CEPA should reduce and bind Indian tariffs on major Canadian exports, such as chemicals, wood products, manufactured goods, and especially food stuffs, where tariff rates can hover near 30%.
Second, these tariff reductions need to be accompanied by strong disciplines against non-tariff barriers. Licensing requirements, technical standards, and product certification procedures can often be onerous and insufficiently harmonized with international best practices. Companies also report local content requirements and government procurement practices that discriminate against foreign companies.
Third, the CEPA must extend Canada’s access to India’s services sector. There are, for instance, significant restrictions on foreign involvement in banking and insurance, some of which my colleague Nav Bubber will be able to speak to. Market access should also be complemented in the services sector by arrangements for the temporary entry and mutual recognition of professionals.
Finally, protections should be included in the agreement for Canada’s growing stock of foreign direct investment in India. A foreign investment promotion and protection agreement, or FIPA , was signed in 2007, yet India has yet to ratify it. This leaves Canadian investments potentially exposed to discriminatory or arbitrary regulations and taxes, and without recourse to investor-state dispute settlement procedures.
The Canadian Chamber applauds the government’s intent to complete the CEPA negotiations in 2013, but it is important that Canada not sacrifice quality for speed. An ambitious and comprehensive agreement that secures real, long-term market access for Canadian companies and their Indian counterparts is an achievement worth waiting for, albeit not forever.
With that, I’d like to pass the microphone to Nav Bubber.
Thank you, and I look forward to your questions.