Image credit: HANDOUT / AFP/GETTY IMAGES
Commentary from Colin Robertson:
Trudeau must make haste on trade with India
by Colin Robertson
The Globe and Mail
February 15, 2018
Prime Minister Justin Trudeau's visit to India this week will reinforce and underline our growing people-to-people ties. The economic relationship is less buoyant, but if Indian Prime Minister Narenda Modi can deliver on his promised domestic reforms, there is the potential for more two-way trade and investment.
With stops in Agra, Amritsar, Ahmedabad, Mumbai, as well as New Delhi, it will be a rare session that does not include some reference to family living or studying in Canada.
The Indian diaspora includes several members in the Canadian Parliament, with four members in the Trudeau cabinet. Nearly 4 per cent of Canadians claim Indian decent, with 40,000 Indians migrating to Canada last year. The 124,000 Indians studying in Canada are our second-largest group of foreign students. No surprise that tourism is also on the rise, with more than 210,000 Indians visiting Canada last year. There are daily and non-stop flights.
India definitely deserves Canadian attention.
India will soon surpass China in population, with one-sixth of humanity. It is also the world's largest democracy, which is a cacophony of caste and creeds. The two Prime Ministers will empathize over the challenges of managing federations with strong sectional and regional pressures. Some of these, such as the Sikh separatist movement, play into Canadian affairs.
At the World Economic Forum in Davos last month, Mr. Modi was forceful in his embrace of globalization. He described his "New India" reform agenda and its pillars of structural reform: technological governance; physical infrastructure; business facilitation; and inclusive development. Designed to give "good administration and better amenities," Canada needs to identify the niche opportunities within each pillar.
Trade and investment will figure in every discussion. Investment from Canadian pension funds in real estate and other sectors has picked up in the past couple of years.
With its steady GDP growth, India is expected to become the third-largest consumer market by 2025.
But Canada and India are still some distance from long-promised deals on foreign investment and closer economic relations.
The foreign-investment protection agreement negotiated by the Paul Martin and Stephen Harper governments that was concluded in 2007 has yet to be implemented. Free-trade negotiations began in 2010. The six-month "road map" to its achievement, that Mr. Harper and Mr. Modi enthused about during the Indian Prime Minister's Canadian visit in April, 2015, has yet to materialize.
Much of the problem lies, as the World Bank consistently reports, with India's trade restrictiveness. Mr. Modi talks a good show on reform and, while he is making some progress, the structural impediments are deep and entrenched.
There is also, notwithstanding Mr. Modi's declaration in Davos, Indian protectionism.
The imposition late last year of a 50-per-cent import tariff on peas and a 30-per-cent tariff on chickpeas and lentils should be high on Mr. Trudeau's discussions with Mr. Modi. Agricultural sales to India are a major market, especially for Prairie farmers.
Mr. Trudeau will likely get a receptive hearing on climate and the progressive trade agenda that can be parleyed into useful initiatives.
Mr. Modi will raise Indo-Pacific security and likely ask about Canadian capacity and capabilities. Indian policy under Mr. Modi has shifted from "Look East" to "Act East." His "Neighbourhood First" policy is roughly analogous to the Trudeau government's new "Strong, Secure, Engaged" defence policy. At last month's Association of Southeast Asian Nations forum, there were discussions about the "congagement" – containment and engagement – of China. Mr. Trudeau should listen to Mr. Modi's perspective.
With the Trans-Pacific Partnership now a reality and likely to be implemented later this year, our trade in the Pacific will only increase. It will oblige more attention and commitment to Indo-Pacific security.
The tempo of Indo-Pacific activity by our Esquimalt-based warships has picked up. HMCS Chicoutimi, one of our Victoria-class submarines, is completing a nearly six month successful Pacific exercise that also took it to Japan. If we want to be seen as a serious Indo-Pacific partner, the current tempo will be seen as the bare minimum.
Mr. Trudeau's India visit is his longest yet to a single country. The Indian backdrop will provide a spectacular picturesque travelogue against a celebration of family ties. But real success will also require serious and continuing conversations on trade and security.
A former diplomat, Colin Robertson is vice-president and fellow at the Canadian Global Affairs Institute.
Previous CGAI podcasts about India
Previous CGAI papers about India
- 2014 Policy Update by Eric Miller - The Elephant Lumbers Forward: India and its Economy on the Eve of Elections
- 2014 Policy Paper by Patrick James - Grand, Bland or Somewhat Planned? Toward a Canadian Strategy for the Indo-Pacific Region
- 2012 Policy Update by Rodnie Allison – Indian Aerospace: Poised for Takeoff?
- 2012 Paper by Roger Girouard – China’s Shadow: A Canadian Concern?