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India and Canada Pause Free Trade Agreement Talks

  • 18 Sep 2023

Recently, India and Canada have temporarily halted their negotiations on a Comprehensive Economic Partnership Agreement (CEPA), a bilateral free trade agreement.

Key Points

  • Negotiations Paused: The pause is attributed to ongoing political developments and concerns related to "anti-India activities" in Canada.
  • Resolution Expected: A senior government official confirmed the pause, explaining that talks would resume once the political issues between the two countries are resolved.
  • The move is described as a pause rather than a complete break in negotiations.
  • Strained Relations: Bilateral relations have been strained due to the activities of pro-Khalistan groups in Canada.
  • Earlier in July, India summoned the Canadian envoy and issued a demarche after posters naming senior Indian diplomats appeared in certain areas of Canada.
  • PM Strong Message: During the G20 Summit, Indian Prime Minister met Canadian counterpart and conveyed India's concerns about "anti-India activities of extremist elements in Canada."
  • India raised issues related to the promotion of secessionism, incitement of violence against Indian diplomats, damage to diplomatic premises, threats to the Indian community, and the nexus of these elements with organized crime and other unlawful activities.

India – Canada Relations

Historical Background

  • India established diplomatic relations with Canada in 1947.
  • The Prime Minister of India's visit to Canada in April 2015 elevated bilateral relations to a strategic partnership.
  • Recent years have seen efforts to enhance cooperation in various mutual interest areas.

Bilateral Trade Ties

  • In 2022, India was Canada's 10th largest trading partner, with growing exports and imports.
  • India's total exports to Canada in 2022-23 reached US$ 4.10 billion, up from US$ 3.76 billion in the previous fiscal year.
  • Imports from Canada during 2022-23 amounted to US$ 4.05 billion, compared to US$ 3.13 billion in 2021-22.
  • The current financial year (April-June) witnessed India's exports to Canada at US$ 911.10 million and imports from Canada at US$ 990.79 million.

Investment and Presence

  • Canadian Pension Funds have invested approximately US$ 55 billion in India, while cumulative FDI from Canada since 2000 stands at about US$ 4.07 billion.
  • Over 600 Canadian companies have a presence in India, and more than 1,000 firms actively pursue business in the Indian market.
  • Indian companies in Canada operate in sectors such as Information Technology, software, steel, natural resources, and banking.

Major Exports and Imports

  • Notable exports to Canada include gems, jewellery, pharmaceutical products, ready-made garments, mechanical appliances, organic chemicals, and light engineering goods.
  • India imports pulses, newsprint, wood pulp, asbestos, potash, iron scrap, copper, minerals, and industrial chemicals from Canada.

Nuclear Cooperation

  • In June 2010, a Nuclear Cooperation Agreement (NCA) with Canada was signed, effective from September 2013.
  • The Appropriate Arrangement (AA) for the NCA, signed in March 2013, established a Joint Committee on Civil Nuclear Cooperation.

Commercial Relations

  • An annualized Trade Ministers dialogue reviews trade and economic relations.
  • Technical negotiations for a Comprehensive Economic Partnership Agreement (CEPA) were ongoing, covering goods, services, investment, and trade facilitation.

Science and Technology

  • Focus on promoting industrial R&D with IP potential.
  • Canada was a partner country for the 2017 Technology Summit.

Security and Defence

  • Collaboration in international fora like UN, Commonwealth, and G-20.
  • Expanding defence ties with mutual ship visits.
  • Robust counter-terrorism cooperation through the JWG on Counter-Terrorism.

Space

  • Cooperation in space science, earth observation, satellite launch services, and ground support for space missions since the 1990s.
  • ISRO and Canadian Space Agency (CSA) signed MOUs in 1996 and 2003.
  • ANTRIX launched Canadian nanosatellites.
  • ISRO's 100th Satellite PSLV in 2018 carried Canada's first LEO satellite.

Agricultural Cooperation

  • Bilateral MoU on agriculture cooperation signed in 2009.
  • JWG established sub-groups on knowledge exchange, animal development, and agricultural marketing.
  • Separate Joint Working Group for Pulses.

Indian Diaspora

  • Canada hosts a significant Indian diaspora of 1.6 million (PIOs and NRIs), over 4% of its population.
  • Indian diaspora excels in various sectors, including politics, with 22 MPs of Indian origin in the House of Commons.

Cultural Exchanges

  • Canada was the Country of Focus at the 48th International Film Festival of India in 2017.
  • India – Canada Coproduction Agreement in films.

Challenges in India-Canada Ties

  • Khalistan Separatism: Resurgence of Khalistan separatism and calls for a "referendum" among the Sikh community in Canada.
  • Incidents of Vandalism: Targeting the Indian community in Canada.
  • Canadian Pronouncements: Statements on developments in India can trigger diplomatic tensions.
  • India's Structural Impediments: Complex labour laws, market protectionism, and bureaucratic regulations.
  • Inadequate Trade: Despite some progress, Canada remains an insignificant trading partner for India.