India trade talks heating up, but ex-envoy cautions: ‘we’ve been to the altar before’

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The Hill Times

India trade talks heating up, but ex-envoy cautions: ‘we’ve been to the altar before’

By PETER MAZEREEUW

Canada and India are getting the ball rolling again on negotiations towards free-trade and investment agreements with India, as the Canadian government considers what to do with a Temporary Foreign Worker Program that the South Asian state wants changed.

Canada’s chief negotiators for the trade and investment treaties with India, Don Stephenson and Vernon MacKay, met with their Indian counterparts earlier this year to talk about moving ahead with negotiations on the agreements, about a year after the last formal round of trade talks was held.

Trade Minister Chrystia Freeland (University-Rosedale, Ont.) also directed staff at Global Affairs Canada to “reinvigorate” the negotiations on the Canada-India Comprehensive Economic Partnership Agreement (CEPA) after a meeting with her Indian peers in Toronto late last month, according to her spokesperson, Alex Lawrence.

“There was agreement that negotiators should get back to the negotiating table as soon as possible and intensify efforts. The next round of negotiations has not yet been scheduled,” said an emailed statement from Mr. Lawrence.

Ms. Freeland met with Indian Commerce Minister of State Nirmala Sitharaman in Toronto late last month to hold an annual ministerial dialogue on trade. Days later, she and Finance Minister Bill Morneau (Toronto Centre, Ont.) met with Indian Finance Minister Arun Jaitley, where they agreed to try to hold another round of negotiations on a bilateral investment treaty, or BIT, “at an early date,” and to try to conclude the talks quickly, according to a statement posted on the website of the Indian High Commission in Ottawa.

However, Canada’s government didn’t mention either of those negotiations in press releases following the meetings between ministers, which instead played up the importance of closer trade and business ties between the two countries in general. Ms. Freeland’s office did not say why the negotiations were not mentioned when asked by The Hill Times.

India’s High Commission in Canada raised each set of negotiations in its own press releases following the meetings.

Canada’s hesitation to play up the trade talks, if intentional, is understandable, said Stewart Beck, who served as Canada’s high commissioner to India until August 2014, and now leads the Asia Pacific Foundation of Canada.

“I would be advising her to approach it that way too,” he said.

“Don’t get anybody’s expectations up, because we’ve been to the altar a couple of times before and, guess what, no ring.”

Trade talks with India have been slow since they started in 2010, amounting to nine formal rounds of negotiations since that time and none since March 2015. Getting things done with the world’s largest democracy, which includes 29 states and seven territories, can be time consuming.

“It’s always a matter of the problematic nature of nailing India down,” said Conservative trade critic and former agriculture minister Gerry Ritz (Battlefords-Lloydminster, Sask.). “So many layers—layers upon layers to deal with.”

An investment treaty is a set of legally binding rights and obligations meant to protect the investors of the countries involved from having their assets in the other country expropriated or otherwise unfairly treated. A trade agreement relates more to lowering tariffs on goods travelling to and from the countries.

Talks on the CEPA cooled when India put all of its bilateral investment treaties up for review in 2013 following several high-profile investor-state lawsuits against the Indian government. Such lawsuits are typically brought about due to investor-state dispute settlement clauses in investment treaties that allow businesses to sue governments if they feel they’ve been treated unfairly.

Canada considered the Indian BIT a done deal, listing it as “concluded” on the foreign ministry website. India had other ideas, not just for Canada but all of its foreign investment treaties.

While the BIT and CEPA negotiations are separate, Canada has pushed for as broad a trade agreement as possible, and moving forward on the CEPA without resolving the investment side of trade would have been problematic.

However, that roadblock seems to have eased. The Liberals agreed to reopen negotiations on the BIT in February, after India released its “model BIT” that was to serve as the template for its future investment agreements.

The model BIT isn’t dramatically different from the types of investment deals Canada has signed before, but does require that investor-state disputes run all the way through India’s domestic court processes before they can be taken to arbitration.

The Liberal government has already shown a willingness to be more flexible than its Conservative predecessor when it comes to investor-state dispute settlement, reworking those clauses in the Canada-Europe trade deal to get it moving again.

The Liberals are also expected to make changes to the Temporary Foreign Worker Program in the not-too-distant future. One of India’s chief goals in trade talks has been a loosening of Canada’s restrictions on the entry of high-skilled temporary foreign workers, to make it easier for Indian IT companies to ply their trade in Canada.

Canada’s Conservative government clamped down on the Temporary Foreign Worker Program in 2014 after a series of highly-publicized cases of use and abuse of the program to the detriment of Canadian workers, including the RBC-iGate scandal, where Indian IT workers were brought to Canada through the program to learn how to replace Canadian employees when RBC outsourced their jobs to India.

The Liberal government is working on a response to a report from the House Human Resources Committee that called for an overhaul of the Temporary Foreign Worker Program, and Immigration Minister John McCallum (Markham-Thornhill, Ont.) told the Globe and Mail in August that the government was planning to loosen some of the restrictions on labour mobility in the program.

The government is “committed to reforming work permit programs to encourage the hiring and training of Canadians, and to limit the use of foreign workers,” according to the statement from Mr. Lawrence.‎

The government would likely need to agree to address India’s ask on the Temporary Foreign Worker Program in some way in order to get a deal done, said Mr. Beck.

To boot, Prime Minister Justin Trudeau (Papineau, Que.) is expected to visit India at some point in the next six months or so, completing a cocktail of opportunities and motivations to work towards something Mr. Trudeau can announce during his visit.

Liberal MP Chandra Arya (Nepean, Ont.), who heads the Canada-India Parliamentary Association, said he and some of his Indian-Canadian constituents wanted the CEPA “realized as early as possible.”

Mr. Arya said he hoped negotiations could be concluded in time for Mr. Trudeau’s visit. That may be too ambitious for a complex trade agreement, said Mr. Beck, but finishing the investment treaty is a realistic goal.

Finishing the BIT will make it easier to complete the CEPA by taking one more facet of the business relationship off the bargaining table, said Mr. Beck.

The Conservatives would welcome trade and investment deals with India, said Mr. Ritz.

source: The Hill Times