In a surprise move, Canada pauses talks on trade pact with India ahead of G-20 Summit

In an unexpected move, Prime Minister Justin Trudeau’s government requested a “pause” on the proposed trade talks with India just three months after the two nations said they aimed to seal an initial agreement this year. The Canadian leader is expected to attend the 18th G20 summit set to be held in New Delhi next weekend between September 9 and September 10.

India’s High Commissioner to Canada confirmed that Trudeau’s team initiated the pause “within the last month”, which was first reported by the Canadian Press. “The Canadian side has suggested a ‘pause’ to the ongoing fast-paced negotiations on an early-progress trade agreement with India,” Sanjay Kumar Verma said in an emailed statement. “Though I am not aware of exact reason(s), most likely, the ‘pause’ will allow more consultations with the stakeholders.”

According to a report, Prime Minister Justin Trudeau’s government first pressed pause and requested India to follow suit last month. Reports further said that both nations may mutually decide to resume talks in future.

History of trade treaty between India & Canada

Although Canada and India have been talking off and on since 2010 about a comprehensive economic partnership agreement, the talks were formally relaunched last year after a five-year hiatus. In March 2022, the two countries had restarted negotiations on what is called the Early Progress Trade Agreement (EPTA) which covers various areas including goods, services, investment, rules of origin, and dispute settlement. The governments aimed to seal an initial agreement this year to increase trade and expand investment while setting out a mechanism to deal with disputes

Trade negotiations are long, complex processes and Canada has paused to take stock of where we are in the situation, a Canadian government official told reporters on a briefing about Trudeau’s upcoming trip to India. The official, who spoke on condition of anonymity, declined to provide more details.

Notably, both India and Canada have been negotiating a trade deal since 2010 when the Congress government was in power. Till date, several rounds of negotiations have been held between both the nations on the pact. However, the abrupt decision from Ottawa comes at a time when the relations between the two nations are strained following the rise of the Khalistani movement in Canada. 

Neither Trudeau’s office nor the Canadian Trade Minister Mary Ng’s office immediately respond to a request for comment.

In May, Commerce and Industry Minister Piyush Goyal visited Ottawa and both sides appeared optimistic. Ng said that they were getting closer to signing the early-progress agreement, an initial deal that would focus on a few industries rather than an economy-wide accord. “It is not going to be years,” she said at the time.

Canada has had intermittent trade negotiations with India stretching back a decade, but in recent years Trudeau’s government has ramped up its efforts to diversify its economy away from China. A trade deal with India is part of the broader Indo-Pacific strategy.

India-Canada Comprehensive Economic Partnership Agreement (CEPA)

In September 2008, the India-Canada CEO Round Table recommended that India and Canada would benefit enormously from CEPA by eliminating tariffs on a substantial majority of the bilateral trade. CEPA would cover trade in goods, trade in services, rules of origin, sanitary and phytosanitary measures, technical barriers to trade and other areas of economic cooperation.

According to the Commerce Ministry, a Joint Study was conducted and the report came in September 2010 strongly recommending the benefits of CEPA for both countries. 

Accordingly, the announcement of the launch of India-Canada CEPA negotiations was made by the PMs of both the countries in Seoul in November 2010 and the negotiations were formally launched by CITM and Canadian Trade Minister Van Loan on 16 November 2010 in New Delhi.

The 10th Round was held in New Delhi in August 2017.

A stocktaking CEPA and FIPA virtual bilateral meeting was held on 22nd June 2020 between the Chief Negotiators of both sides. Subsequently, on 27th October 2020 a bilateral meeting was held to explore the option of an early harvest / interim agreement. In this regard, scoping paper has been shared with the Canadian side, and on 19th November 2020 a DVC was held and both sides are engaged to take it forward.

Trudeau’s upcoming visit to India

Trudeau’s country is home to a vast Indian community, including the largest Sikh population outside of India, and there have been calls for his government to make a trade deal contingent on India respecting the human rights of religious minorities.

Prime Minister Narendra Modi is chairing the G-20 this year and several of Trudeau’s ministers have already gathered with their counterparts in India throughout the summer. 

Last month, a top Indian trade official said New Delhi planned to hold bilateral free trade talks with Canada and other nations on the sidelines of G20 summit as Trudeau is set to travel to New Delhi for the leaders’ summit next weekend, though it’s not yet clear whether he will meet one-on-one with PM Modi.

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