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India, Canada hit pause on FTA talks amid strain in ties after Trudeau visit

Days after Prime Minister Narendra Modi expressed concern over “anti-India activities of extremist elements” in Canada, at his meeting with Canadian counterpart Justin Trudeau on the sidelines of the G20 Summit, the two countries are learnt to have “paused” their negotiations on a bilateral free trade agreement.

Confirming this, a senior government official said on Friday that India-Canada talks on a Comprehensive Economic Partnership Agreement (CEPA) are expected to resume after the resolution of the issues between the two countries.

“There were certain political developments in Canada on which India has also raised its objection… for the time being (till) these political developments are settled, we have paused the negotiations with Canada. But the moment these political issues are sorted out, the talks will resume. It is only a pause. There is no break, there is only pause,” said the official.

Ties between the two countries have been strained over the activities of pro-Khalistan groups in Canada. In July, India had summoned the Canadian envoy and issued a demarche, days after posters naming senior Indian diplomats posted in Canada came up in some areas there.

Before the start of the G20 Summit, sections of the Canadian media had reported that Ottawa had sought a pause in the trade negotiations.

On September 10, following a meeting between Modi and Trudeau on the sidelines of the G20 Summit, India issued a strongly-worded statement.

“He (Modi) conveyed our strong concerns about continuing anti-India activities of extremist elements in Canada. They are promoting secessionism and inciting violence against Indian diplomats, damaging diplomatic premises, and threatening the Indian community in Canada and their places of worship,” the Ministry of External Affairs (MEA) said in a readout of the meeting.

“The nexus of such forces with organised crime, drug syndicates and human trafficking should be a concern for Canada as well. It is essential for the two countries to cooperate in dealing with such threats,” the MEA said. “The Prime Minister highlighted that India-Canada relations are anchored in shared democratic values, respect for rule of law and strong people-to-people ties,” it said.

Asked about India’s concerns, Trudeau had said at a press conference: “Canada will always defend freedom of expression, freedom of conscience, and freedom of peaceful protest, and it is extremely important to us… At the same time, we are always there to prevent violence and to push back against hatred. I think, on the issue of the community, it is important to remember that the actions of a few do not represent the entire community or Canada”.

In March 2022, the two countries had agreed to re-launch the CEPA negotiations and consider an interim agreement or Early Progress Trade Agreement (EPTA) that could bring commercial gains to both. Negotiations on CEPA/ EPTA resumed in April 2022; nine rounds of talks were held till July this year. The last round, from July 12-21, was held in virtual format.

So far, the two countries have held discussions on tracks related to goods, trade remedies, rules of origin, origin procedures, services, institutional and core provisions.

On May 8, the 6th Ministerial Dialogue on Trade and Investment (MDTI) was also held in Canada, and there was a ministerial review of EPTA. “On the basis of ministerial guidance, work on various tracks were ongoing to complete negotiations as soon as possible to achieve mutually beneficial outcomes,” said another official.


Bilateral trade ties

IN 2022, India was Canada’s 10th largest trading partner. India’s total exports to Canada added up to US$ 4.10 billion in 2022-23, up from US$ 3.76 billion in 2021-22. India’s imports from Canada added up to US$ 4.05 billion in 2022-23, up from US$ 3.13 billion in 2021-22.

India and Canada have significant trade relations. In 2022, India was Canada’s 10th largest trading partner; since 2018, India has also been the largest source of international students in Canada, according to information provided by the Canadian government.

India’s total exports to Canada added up to US$ 4.10 billion in 2022-23, up from US$ 3.76 billion in 2021-22. India’s imports from Canada added up to US$ 4.05 billion in 2022-23, up from US$ 3.13 billion in 2021-22.

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According to government data, in the current financial year, during April-June, India’s exports to Canada stood at US$ 911.10 million, while imports from Canada were worth US$ 990.79 million.

Canadian Pension Funds have cumulatively invested around US$ 55 billion in India. Cumulative FDI from Canada since 2000 is about US$ 4.07 billion. Over 600 Canadian companies have a presence in India, and over 1,000 companies are actively pursuing business in the Indian market. Indian companies in Canada are active in Information Technology, software, steel, natural resources and banking sectors.

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Major items of exports to Canada include gems, jewellery and precious stones, pharmaceutical products, ready-made garments, mechanical appliances, organic chemicals, light engineering goods, iron & steel articles. On the other hand, India imports pulses, newsprint, wood pulp, asbestos, potash, iron scrap, copper, minerals and industrial chemicals from Canada.

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