Canada pauses FTA negotiations with India, both take mutual decision on resumption

While the Free Trade Agreement (FTA) negotiations between Canada and India have been in progress for a long time, Canada has put a temporary halt to these negotiations and officials from both nations have decided to mutually determine when these discussions will resume in the future.

“The Canadian side conveyed that they were taking a pause in India-Canada negotiations on the Early Progress Trade Agreement. This will enable us both to take stock of progress and next steps. We will decide by mutual agreement when negotiations will resume,” the official stated.

The news comes just ahead of Canadian Prime Minister Justin Trudeau’s visit to India for the G20 Summit on September 9-10. It should be noted that more than half a dozen rounds of talks have already taken place between Canada and India regarding the FTA. In March of the previous year, negotiations were re-launched for an interim agreement, officially named the Early Progress Trade Agreement (EPTA).

In general, EPTAs involve a substantial reduction or elimination of customs duties on a wide range of traded goods between the two countries. They also aim to liberalize trade in services and encourage investment. A few such commodities, that India has been seeking duty-free access to, include textiles and leather. On the other hand, Canada’s interests lie in areas such as dairy and agricultural products.

The bilateral trade volume between Canada and India had shown steady growth, reaching USD 8.16 billion in 2022-23 from USD 7 billion in the previous fiscal year.

Reassuring that many Indian goods already enter Canada without Customs Duties, Mr. Ajay Srivastava, Co-Founder of the Global Research Initiative (GTRI), said that the pause in negotiations would not negatively impact Indian trade interests significantly. However, discontinuing the FTA may primarily affect Canadian exports which would have benefited from reduced tariff barriers in India.

Mr. Srivastava noted that the on-again, off-again nature of FTA negotiations had been ongoing since 2010, with interruptions in 2017 and a restart in 2021. This latest pause may be attributed to Canada’s reluctance to meet India’s requests in the services sector, particularly concerning the movement of professionals (Mode IV), and potential shortcomings in India’s goods offer.

Against the backdrop of rapidly evolving global trade dynamics, with major players such as the US and the European Union imposing stricter regulations, especially related to climate and technology, Mr. Srivastava recommended that countries focus on bolstering domestic resilience and consider delaying further trade openings until there is a clear and favorable economic rationale.

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