Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



Canada and India Launch Free Trade Agreement Negotiations

After years of preliminary discussions, on November 12, 2010, Canada and India have announced that they have launched free trade agreement (to be called a Comprehensive Economic Partnership Agreement (CEPA)) negotiations. The announcement comes after a meeting between Prime Minister Harper and Prime Minister Manmohan Singh during the G20 summit in Seoul.

This is a significant positive development in Canada / India trade. While the CEPA negotiations will not be easy or quick (as evidenced by the delays in the implementation of the negotiated (but not signed) foreign investment promotion and protection agreement).

Difficult issues will include (1) security, (2) agriculture, (3) textiles, (4) pharmaceuticals, (5) SPS measures, (6) TBT measures, (7) non tariff barriers, (8) services, (9) intellectual property, (10) government procurement, (11) safeguards, (12) labour and labour mobility, and (13) environment. Discussions about telecommunications, competition policy, and financial services may also be difficult as these topics are more developed topics.

One of the most significant areas of any negotiation of a free trade agreement is regarding the elimination and reduction of customs duties. Many Canadian businesses will be concerned about the elimination of customs duties after the implementation of the CETA. If duties are not eliminated from the first day, they would be reduced over a period of time. It goes without saying that where there is a competing manufacturing industry in Canada, here will be a desire for the duties to be removed slowly over a longer period of time. Indian businesses, on the other hand will want to see duties eliminated or reduced as quickly as possible because cheaper goods would be attractive to Canadian consumers.

I will add a negative note that many Canadians will be concerned about food and product safety. One of the positive developments of free trade agreement negotiations is that countries/governments learn about the others' regulatory approval processes. That does not mean that the level of comfort with those regulatory measures is always at appropriate levels and that there are not barries to entry. My guess is that Canadians will focus on Indian regulatory measures and some concerns about denial of benefits (on the Indian side) will be in this area. For example, Canadians may be rightly concerned about processed foods and that they will not make Canadians ill. Even if the duties on these food products may be reduced, the exports to Canada may not increase if Agri-food Canada/Health Canada do not accept Indian regulatory processes.

If you would like more information, please contact Cyndee Todgham Cherniak at 416-307-4168. Cyndee is an adjunct law professor at Case Western Reserve Univeristy School of Law and teaches a course on NAFTA and free trade agreements.  She has reviewed over 120 bilateral trading arrangements for the Asian Development Bank.

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