PM’s India visit not about trade alone
Justin Trudeau will head to India next month, thus affirming the old proverb that if you cannot have a bird of paradise, you better take a wet hen.
That’s not a shot at India. There are many good reasons for the prime minister to visit the sub- continent, not least the chance to ingratiate himself with 1.6 million Indo- Canadians 18 months before a general election.
But Canada’s volume of trade with India is not large enough to offer much relief should U. S. President Donald Trump follow through on his threat to undo the North American Free Trade Agreement.
Opening free- trade talks with China, a country with which we have a $ 60- billion trading relationship, would have created major opportunities for Canadian exporters. But that prospect has dimmed for now, following the prime minister’s presumptuous demand that the Chinese agree to more exacting labour standards than the Communist regime could stomach.
The Trans- Pacific Partnership, which i ncludes Japan, would provide a welcome alternative for Canadian business, particularly for farmers.
But Canada is the lone holdout among the 11 remaining signatories, concerned over the impact of a deal on its cultural and auto industries.
The emphasis on a “progressive” trade agenda that i nsists on t he i nclusion of chapters on labour, the environment and Aboriginal and gender rights, has infuriated potential trading partners, including the Americans.
Having struck out around the globe, Trudeau is now set to attempt to woo Indian Prime Minister, Narendra Modi.
India could be integral, as part of a broader postNAF TA risk mitigation strategy.
But the prime minister should be careful to avoid presenting it as the Next Big Thing.
Ha v i n g followed the progress of Canada’s trade relationship with India over the past decade, here are a number of observations.
One, our trade with India is rising dramatically, particularly in services, but at $ 8 billion in two- way trade, it barely breaks into our Top 10 partners and accounts for less than one per cent of our exports.
Two, the relationship has been promising for a long time, but it turns out to be l argely a relationship of promises.
When Modi met Stephen Harper in Ottawa in 2015, he pledged a “road map” for a free- trade agreement within six months. But there remain stubborn impediments to progress, not least the Indian desire to secure labour mobility for their millions of cost- competitive white- collar workers — a problem for any Canadian government, given recent controversies over temporary foreign workers. One more round of negotiations will be completed on talks that opened in 2010, so anything is possible. But the relationship has long underdelivered and few people expect a breakthrough will be made next month.
Third, Modi is unlikely to be any more receptive than the Chinese or Japanese to Trudeau’s insistence on imposing the Liberal agenda in areas where the domestic circumstance make reform problematic.
Goldy Hyder, the Indianborn chief executive of Hill & Knowlton Strategies Canada, said it makes sense for Trudeau to hedge his bets by travelling to India, thus sending the signal to the Americans that Canada is moving on.
But, he said, Trudeau cannot repeat the Chinese experience of lecturing the Indians about human rights in their own country. “We need them more than they need us,” he said. “The world’s at their door.”
Fourth, as The Economist pointed out in a lengthy essay last week, while enthusiasm for India is boundless, the returns have fallen short of the hype. Report after report points to 300- 400 million Indians in the ranks of the global middle class, yet relatively few have money to spend. The Chinese own five times as many motor vehicles per head; 97 per cent of Indians have never flown; mean GDP per head is just US$ 1,700, with 80 per cent of the population earning less than that. The conclusion: those relying on India becoming the next consumer pivot are likely to be disappointed.
As Hyder pointed out, Canada is well- positioned to take advantage of the opportunities that do exist in areas like finance, infrastructure ( Canadian pension funds have invested $15 billion) and education (with 124,000 students here, India is Canada’s second- largest source of foreign students).
“We see the visit as deepening and broadening our strategic partnership,” said Vikas Swarup, who as well as being India’s High Commissioner in Ottawa, is also famous for having written the book that became the movie Slumdog Millionaire.
“Canada’s financial and trade muscle will help us in a host of projects. We don’t receive bilateral aid but we are partners in areas ranging from energy to defence to security and counterterrorism,” he said.
But that deepening and broadening depends on whether the prime minister is serious about shoring up a relationship that is rather fragile right now — India recently decided to impose tariffs on Canadian pea imports because of record output.
“Is there a political agenda to this trip, is it a courtesy call or is it truly about kickstarting a legitimate trade discussion?” said Hyder.
More of t en t han not, Canadian politicians have played footsie with their Indian counterparts to win votes at home.
Harper worked hard at winning the Indo- Canadian vote, through his 2008 apology for the Komagata Maru incident, in which Sikh immigrants were refused entry to Canada and sent back to Calcutta, and his 2009 and 2012 visits to India.
This prime minister has been no less brazen — the whole progressive t rade agenda seems more focused on winning left- of- centre votes than on securing trade deals.
The long- run success will depend on the visit stimulating bilateral relations, as part of a broader strategy to re-orient Canada as an AsiaPacific trading nation.
In that event, the wet hen would be a prize worth winning.