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Peter Sutherland, Canada's high commissioner to India from 2000 to 2003, has taken over as president and CEO of the Canada-India Business Council, a group that represents 70 per cent of businesses engaged in bilateral trade and investment. Excerpts from an interview with Indira Kannan in Toronto:
What's at the top of your to-do list?
We want to build and expand our presence in India. For the last couple of years, we've had the Canada India Business Forum each year in November. We want to do more of this. We're also looking at building our relationships with groups in India. And trade policy is particularly important right now because we're supposed to be in the final year of talks on the Comprehensive Economic Partnership Agreement (CEPA).
Bilateral trade has stagnated at around $5 billion for the past three years. Why?
Part of it is just what's happened in the world economy. In India you weren't affected as badly by the recession, nor was Canada. But since then your economic growth has slowed down. And also you've had a lot of publicity about major corruption scandals, which as a result has slowed the decision making process on some of the reforms.
Do you believe the bilateral trade target of $15 billion by 2015 can still be achieved?
It's ambitious, that's for sure. But I think it is achievable if a number of things happen. The CEPA agreement has to be concluded more or less on schedule and has to be a big agreement.
Some experts say the official figures for trade between Canada and India are understated. If a product is shipped from Canada through the United States or through Europe to India, it shows up as a Canadian export to the US or to Europe, and from an Indian point of view, it's coming in from Europe or the US.
We've had a breakthrough on the nuclear cooperation agreement. That opens up huge possibilities for the sale of nuclear technology and particularly uranium. Similarly, if we get some Indian investment or arrangements by which India is purchasing oil and or gas from Canada that will give a big spur to increasing the volume and value of trade.
When do you expect to see tangible benefits from CEPA if it is concluded on time?
That would depend on the nature of the agreement because usually these agreements have phase-out periods for reducing tariffs and non-tariff barriers and phase-in periods for other aspects. However, the very fact that you've got an agreement concluded has huge symbolic value. That in itself will encourage companies in both countries to say, 'gee, we should start taking a look, this is an opportunity, the governments have made progress in breaking down some of the barriers, now's the time to act'.
Which sectors are likely to gain the most from CEPA?
Again, depends. But I would suppose some manufacturing goods, including processed agri-food products, would get a big push as a result of this. The other area is services - professional services like financial services and particularly telecom or ICT in both directions. To the extent they get agreement on moving people back and forth that will have a big impact on the services side of our bilateral trade arrangement.
What do you see as the biggest obstacles to bilateral trade?
The two biggest problems are of perceptions and inertia. On the Canadian side, the smaller business enterprises for example, perceive India as being a very difficult market - far away, complex and hard to make money. On the Indian side they see Canada as far away, Europe's much closer, and smaller than the US, so why bother, and they're just not aware what the opportunities are.
If the size of Canada's market is a limiting factor, how do you deal with that, because that's not going to change?
Again it's a question of perception. Because of our North American Free Trade Agreement (NAFTA) - yes the Canadian market by itself is small - but we're essentially part of a larger North American market. So you can come to Canada where it's easier to get a foothold and the costs of doing business are lower and from that foothold you can export to the US, which is, for all intents and purposes, a domestic market from Canada.
Canada is a net importer of FDI from India. What's stopping Canadian companies from investing more in India?
First of all, the economic climate generally, global recession and then some of the events that have been reported in India. As a result of some of the scandals that took place, the decision to cancel some of the telecom licenses raises concerns in the minds of potential investors.
The big corrective to that is that Canada and India have been, for quite some time, negotiating a Foreign Investment Promotion and Protection Agreement. It's been almost concluded but recently the Indian government put a hold on it because they wanted to review internally their own FDI policies. So Canadians, when they look at this, they say, 'well, we've got this agreement with many other countries, we don't have one with India, what's the problem?' That's a mental block in some cases.
