Whatever the issues with Prime Minister Justin Trudeau’s recent state visit to India, he made important progress on one irritant for Canadian grain growers, but that progress will yield results only if the follow-up is successful.
During the visit, Trudeau and Indian Prime Minister Narendra Modi announced the two countries will come to an agreement on fumigation rules for pulses by the end of 2018. India has long used tariffs and, to some degree, non-tariff trade barriers such as fumigation rules to prop up prices and protect its large agricultural population, much of which lives in poverty.
There is room for skepticism on this.
India insists that imported crops be fumigated in host countries to deal with a nematode pest, which is not present in Canada due to climate conditions. Fumigation is done with methyl bromide, a chemical that has been phased out in Canada and many other countries because of its effect on the ozone layer. Canada argues the fumigation technique doesn’t work in cold-weather countries. India has extended periodic exemptions to Canada and other countries over the years, but that exemption ran out on Sept. 30. Another six-month exemption was granted in January, but the uncertain nature of this issue is perplexing, given that when Canada’s exemption ran out, exemptions were extended to other countries.
A joint statement during Trudeau’s visit explained that the two countries “will work closely together to finalize an arrangement within 2018 to enable the export of Canadian pulses to India free from pests of quarantine importance, with mutually acceptable technological protocols.”
If it’s true that India will accept a science-based approach to this issue, that would be an important breakthrough.
Canadian pulse producers have applauded the announcement.
While resolving this issue would be encouraging, there is still the larger issue of India’s use of import duties on pulses to prop up prices.
Right after Trudeau left India, the Indian government raised import tariffs for chickpeas to 60 percent from 40 percent. This after placing a 30 percent tariff on chickpeas late last year and raising it to 40 percent early this year. Canada exported 10,000 tonnes of chickpeas to India last year.
It’s tempting to view this as India’s way of thumbing its nose at Canada after the diplomatic row caused by the Trudeau government’s invitation of Jaspal Atwal to a reception in India. Atwal spent time in prison after being convicted of attempted murder of an Indian state cabinet minister on Vancouver Island in 1986. However, since the Indian government also announced it was doubling state purchases of oilseeds from farmers to prop up prices, the Atwal incident was not likely the issue.
In 2016, Canada’s annual pulse exports to India were valued $1.1 billion but exports have slowed considerably in recent months.
There is also another issue Trudeau could address. India tends to enforce tariffs immediately, so shipments already on their way are subject to the extra costs. There should be a reasonable compromise there. Canadian officials should press for exemptions to ships already ocean-bound.
India has not shown a lot of enthusiasm to resolve these issues, and really has no hard incentive to do so by the end of 2018, other than maintaining good relations with Canada.
Whether it has the initiative to do so after the Atwal fiasco remains to be seen.
Canada will have to press this. Finishing off this issue would be a good sign that the two countries agree on the mutual benefits of transparency and trust.
Bruce Dyck, Barb Glen, Brian MacLeod and Michael Raine collaborate in the writing of Western Producer editorials.