India shows interest in free trade agreement

Pulse sector eager for feds to ‘aggressively pursue’ abridged version of a trade deal, known as an early-harvest agreement

Stalled free trade agreement talks between Canada and India are back on track.

Negotiations on the Canada-India Comprehensive Economic Partnership Agreement were launched in 2010 but petered out in 2017 when the two parties couldn’t come to terms.

Talks started up again in November 2020 and June 2021 with India proposing an abridged version of a free trade agreement (FTA), known as an early-harvest agreement.

Pulse Canada has let federal government negotiators know it is very much in favour of that idea.

“We want them to pursue an interim arrangement that includes pulses and agriculture in general and pushes for more predictability in trade,” said Mac Ross, director of market access and trade policy with the organization.

Trade with India has been anything but predictable with the constant ebb and flow of a dizzying array of policies coming out of New Delhi.

For instance, on July 27 India reduced its tariff on lentils to 11 percent from 33 percent without any warning. There is no expiry date on the reduction, so Canadian exporters have no idea how long that window will stay open.

A few weeks earlier India implemented a 200-tonne stock limit for retailers, wholesalers and importers of pulses, an unexpected policy move that would have put a stranglehold on trade.

After intense opposition from India’s pulse trade, the government relented and revised the order, removing the limit for importers and upping the stock amount to 500 tonnes for wholesalers.

Pulse Canada sees the early-harvest FTA negotiations as a prime opportunity to establish some long-term, predictable rules for trade between the two countries.

Ross said India has been reluctant to sign full-fledged trade agreements in the past. The country withdrew from the Regional Comprehensive Economic Partnership, an agreement amongst 15 Asia-Pacific nations.

However, it appears as though India might be willing to participate in a scaled-down FTA that packages elements the two sides can agree on and leaves the more contentious issues until a later date.

“We’re seeing a unique opportunity where they’re actually willing to come back to the table,” said Ross.

Pulse Canada doesn’t want Ottawa to waste that opportunity, and is encouraging Canada’s negotiators to “aggressively pursue” an early-harvest agreement that includes agriculture.

“We’ve seen other countries do that more and more over the last couple of years and that’s something we want our government to pursue,” he said.

The Canadian Agri-Food Trade Alliance believes trade with India could grow by 42 percent if the two countries signed a free trade pact.

“This growth could transform India into one of Canada’s top-five export markets,” the group said in a 2015 document.

More than 95 percent of Canada’s agri-food exports to India were peas and lentils at that time.

CAFTA feels there is room to expand pork and canola sales to the country if India reduced its tariff and non-tariff barriers as well as religious and cultural restrictions on products such as beef.

CAFTA said the most pressing obstacle is non-tariff barriers.

“It is not uncommon for India to make changes to import requirements with little or no advance notice to exporters,” said CAFTA.

Shipments can be held up in transit, leading to increased costs and uncertainty for exporters.

“As well, India often imposes requirements that are simply impossible or too costly for exporters to comply with,” it said.

CAFTA said any deal with India would need to tackle existing non-tariff barriers and create mechanisms for managing future barriers.

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