Various Issues on India-Canada Trade Agreement
The negotiations for the Canada-India free trade agreement, which is officially called as Comprehensive Economic Partnership Agreement (CEPA), have been put on back burner due to several issues between both countries. The bilateral Foreign Investment Promotion and Protection Agreement (FIPPA) is also not ratified. Now Canada is focussing on ratification of the Trans-Pacific Partnership (TPP), the US led mega regional FTA of 12 Pacific rim nations. India is not a party to the TPP.
Issues in conclusion of FIPPA
India and Canada had concluded negotiations on a FIPPA in 2007. The FIPPA would safeguard investors’ rights in both the countries. But it was not ratified. Later India decided not to sign new Bilateral Investment Treaties (BIT) until a model BIT text is prepared. Now a new BIT text is prepared and India is yet to discuss this matter with Canada.
The main issue that Canada has with India is regarding clauses in the proposed FIPPA including on the Investor-State Dispute Settlement (ISDS) mechanism.
In case of disputes, India wants the investors to exhaust the domestic remedies before going to international tribunals. But Canada is worrying about the judicial delays in India and it prefers international tribunals.
The other issue is that Canada want assurance from India for investment protection in case of any roll-back or changes in the policy. But India has not agreed with Canada as it may lead to losing its policy space.
Issues in conclusion of CEPA
The negotiations for a free trade agreement were started in 2010. There are several differences from both sides. Till now nine rounds of negotiations were held.The main unresolved issues in the FTA are clauses proposed by Canada namely “MFN-forward” and “ratchet”. Under ‘MFN-forward’, any future concessions given by India to its other trading partners would automatically be extended to Canada. But India says its relations with each trading partner are unique and it cannot extend the concessions given to one country to other countries. Under ‘Ratchet’, all the benefits from the future liberalisation policies of India would automatically extended to Canada and vice-versa. India opposing this clause as it will reduce its policy space. India is also against Canada’s proposals to include labour and environment standards as well as competition and government procurement in the FTA.
