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Likelihood of Canada-India FIPA & CEPA said to be slim

Modi & Harper

The Council of Canadians is warning against Stephen Harper’s agenda of ‘investor protection’ and ‘free trade’ agreements with India.

While the Harper government wants the already-negotiated Canada-India Foreign Investment Promotion and Protection Agreement (FIPA) ratified and to restart the stalled Canada-India Comprehensive Economic Partnership Agreement (CEPA) talks, Globe and Mail columnist Barrie McKenna points to the obstacles on both these fronts.

McKenna writes, “[CEPA] remains mostly an aspirational goal” because of “India’s highly protected market and the entrenched positions of both sides on key sensitive issues.” He specifies, “A key stumbling block to full free trade is that Canada wants a lot in terms of access for its goods in a highly protected market, but has relatively little to offer in return because tariffs are already relatively low here. And Ottawa is reluctant to give the one thing India really wants – freer mobility of visitors and temporary service workers here, [according to Stewart Beck, chief executive of the Asia-Pacific Foundation of Canada].”

With respect to the FIPA, McKenna explains, “The deal sets ground rules for investors, allowing them to seek compensation for unfair treatment. But India suspended all such deals, including the one with Canada, over concerns that it could face a flood of investor challenges. Instead, India is now drafting its own investment rules, hoping foreign countries such as Canada will agree to them.”

The context for this is the Indian government’s attempt to recover as much as $2.4 billion in taxes from Vodafone India Services Pvt. Ltd., an Indian subsidiary of UK-based transnational Vodafone Group Plc. In 2012, Vodafone responded by threatening an investor-state challenge through a bilateral investment treaty. In the end, the case was heard by the Bombay High Court. In October 2014, the court ruled in favour of Vodafone. But the initial threat of an investor-state challenge by the company prompted a review by the Indian Parliament of investment protection agreements.

Given the obstacles in moving forward on a FIPA and CEPA, McKenna adds, “Ottawa is seeking improved market access on a product-by-product basis. As evidence of progress, Canadian officials point to India’s decision this year to accept imports of Canadian ash lumber products, and eastern spruce in 2013. There is also talk of a deal that would see Saskatchewan-based Cameco Corp.. resume Canadian exports of uranium to feed India’s nuclear reactors.”

The Council of Canadians opposes investor-state dispute settlement provisions in ‘free trade’ and ‘investor protection’ agreements, such as the proposed Canada-India CEPA and FIPA. We call for transparent and democratic negotiations for fair trade agreements that benefit people, respect human rights and protect the environment. We reject ‘free trade’ agreements that constrain governments from acting in the public interest and that entrench corporate rights. We have also called for a ban on uranium mining which creates toxic tailings and poses water contamination and other environmental risks and health hazards.

Further reading
Will Modi’s visit to Canada include the signing of a Canada-India FIPA? (April 2015 blog)