{"id":292312,"date":"2015-08-20T12:26:14","date_gmt":"2015-08-20T16:26:14","guid":{"rendered":"https:\/\/policyoptions.irpp.org\/2015\/08\/where-does-india-fit-into-canadas-trade-policy\/"},"modified":"2025-08-28T15:22:58","modified_gmt":"2025-08-28T19:22:58","slug":"where-does-india-fit-into-canadas-trade-policy","status":"publish","type":"post","link":"https:\/\/policyoptions.irpp.org\/fr\/2015\/08\/where-does-india-fit-into-canadas-trade-policy\/","title":{"rendered":"Where does India fit into Canada\u2019s trade policy?"},"content":{"rendered":"

<\/p>\n

For decades, Canada has sought stronger trade and investment links with countries beyond traditional markets in North America and Europe. And in recent years, slowly, surely \u2014 but quietly \u2014 Canada has been<\/em> diversifying its links into other regions (see here<\/a>).<\/p>\n

India, a fast-growth country with great promise, is a natural candidate to consider. In a new IRPP study<\/a>, co-author Someshwar Rao and I take a detailed look at Canada\u2019s economic relationship with India \u2014 particularly the potential to strengthen this relationship through a trade deal.<\/p>\n

Negotiations on a comprehensive economic partnership agreement (CEPA) have been underway for years, but progress has been slow. Recently, however, optimism has increased thanks to the election of a new majority government in India committed to economic reforms and Prime Minister Narendra Modi\u2019s visit in April \u2014 the first to Canada by a sitting Indian PM in over 40 years. During this visit, new commercial agreements were announced, the Canada-India relationship was formally upgraded to a \u201cstrategic partnership\u201d, and the two PMs said that they would push to conclude CEPA talks in 2015.<\/p>\n

Where India fits into Canada\u2019s broader trade objectives
\n<\/strong>This trade deal would be Canada\u2019s second in the Asia-Pacific region (after South Korea) and its first with a \u2018BRICS\u2019 emerging market country. Taken together with the decades-old NAFTA (North American links), the recent Canada-EU deal (Atlantic links) and possibly the Trans-Pacific Partnership (Pacific links) \u2014 which appears to be nearing its final stages of negotiations \u2014 the CEPA with India would mean that much of Canada\u2019s trade would benefit from explicit trade preferences.<\/p>\n

India has significant potential
\n<\/strong>We find that economic links between Canada and India have grown quickly in recent decades but remain weak. But several factors suggest considerable untapped potential in India over the long term. The two countries can leverage strong social ties because of the large Indian diaspora in Canada; they share English as a common business language, have legal systems based on British common law, and democratic political institutions. Moreover, estimates from the Canadian government\u2019s \u201cgravity model<\/a>\u201d[1]<\/a> suggest that, among the high-growth trading partners with which Canada doesn\u2019t have a trade deal, exports to India showed the largest underperformance (whereas we already \u201covertrade\u201d with China, according to the model).<\/p>\n

But realizing this potential requires action<\/strong>
\nIndia\u2019s economic growth outlook is among the most favourable in the world, but many of India\u2019s potential strengths could turn into weaknesses if they\u2019re not properly managed. Actions are needed on several fronts, including to:<\/p>\n