Canada is launching negotiations with India toward a free-trade deal that upon completion is projected to boost the economies of both nations by $6-billion a year.
Prime Minister Stephen Harper and Indian Prime Minister Manmohan Singh approved the talks Friday during a bilateral meeting on the sidelines of the Group of 20 summit in Seoul.
"This will be of enormous benefit to both of our countries and obviously of particular interest to the Indo-Canadian business community," Mr. Harper said as the two leaders announced their plans. "This is a key milestone in our relationship. It demonstrates our increasing co-operation. It is a historic step and we look forward to working hard and coming to a successful and conclusive negotiations as soon as possible."
Mr. Singh said the Canada-India relationship has undergone a "sea change" of late.
"After Prime Minister Harper's visit to India last year and my own visit to Canada we have taken momentous decisions to bring our two countries closer to each other, to widen and deepen our bilateral relationship," he said. "The landmark agreement in co-operation in civil nuclear energy is one indication of the sea change that has come with our relationship."
The talks, which do not yet have a target for completion, come as some are questioning Canada's commitment to open trade after the government earlier this month rejected the hostile takeover bid by Australia's BHP Billiton Ltd. for Saskatchewan fertilizer producer Potash Corp. of Saskatchewan Inc. because it did not represent a net benefit to Canada.
The Conservative government noted that since 2006 it has signed and implemented new trade agreements with eight countries and is in negotiations with close to 50 others around the world.
Bilateral merchandise trade with India totalled $4.2-billion in 2009, an increase of 70.2 per cent from 2004, with exports increasing by 149.3 per cent over the same period. In 2009, Canada's main export products were vegetables, fertilizers, machinery and wood pulp.
Imports from India for the same year were valued at $2-billion and consisted principally of organic chemicals, knit and woven apparel, precious stones and metals, and electrical and electronic equipment and machinery.
For Canada, which has been trying to coax India into negotiations for several years, the prize is the huge potential market for services, even more than goods. Canadian banks, insurers and engineering firms have long sought better access to Indian's protected domestic market, according to trade lawyer Lawrence Herman of Cassels Brock in Toronto.
India had resisted freer trade with Canada because of strained relations over nuclear technology, he said. Canada was upset by India's development of nuclear arms in the early 1970s that in part used Canadian technology supplied for power production.
The start of talks is as an "important development" with an "important potential trading partner," Mr. Herman said.
"It's a huge and growing market with a burgeoning middle class," he added.
Bill Curry