‘India should open up financial services sector’

‘India should open up financial services sector’
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First Published: Fri, Apr 20 2007. 12 45 AM IST
Updated: Fri, Apr 20 2007. 12 45 AM IST
David Emerson, Canada’s minister of international trade, terms boosting trade with India “top priority” for his country. In New Delhi on a two-day visit, aimed mainly at pushing through the bilateral Foreign Investment and Protection Agreement (Fipa), Emerson announced that the Canadian government is set to expand its footprint in India by opening a trade office in Hyderabad to begin with. The Canadian trade minister spoke to Mint about the prospects for bilateral trade in a globalizing economy. Edited excerpts:
What is holding up Fipa? Why is it a necessary precursor to a free trade agreement?
I wouldn’t like to go public on the specifics. Let’s leave it at this: Canada has traditionally had certain sectors which we have never put on the table in trade agreements.
These are linked to our cultural industries and some of our domestic social programmes in which we have never wanted to allow private foreign investment.
We are trying to deal with this and also with the implications of existing agreements with other countries. But we would ideally like to have the agreement in place by mid-year. This will be a critical building block going towards a more comprehensive free trade agreement (FTA). Trade flows in a globalized economy often involve overlapping of companies and supply chains in both markets.
If you don’t have stable and transparent investment environments and dispute resolution mechanisms, which this initial agreement envisages, then you are adding risk to investors.
Are bilateral FTAs insurance policies of sorts against a possible failure at clinching the global free trade deal at the World Trade Organization (WTO)?
There can be broad agreements at the WTO but they are not designed for specifics of any bilateral trading relationships. Bilateral agreements are more granular, more specific, dealing with issues that don’t get picked up at the WTO. For us, a deal at the WTO is an absolute must. We are a small country. The WTO is the only body of international law that does not belong to the US or Europe or anybody else. It doesn’t belong to the country with the biggest muscles. It belongs to all members.
Where do you stand on the issue of farm subsidies which has held up the progress of Doha round at the WTO?
We are with India on this issue. I agree totally with your industry minister Kamal Nath that there have to be very aggressive cuts in farm subsidies paid by the rich countries. We stand to lose living next door to the proverbial elephant because we can’t match the US treasury in paying subsidies to our farmers.
Is Canada looking for newer markets also because you fear a slowdown in the US economy?
Not specifically, but it will have implications if there were to be a slowdown. We needed to get from a production platform that could serve a base of 31 million population (in Canada) to a 400 million-plus population in North America. Now we need to get to use this platform to get to the other markets. India is top priority for us because you have one billion-plus platform.
What are your main areas of concern vis-a-vis India? What more can India do to boost bilateral trade?
I would say open up your financial services sector. That will be good for India as well as Canada and it will have a cascading effect. Second, allow Canadian natural resources companies to operate here. We have world-class firms creating global supply chains and India has the market.
Do you have any reservations regarding Indian companies buying out Canadian firms?
We have some sensitivities in this regard. These aren’t related to India. It’s just anxiety about public firms not operating well after acquisition. But we are clear we need foreign investment, that too from partners we want to do business with. We want India to be our top trading partner.
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First Published: Fri, Apr 20 2007. 12 45 AM IST