FOREIGN RELATIONS: Canada PM popular in India for putting trade first

Published: October 30, 2012

Indian farmers sort peas after harvesting in a field on the outskirts of Amritsar on March 9, 2010. One of Ottawa’s goals on its upcoming trade mission to the region is to sell technologies for refrigerating and storing India’s own crops, which suffer from a spoilage rate of more than 30 per cent. Narinder Nanu/AFP/Getty Images

MATTHEW FISHER
POSTMEDIA NEWS

Prime Minister Stephen Harper can expect a warm, even rapturous welcome when he arrives Sunday in India on what is to be an unusually long six-day trip to the subcontinent to drum up business for Canada. Coming with the prime minister are several cabinet ministers and a large group of senior businessmen.

As in so many other areas of foreign trade, Canada was astonishingly late to twig to the opportunities presented by India’s $2-trillion-a-year economy. Canada’s Achilles heel has often been that its governments and business people “thought small.” But Canada was also badly hurt in India because “it was preachy, which made India prickly,” according to Nandan Un-nikrishnan, vice-president of the New Delhi-based Observer Research Foundation and an expert on India’s relations with Russia and North America.

Successive Canadian governments ignored India for decades, except to scold it over its nuclear policies and the human rights of those whom India considered terrorists. Canada’s policy greatly irritated India and achieved nothing except to make a few Canadians feel morally superior while costing the Canadian economy dearly.

The cant over moral issues has almost totally disappeared since Harper’s government won its first majority in May 2011 and made improving Canada’s economy through trade its main international focus. This pragmatic, common sense approach to diplomacy and trade was long overdue and has found an eager ear in India.

“Harper is sensitive to India and is loved for it,” said Raja Mohan, director of Strategic Studies for India’s OFL. “Because of the nuclear issue the relationship collapsed in the ’70s. Harper’s government has chosen to break out of that nuclear theology and has opened up trade. There are real synergies for the first time.”

The prime minister seeks to triple trade with India to $15 billion a year within three years. That would take Canada from the bottom to the top of the second tier of India’s trading partners.

The strategy has three main parts: education, agriculture and energy.

Ottawa seeks to greatly increase the number of post-secondary students from India studying in Canada from the more than 12,000 a year today. It is pushing the country’s already exploding $500 million a year agricultural trade with India, which is led by pea and lentil exports. It also hopes to sell technologies for refrigerating and storing India’s own crops, which suffer from a spoilage rate of more than 30 per cent.

Greater exports of potash for fertilizer, pulp for rayon as well as aircraft, rail cars and automotive parts also figure in Ottawa’s calculations.

However, the Conservative government intends to largely achieve its lofty trade target by aggressively selling hydrocarbons to India. The subcontinent has an insatiable appetite for energy to grow its economy, which has slowed a bit recently but is expected to continue expanding at between six and eight per cent annually for some time.

To ensure stability, India needs energy security that can only come from tapping non-traditional markets. About 30 Indian energy executives quietly visited Alberta last month to kick some tires. The visit came soon before news reports here claimed that India’s state-owned Oil and Natural Gas Corporation wanted to buy a 20-per-cent stake in Marathon Oil’s Athabasca Oil Sands Project.

One major opportunity arises because natural gas from Canada sells for about $3 per thousand cubic feet while India pays about $15 per thousand cubic feet to import gas from the Middle East. If India buys from Canada, that wide price discrepancy would cushion the cost of liquefying the gas, reversing some pipelines, building new port facilities on the east coast and shipping the product from there to here. The intention is to see if Canada can land that gas in India for $10 or $11 per thousand cubic feet.

Another possible boon for Canada, which lacks the staggering sums necessary to exploit its own resources, is that India’s corporate sector is sitting on large pools of investment capital that it wants to place overseas.

But it is a global market and India has options. Australian Prime Minister Julia Gillard was in India two weeks ago, the fourth visit in as many years by a prime minister from that country. Australia is already well out of the gate, doing four times as much trade with India as Canada. Like Harper, who is about to make his second visit to India, Gillard was hawking natural gas, greater agricultural exports and the benefits to some of the 500 million Indians under the age of 25 of receiving an Ozzie education.

Canada’s strength is that its brand is good, its banks are sound and its economy and government are stable.

It counts for a lot with India that Canada now puts trade first. It has also been noted that Harper wants to nurture the relationship by spending more time here next month than he has on any other foreign trip since becoming prime minister six-and-a-half years ago.

The prime minister’s visit to India and his agenda say a lot about which direction the world is evolving in and how Canada can play a much bigger part in it.






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