India-Canada row: Quiet diplomacy can achieve a lot more

The suspension of trade negotiations was the first salvo in the ongoing diplomatic spat between India and Canada. It is unlikely to hit the economic interests of either country, at least for now. However, unintended consequences cannot be ruled out. Soon after Prime Minister Justin Trudeau returned to Canada after the G20 meeting in New Delhi, Canada indefinitely postponed the scheduled five-day visit of a trade delegation to India starting 9 October. The Canadian trade mission was to be led by Mary Ng, Canadian Trade Minister. The agenda was to take forward the talks on the Early Progress Trade Agreement (EPTA) that were paused in August.

The current bilateral merchandise trade between the two countries is around $8.16 billion. Industry experts had estimated that the conclusion of the Comprehensive Economic Partnership Agreement (CEPA) would have helped the bilateral trade nearly double the figure in the next few years. That is not a significant portion of our total merchandise trade of close to $1.2 trillion last year. On specific import and export products, both Canada and India have enough alternate sources to ensure that the supplies remain unaffected. The bilateral export or import of services is also not too significant in the overall context to be a cause for concern.

There are around 600 Canadian companies that have invested in India and about 30 Indian companies that have operations in Canada. There are no indications that these investments will not grow in the coming days despite the deteriorating political relationship between the two countries. The foreign portfolio investments from Canadian entities easily exceed $50 billion, with the Canadian pension funds alone accounting for more than $45 billion in investments in various Indian entities. These investments are driven by commercial considerations and long-term interests that are unlikely to take a hit, at least in the near term.

The major worry is about the future of about two million persons of Indian origin living in Canada and about students and young people of Indian origin who have gone to Canada on temporary visas for studies or work permits.  Many families in India depend on inward remittances from their relatives settled in Canada. Most of the young people have gone to Canada in the hope of getting citizenship and leading better lives. Their aspirations hang in balance after the recent worsening of bilateral relationships. A greater worry is about the harmony between various sections of persons of Indian origin settled in Canada and their relationship with other Canadians. No less is the worry about the fall-out of the diplomatic crisis on certain sections of people living in India. The consequences of degeneration in the quality of dialogue between the leaders of the two countries can be quite uncertain and unintended.

The need of the hour, therefore, is for the leaders in both countries to tone down the belligerent rhetoric and cool the temperatures. Quiet diplomacy can achieve a lot more. India and Canada not only have shared democratic values but also shared interests given the context of a rising and expansionist China flexing its muscles. The leaders of both countries should encourage bilateral trade and people-to-people exchanges that can help build bridges.

Email : tncrajagopalan@gmail.com