Earlier this month, Sanjay Verma, India’s High Commissioner to Canada, told a Montreal conference that the Indian government views any rhetoric around Sikh separatism or the creation of Khalistan in India’s Punjab region as a “national security threat.” 

Here in Canada, however, our government generally views such statements as protected speech unless they cross into criminal activity under domestic law. 

How we reconcile these two differing interpretations will define Canada’s relationship with the country that now holds the largest population on Earth.

The issue came to the fore in the aftermath of the murder of Sikh separatist Hardeep Singh Nijjar in June 2023 in British Columbia. Nijjar who was born in the Punjab region but moved to Canada in 1997 and became a citizen in 2007 was an advocate for Sikh independence. The Indian government had labelled him a key figure in the Khalistan Tiger Force, a banned militia group in the country. 

The Trudeau government took the extraordinary step in September 2023 of accusing the Indian government for being complicit in Nijjar’s killing. The accusation set off serious bilateral tensions which I wrote about in November last year. 

This month has witnessed some new developments in the case. Four men accused of carrying out the killing have been arrested and charged by the RCMP, three of whom came to Canada on student visas. They appeared before a B.C. court this week. It has been noted that the men could be linked to the Bishnoi gang, a criminal enterprise from Punjab involved in drug smuggling and extortion, including with operations in Canada. 

High Commissioner Verma’s provocative comments about Sikh extremism came after these arrests. They reflect a common criticism from the Indian government about Canada’s perceived laxity when it comes to these issues.

For instance, Indian External Affairs Minister Subrahmanyam Jaishankar has previously criticized the Canadian government for “welcoming criminals with organised crime links from Punjab into the country” including those who promote separatist extremism and violence. 

Verma has also stated that “Indians will decide what will happen to India, not foreigners,” implying that outside opinions on India’s processes are not welcome. According to this perspective, foreigners even include Indians who have renounced their Indian citizenship to gain Canadian citizenship.

As of May 8, India reiterated that Canada has yet to provide specific evidence that Delhi was connected to the four arrested men. 

If Canadian officials have been silent on the issue, it shouldn’t be interpreted as agreement with the Indian government. The Canadian government has generally been of the view that India’s definition of terrorism does not compute with the Canadian legal system. Similarly, Ottawa says that India has provided insufficient evidence to back up its allegations that some Canadian residents are engaged in Khalistani terrorism. One country’s terrorist is another country’s outspoken citizen it seems.

How, if at all, can we bridge this gap? 

One possible source of common ground is that both Canada and India have faced separatist movements, including some instances of separatist-related violence in their contemporary histories. What role can these histories play in present-day thinking?

The Front de libération du Québec (FLQ)’s bombings and violence in Quebec in the late 1960s culminated in the famous October crisis in 1970 with the kidnappings of British Trade Commissioner James Cross and the eventual murder of Quebec Cabinet minister Pierre Laporte. The federal government eventually invoked the controversial War Measures Act to restore public order, including outlawing the FLQ, making group membership a criminal act. 

What about India? It’s a country literally born from separation in August 1947 with Britain’s partitioning leading to a Hindu-majority India and the creation of the Muslim-majority Pakistan. In the immediate aftermath, there was a mass refugee crisis and violent outbreaks between opposing religious groups at the newly forged borders. By 1948, when the mass migration had settled down, 15 million people had been displaced and between one and two million people were killed. Punjab was an area heavily affected by partition. 

The push from Sikh Khalistani separatists to form their own nation rose in the 1970s and hit a breaking point by the 1980s. In 1984, Prime Minister Indira Gandhi’s controversial use of military force to subdue the separatists in the Golden Temple (known as Operation Blue Star) led to high civilian casualties. She was later assassinated in October of that same year by her Sikh bodyguards. Operation Blue Star was a catalyst for a decade marked by violence between the Indian government and pro-Khalistani militants. Although this more violent push was put to rest by the 1990s, supportive sentiment remains, especially in diaspora communities beyond India’s borders.  

This violent history of course doesn’t justify extra-territorial killings, but it still informs the perspective that India holds. With this understanding, there are multiple possibilities that may come to light in the coming months as Nijjar’s accused killers face trial. 

If the investigations show links to gangs, then we should consider the threat levels of rogue elements on Canadian soil. This raises various concerns including about Canada’s student visa program. If it is instead revealed that the men are indeed linked to the Indian government, as it appears to be in the case in the United States, it reflects deeper challenges for the Canada-India relationship. It is also possible that the killing of Nijjar was a combination of these two narratives. Both are horrible outcomes for Canada. We do not want our country to become a playground for state-sanctioned assassins or foreign gang activity.

Of course the rule of law must be respected. But we should not ignore the fears that inform the perspectives of many Indians and Indo-Canadians. Recognizing these concerns will bring us one step closer to rebuilding the Canada-India relationship.

Eliminating interprovincial trade barriers to create one genuine national market is one of the hardy perennials of Canadian politics and federal-provincial relations. But it is a flower that never blooms. It is time for Ottawa to exercise genuine leadership by creatively applying its fiscal powers to incentivize provinces to do the right thing.

Study after study has shown that interprovincial trade barriers seriously stunt Canada’s economic growth and productivity, which now lag further and further behind the single markets of the European Union (EU) and the United States (U.S.). Studies, by the International Monetary Fund and the Bank of Canada among others, find that removing these barriers would boost Canada’s GDP anywhere from four to seven percent. 

Lower GDP not only means that Canadians are poorer per capita, but it also means “lost” revenue of roughly $15 billion or more to the federal government and the provinces each year. That is a lot more than Ottawa plans to spend on fast-tracking the building of new housing ($8.5 billion), pharmacare ($1.5 billion over five years), or defence ($8.1 billion over the next five years).

Despite various attempts over the years to reduce internal trade barriers, many obstacles to trade across provinces remain, especially in procurement, labour mobility, trucking, and agriculture and agrifood. There is less free movement of goods and services in Canada than in the EU, which has 27 member countries and more than ten times Canada’s population, or in the United States, which has 50 states and more than eight times Canada’s population.

Why do these barriers persist? There are well-organized, self-interested lobbies for particular sectors, such as dairy producers in Ontario and Quebec that can block change. Perhaps even more important is the coordination problem: the benefits of removing interprovincial barriers are much greater if all provinces act together, and so provinces are reluctant to lower their own barriers—and anger these domestic lobbies—without some assurance that other provinces will do likewise. However, as we saw with the Canadian Free Trade Agreement in 2017—with its dozens of exceptions—simply bringing the provinces together will not bring about the change that is needed.

So what is the way forward? In one world, the federal government would direct the provinces to remove barriers under its trade and commerce powers (S. 121) in the Constitution. But in a series of crucial rulings, the Supreme Court, including its controversial decision in R. vs Comeau (also known as the “free-the-beer case”), has upheld the rights of provinces to restrict the purchase of goods and services across provincial boundaries.   

Ottawa’s challenge is to exercise leadership, not coerce or hector the provinces, but to offer calibrated inducements to remove trade barriers. 

The basis of such a bargain should be as follows: if provinces are willing to pay the political price for dropping barriers, Ottawa should compensate the provinces with something else in return. However, it should not cut the provinces a cheque, as some have suggested, from the increased revenues generated by substantial GDP growth. This would simply increase provincial dependence on federal transfers. Except for equalization, which is enshrined in the Constitution (and rightly so), each level of government should be as self-reliant as possible to enhance administrative efficiency and provide clear accountability to voters.

Instead, Ottawa should provide so-called “tax points” to the provinces, reducing its tax take so that provinces can get a greater share of the revenue. 

The provinces could, if they chose, raise their taxes by the same amount as the feds lowered them and use it to pay down debt or spend it—perhaps on measures that would help those groups negatively affected by the elimination of barriers. 

Importantly, taxpayers would be no worse off in this scenario and indeed could be better off if the provinces chose not to take up all the tax room given to them—remember that because eliminating barriers increases GDP for everyone, provincial revenues will rise as well. Accordingly, a province could choose not to raise taxes and still see higher revenues.

A key decision when implementing such an approach is whether to offer a deal to any province that wants it or require all provinces to join simultaneously. The problem is that reluctant provinces might try to water down the deal and bargain with Ottawa to remove some barriers and not others for a lower tax point transfer. On the other hand, an extensive federal-provincial negotiation would be a painful and possibly underproductive exercise unless the groundwork is laid properly in advance. 

Accordingly, it may be helpful to take a page from the Canada-U.S. free trade negotiations in the 1980s, where the foundations were laid by the Royal Commission on the Canadian Economy, which conducted a detailed and careful sector-by-sector analysis of the costs and benefits of free trade before talks formally began, thus building critical public support for what the Commission’s chair, Donald Macdonald, called “the leap of faith.” A similar exercise today on removing interprovincial barriers and the benefits of tax point transfers would have to be collaborative with the provinces and the private sector but should start now.

Undoubtedly, a concerted effort to remove interprovincial trade barriers will have immediate political costs. At the same time, the economic benefits will take a few years to materialise as they did with CUSMA and then NAFTA. To ease the pain, the federal government should lower taxes immediately after an agreement is signed and absorb the impact through a temporarily higher deficit or temporary spending reductions. Above all, Ottawa must show leadership and demonstrate its commitment to an agreement from the beginning.