Next week India and Australia are set to sign the first ever interim trade agreement. This will be followed by a Comprehensive Economic Cooperation Agreement (CECA) by 2023 in which the remaining of the issues will be addressed once the ITA is operational. This will be one of the fastest agreements to be concluded by either of the countries.
Before a Free trade agreement is signed, ITA or early Harvest Trade Agreement is used to liberalise trade on certain goods between trading blocs or countries.
In the case of India and Australia, top government officials have said that the ITA with Australia will cover areas of interest for both countries.
These include Rules of Origin, goods, services, customs procedures, sanitary and phytosanitary measures.
According to the information available in public domain, the bilateral trade between the two countries touched USD 12.5 billion in FY21 and surpassed USD17.7 billion in the first 10 months of FY22.
India has imported gold, LNG and coal and India has exported gems and jewelry, diesel and petrol to that country.
At the end of talks with his Australian counterpart Dan Tehan, last month Union Minister Piyush Goyal had said that the ITA is expected to cover various sectors including renewable, health, education, textiles, and pharma.
Both sides also noted that they had respected “each other’s sensitivities’’ during the negotiations. The Australian minister said that his country understood that beef, diary and wheat were sensitive sectors for India. Thus indicating that Australia would not seek market access for products in these sectors.
Australia is keen on getting phased reduction for its wines as it seeks market access for wines and its agricultural products.
The ITA will help in visa access for the Indian students as well as professionals. As the Australian minister had said last month, both countries are looking at mutual recognition of educational qualifications. This will help in boosting the number of Indian students seeking education in that country and vice versa. And this will also help in boosting tourism traffic in both countries.
Both countries have inked a MoU to help increase tourist traffic between India and Australia.
Once the agreement is in place, there will be a deeper cooperation between the two countries in rare earth elements and critical minerals which are required for various industries including renewable and electric vehicles.
The Australian Minister had said according to reports that his country had plentiful supplies of rare earths and critical minerals. Australia is looking for places for these rare earths and minerals to be processed and to get them into the manufacturing in India.
Australia already has Free Trade agreements with the US and Japan. And once the trade agreement is signed with India, all the four countries will be further connected through FTAs which help in boosting trade cooperation among all the member countries.
The leaders of the QUAD will be meeting in Tokyo later in the summer for summit level talks and they are likely to discuss a framework for economic cooperation within the members.
When the two sides met at the 17th India-Australia Joint Ministerial Commission meeting which took place on 30 September 2021, the ministers of both countries formally re-launched CECA negotiations. It was during that meeting that a decision was taken to reach an interim agreement by year end which would deepen the bilateral trade in goods and services.
The two countries agreed to conclude full CECA by 2022.
The two countries had started negotiations for CECA in May 2011 and at the end of nine rounds had decided to suspend negotiation in September 2015.
In the midst of a global pandemic in June 2020, at the end of the first ever virtual summit level talks between Prime Minister Narendra Modi and Prime Minister Morrison of Australia, it was decided to re-start talks on bilateral CECA.
