PM Modi says trade pact watershed moment in India-Australia relations
Australian Prime Minister Scott Morrison said the India-Australia Economic Cooperation and Trade Agreement (IndAus ECTA), signed on 2 April 2022, delivers a clear message that democracies are working together and ensuring the security and resilience of supply chains.
“It will send a powerful signal to our businesses that ‘one of the biggest doors’ is now open as two dynamic regional economies and like-minded democracies are working together for mutual benefit,” he said after the pact was signed virtually by the two countries’ trade ministers.
The agreement further develops on the promise of the relationship, he added.
Apart from increased trade and economic cooperation, Morrison said, “IndAus ECTA will further deepen the warm and close ties between the people of the two countries by expanding work, study and travel opportunities.”
Prime Minister Narendra Modi elaborated that signing of IndAus ECTA in such a short span of time reflects the depth of the mutual confidence between the two countries.
Modi underlined the huge potential that exists in the two economies to fulfil the needs of each other and this agreement will enable the two countries to fully leverage these opportunities.
“This is a watershed moment for our bilateral relations,” said Modi who virtually witnessed the pact signing with his Australian counterpart.
The Prime Minister said, “On the basis of this agreement, together, we will be able to increase the resilience of supply chains, and also contribute to the stability of the Indo-Pacific region.”
Terming “people to people” relations as the key pillar of the relationship between India and Australia, Modi said, “This agreement will facilitate the exchange of students, professionals and tourists between us, which will further strengthen these relations.”
Commerce and Industry Minister Piyush Goyal and Minister for Trade, Tourism and Investment Dan Tehan also expressed their views on growing strength of the relationship between the two countries before signing of the agreement.
Growing India-Australia economic and commercial relations contribute to the stability and strength of a rapidly diversifying and deepening relationship between the two countries.
The IndAus ECTA, encompassing trade in goods and services, is a balanced and equitable trade agreement, which will further cement the already deep, close and strategic relations between the two countries and will significantly enhance the bilateral trade in goods and services, create new employment opportunities, raise living standards and improve the general welfare of the peoples of the two countries.
The salient features of India-Australia ECTA are as follows:
The India-Australia ECTA is the first trade agreement of India with a developed country after more than a decade. The Agreement encompasses cooperation across the entire gamut of bilateral economic and commercial relations between the two friendly countries, and covers areas like Trade in Goods, Rules of Origin, Trade in Services, Technical Barriers to Trade (TBT), Sanitary and Phytosanitary (SPS) measures, Dispute Settlement, Movement of Natural Persons, Telecom, Customs Procedures, Pharmaceutical products, and Cooperation in other Areas. Eight subject specific side letters covering various aspects of bilateral economic cooperation were also concluded as part of the Agreement.
Impact or benefits:
ECTA provides for an institutional mechanism to encourage and improve trade between the two countries. The ECTA between India and Australia covers almost all the tariff lines dealt in by India and Australia respectively. India will benefit from preferential market access provided by Australia on 100% of its tariff lines. This includes all the labour-intensive sectors of export interest to India such as Gems and Jewellery, Textiles, leather, footwear, furniture, food, and agricultural products, engineering products, medical devices, and Automobiles. On the other hand, India will be offering preferential access to Australia on over 70% of its tariff lines, including lines of export interest to Australia which are primarily raw materials and intermediaries such as coal, mineral ores and wines etc.
As regards trade in services, Australia has offered wide ranging commitments in around 135 sub sectors and Most Favoured Nation (MFN) in 120 sub sectors which cover key areas of India’s interest like IT, ITES, Business services, Health, Education, and Audio visual. Some of the key offers from Australia in the services space include: Quota for chefs and yoga teachers; Post study work visa of 2-4 years for Indian students on reciprocal basis; mutual recognition of Professional Services and Other licensed/regulated Occupations; and Work & Holiday visa arrangement for young professionals. On the other hand, India has offered market access to Australia in around 103 sub-sectors and Most Favoured Nation in 31 sub-sectors from the 11 broad service sectors such as ‘business services’, ‘communication services’, ‘construction and related engineering services’, and so on. Both sides have also agreed to a separate Annex on Pharmaceutical products under this agreement, which will enable fast track approval for patented, generic and biosimilar medicines.
Timelines:
The negotiations for India-Australia ECTA were formally re-launched on 30 September 2021 and concluded on a fast-track basis by the end of March 2022.
Background:
India and Australia enjoy excellent bilateral relations that have undergone transformative evolution in recent years, developing along a positive track, into a friendly partnership. This is a special partnership characterized by shared values of a pluralistic, parliamentary democracies, Commonwealth traditions, expanding economic engagement, long standing people-to-people ties and increasing high level interaction. The India-Australia Comprehensive Strategic Partnership initiated during the India-Australia Leaders’ Virtual Summit held between Prime Minister Narendra Modi and Prime Minister of Australia Scott Morrison, on 04 June 2020 is the cornerstone of our multi-faceted bilateral relations.
Growing India-Australia economic and commercial relations contribute to the stability and strength of a rapidly diversifying and deepening bilateral relationship between the two countries. India and Australia have been each other’s important trading partners. These excellent bilateral economic and commercial relations have continued to enhance and deepen over time. Australia is the 17th largest trading partner of India and India is Australia’s 9th largest trading partner. India-Australia bilateral trade for both merchandise and services is valued at US$27.5 billion in 2021. India’s merchandise exports to Australia grew 135% between 2019 and 2021. India’s exports consist primarily of a broad-based basket largely of finished products and were US$6.9 billion in 2021. India’s merchandise imports from Australia were US$15.1 billion in 2021, consisting largely of raw materials, minerals and intermediate goods.
India and Australia are partners in the trilateral Supply Chain Resilience Initiative (SCRI) arrangement along with Japan which seeks to enhance the resilience of supply chains in the Indo-Pacific Region. Further, India and Australia are also members of the recently formed Quad, also comprising US, and Japan, to further enhance cooperation and develop partnership across several issues of common concerns.
The India-Australia ECTA will further cement the already deep, close and strategic relations between the two countries and will significantly enhance bilateral trade in goods and services, create new employment opportunities, raise living standards, and improve the general welfare of the peoples of the two countries. fiinews.com
