Interim trade agreement and FTA
Source: By Karunjit Singh: The Indian Express
India and Australia have announced that they are set to conclude an interim trade agreement in March and a Comprehensive Economic Cooperation Agreement (CECA) 12-18 months thereafter.
An interim or early harvest trade agreement is used to liberalise tariffs on the trade of certain goods between two countries or trading blocs before a comprehensive FTA (Free Trade Agreement) is concluded. Commerce minister Piyush Goyal has said that the interim agreement set to be announced in about 30 days will cover “most areas of interest for both countries” including goods, services, rules of origin, sanitary and phytosanitary measures and customs procedures. Bilateral trade between the two countries stood at about $12.5 billion in FY21 and has already surpassed $17.7 billion in the first 10 months of FY22. India has imported merchandise worth about $12.1 billion from Australia in the first 10 months of the fiscal and has exported merchandise worth $5.6 billion in the same period. Key imports from Australia include coal, gold and LNG while key exports to the country from India include diesel, petrol and gems and jewellery.
Both Goyal and Australia’s trade minister Dan Tehan noted that two sides had “respected each other’s sensitivities” during trade negotiations. Tehan said that Australia understood that dairy, beef and wheat were sensitive sectors for India indicating that Australia would likely not seek market access for products in these categories.
Goyal said that the agreement with Australia was set to bring opportunities across sectors including mining, pharmaceuticals, health, education, renewables, railways, gems and jewellery, tourism, defence and textiles. India is also likely to seek easier visa access for both students and professionals visiting Australia. Australia is likely to seek market access for wines and agricultural products which are not produced on a large scale in India.
Tehan also noted that both countries are also looking at mutual recognition of educational qualifications to boost the number of Indian students seeking education in Australia and vice versa and boost tourism in both countries. India and Australia have also signed an MoU to boost tourism between the two countries.
Australia has also emphasised that the agreement would lead to deeper cooperation between the two countries in critical minerals and rare earth elements which are critical to future industries including renewable energy and electric vehicles.
“We have plentiful supplies of these rare earths and critical minerals in Australia. But we need places for them to be processed, we need to make sure that they go into manufacturing here in India,” Tehan said.
India and Australia are both members of the Quad (Quadrilateral Security Dialogue) along with the US and Japan. Both countries have noted that the coalition has given impetus to increasing trade relations between all members of the Quad. Australia noted that it already had FTAs with both the US and Japan and that all four countries could start building a framework for economic cooperation within the countries of the Quad after they announced a deal with India.
India is currently in the process of negotiating FTAs with the UAE, the UK, Canada, the EU and Israel, besides Australia. India is also looking to complete an early harvest agreement with the UAE and the UK in the first half of 2022.
