Fast-tracking Australia-India Free Trade Agreement

The watchers of AustraliaIndia relations and the Indo-Pacific affairs firmly believe that India’s withdrawal from the Regional Comprehensive Economic Partnership in November 2020, the disruption in international supply chains caused by the Covid, alongside growing tension between India and China and Australia and China, intensified political will in New Delhi and Canberra to pick up the threads of their stalled negotiations on the Free Trade Agreement (FTA) or the Comprehensive Economic Cooperation Agreement (CECA).

The appointment of the former Australian Prime Minister Tony Abbott as the Trade Envoy of Australia and his visit to New Delhi in August 2021 year, followed by the 2+2 dialogue between Defence and Foreign ministers in mid-September in which CECA featured, followed by Australian Trade, Tourism and Investment Minister Dan Tehan’s visit soon after, symbolized the growing synergies across both, bilateral as well as strategic interests.

After talks were suspended in 2015 after nine rounds, Minister Tehan and his Indian Commerce and Industry, Consumer Affairs and Food, and Public Distribution and Textiles counterpart Piyush Goyal resumed formal negotiations in September 2021 and appointed trade negotiators to continue indepth discussions on the entire gamut of CECA.

To fast-track negotiations, both ministers again held virtual discussion on December 23 to materialize an early harvest announcementon an interim trade deal before the end of 2021. Both ministers expressed satisfaction at the progress in talks between the trade (chief) negotiators and indicated that several rounds of talks between trade negotiators was progressing well to ink a “balanced comprehensive agreement” by the end of 2022.

Interim agreement is expected to be reached on goods, services, investments, energy resources, logistics and transport, standards, rules of origin and sanitary and phytosanitary measures.

For years, despite a visible strong will in both capitals, bilateral trade has languished way below its potential, at A$30 bn, and not many are aware that the two-way trade with India had fallen by 13.6 per cent and exports by 18.4 per cent in 2020.

But a flurry of summit level talks enabling the two prime ministers (six times in two years), including the Modi-Morrison virtual summit in June 2020, trade and ministerial level dialogues and the opening of a new Australian Consulate-General in Bengaluru demonstrate a new energy, purpose and high in bilateral relations.

Although Australia and India have a shared bilateral and strategic interests, there is no denying that the path towards an FTA/ CECA is arduous and ironing out differences will be complex. India has only recently emerged out of an year-long violent farmers’ protest, and in that context, opening doors for Australian agricultural commodities, wine and dairy will be difficult for New Delhi to approve, which was the reason for leaving RCEP. Australia wants India to deregulate agricultural sector, and India wants Australia to liberalize the service sector and ease recognition of professional credentials, on which discussions are currently underway.

In 2018, the editor had personally struggled to organize interactions between a delegation of progressive ginger farmers from India’s Northeast with their counterparts in Queensland, which shows sensitivities plaguing both sides in opening up to Agri-based trade and business exchanges.

But the good news in conflict resolution terms is that both sides have a shared desire for moving forward andare well aware that the inability to do so will leave both worse off. Bilateral ties aside, the domineering China factor in the World Trade Organization and the urgent need to reform the Organization will also receive a shot in the arm with Australia and India showing flexibility and compromise in signing the FTA/CECA. The negotiations are being held in the spirit of Article XXIV of the General Agreement of Trade and Tarriff 1994 which specifies the “increasing freedom of trade by the development, through voluntary agreements, of closer integration between the economies of the countries parties to such agreements… [and]…recognize(s) the purpose of a customs union or of a free-trade area should be to facilitate trade between the consistent territories and not to raise barriers to the trade of other contracting parties with such territories”.

This clause is the backbone of the not only the WTO reforms, but also the fight back from the concert of democracies for an open, free, transparent and rulebased order in the Indo-Pacific.