Saturday, October 1, 2022

Independence from China: Australia and India agree on free trade

DThanks to severely undermined claims, Australia and India have managed to strike a free trade agreement after ten years of negotiations. At the same time, Australia continues to negotiate with the European Union on free trade. For decades, Brussels has also wanted India as a partner for free trade.

Independence from China: Australia and India agree on free trade

Christopher Heino

Business Correspondent for South Asia/Pacific based in Singapore.

Australia expects rising demand from the emerging country with some 1.4 billion people to make up for its difficult trade with China. New Delhi is also looking for secure trade ties, especially in view of threats from Beijing to supply raw materials.

However, on Saturday, India’s Prime Minister Narendra Modi and his Australian counterpart, Scott Morrison, signed a trade deal that was severely undermined by European standards. “This agreement opens a huge door for Australian farmers and manufacturers and many others into the world’s fastest growing economy,” Morrison said.

India is currently holding trade talks with many countries

Modi, who discussed broader trade ties with Russian Foreign Minister Sergei Lavrov in New Delhi a day earlier, now said during the virtual meeting: “Based on this agreement, we will be able to simultaneously increase the resilience of supply chains and as well as to contribute to the stability of the Indo-Pacific region.

India’s trade minister Piyush Goyal said that the removal of tariffs under the Australia-India Economic Cooperation and Trade Agreement will take bilateral trade to around $50 billion within five years. Over the next ten years, tariffs are expected to fall on 91 percent of Australia’s exports to Asia’s third-largest economy.

India is also negotiating similar deals with New Zealand and Israel. Just last week, Indians signed a similar agreement with the United Arab Emirates. With Great Britain and Canada they are discussing trade agreements that are free from labor standards and human rights requirements. Commerce Secretary BVR Subrahmanyam is expected to resume talks in Brussels next week.

Indian market has remained closed for sheep farmers till now

In Australia, exporters from the agriculture and natural resource sectors are seen as the big winners from the deal. Until now, for example, Australian sheep farmers have been subject to a 30 percent duty on imports into India. However, now duties mainly on coal and copper, wool, aluminum and lobster are being abolished. In particular, coal, wine and lobster exports suffered from the Chinese blockade.

Beijing wanted to punish Australians for unfair political behavior. However, India already covers a quarter of its growing coal consumption from Australia, of which it is now the third largest customer. The Most Favored Nation clause was given to service providers in 31 sectors such as construction, tourism, education and medical services.

On the other hand, 96 percent of all tariffs on imports from India would fall in Australia. Indian university graduates in the natural sciences will be allowed to live and work “down there” for up to three years in the future – with Australia looking to close the employment gap for highly qualified people. Thousands of visas are issued annually to Indian youth who want to work in Australia while backpacking – helping farms.

A decade of difficult negotiations is coming to an end

Negotiations with Australia on trade and economic partnership began over a decade ago, but broke down after Canberra invited India to join the Regional Comprehensive Economic Partnership (RCEP).

Talks stalled after Modi refused in the last few yards, straining India’s ties with East Asia. They were reintroduced only in September last year, under pressure from a more aggressive Beijing.

The two countries are also part of the Quad Security Alliance, in which Tokyo, Washington and Canberra have also urged India to take a tough stand on Russia’s attack on Ukraine. This was avoided by New Delhi, which not only buys weapons from the Russians but also supplies medicine and technology to Russia.

Nation World News Desk
Nation World News Desk
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