Foreign Policy Watch: India-Australia

Significance of India-Australia Economic Cooperation and Trade Agreement

Note4Students

From UPSC perspective, the following things are important :

Prelims level : ECTA

Mains level : Paper 2- INDAUS-ECTA

Context

Prime Ministers of India and Australis will preside virtually over the signing of a bilateral Free Trade Agreement(ECTA) negotiated in torturous detail over the last decade.

Background

  • Negotiations for a bilateral Comprehensive Economic Cooperation Agreement began in May 2011.
  • But the negotiations continued in fits and starts, without significant progress or indeed real political direction.
  • In June 2020, as part of the Joint Statement after establishing a Comprehensive Strategic Partnership, it was decided to re-engage on a CECA.
  • Consequently, at the 17th India-Australia Joint Ministerial Commission meeting in September 2021, CECA negotiations were re-launched.
  • During virtual summit in 2022, India-Australia fleshed out areas of cooperation ranging from science and technology to climate change and defence to people-to-people ties, and included possibilities of joint surveillance and real-time intelligence sharing.
  • On the eve of the summit, the Morrison government invested over USD 280 million to give a fillip to cooperation with India; to further grow its economic relationship and support jobs and businesses in both countries; as well as to empower the Indian diaspora.

About INDAUS-ECTA

  • The INDAUS ECTA (India-Australia Economic Cooperation and Trade Agreement), reflects vision of the essential unity of the two countries.
  • The ECTA deal is apparently fully in compliance with WTO rules and Article 24 of GATT.
  • Article 24 of GATT allows countries to grant special treatment to one another by establishing a free-trade association, provided that “(1) duties and other trade restrictions would be eliminated on substantially all the trade among the participants, (2) the elimination of internal barriers occurred within a reasonable length of time….”
  • The ECTA should give a boost to India’s labour-intensive manufacturing sector, with a considerable leg-up to the pharma, textile, gemstone and jewellery sectors.
  •  Indian students in Australia will find an easier pathway to employment, and there will be greater ease of visa for a range of skilled human capital from India in demand in Australia, including chefs and yoga instructors.
  • Most of the farming and dairy sector seems to have been kept away from the present agreement.
  • Australian coal will probably get relatively unfettered access to India.

Significance of the ECTA for India-Australia relations

  • The ECTA represents a watershed moment in bilateral relations.
  • ECTA is also a significant turning point for India’s foreign policy — both in terms of geo-strategy as well as geo-economics.
  • Partnership with the convergence of interests: India and Australia today represent a partnership with a near complete convergence of interests and values.
  • Shared concerns over China: Two multicultural, federal democracies that share concerns about stability in the Indo Pacific, are apprehensive about Chinese hegemonic designs, and are increasingly coordinating their policies, are natural partners of the future.

Conclusion

The ECTA signals that India’s relations with Australia — two central pivots of the Quad — are as strong and resilient as ever.

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