Context: The Ministry of Commerce has released data on Indo-Australian Trade relations, as nations visited the 2 year milestone of Indo-Australian Economic Cooperation and Trade Agreement (ETCA) trade deal.
Relevance of the topic:
Prelims: Basics of FTA, CEPA and ETCA.
Mains: Dynamics related to Indo-Australian trade relations; Issues related to CEPA.
Major Highlights:
- Export utilisation of Indo-Australian Economic Cooperation and Trade Agreement (ETCA) has reached 79%. While the import utilisation has reached 84%.
- Trade Utilisation of a free trade agreement (FTA) indicates the extent to which the trade benefits from the agreement.
- It provides insights into whether businesses are effectively leveraging the FTA or finding its concession procedures burdensome.
- Data also reveals that the trade between India and Australia has declined.
- As compared to $4.89 Billion during six months from April to September 2023, exports to Australia have declined to $3.99 Billion in the same period during 2024, marking a 18% decline.
- Imports also witnessed an 18% decline during the same period.
About Economic Cooperation and Trade Agreement (ECTA)
- Economic Cooperation and Trade Agreement is a bilateral trade agreement aimed at enhancing the economic ties between India and Australia.
- It was signed on April 2, 2022 and came into force in December 2022
- Key aspects of ETCA:
- Tariff Reduction: Australia eliminated 96% tariffs on Indian goods. While India offered concessions in coal, wine and agricultural produce to Australia.
- Market access: Both nations provided market access to sectors like pharmaceuticals, education, healthcare and information technology.
- Enhanced professional mobility: Indian IT and healthcare professionals gain improved access to the Australian market.
- Rule of origin: Agreement includes rules of origin clause to avoid benefits to any third party.
- ETCA can be considered as the foundational stone for the upcoming Comprehensive Economic Cooperation Agreement (CECA).
About Comprehensive Economic Cooperation Agreement (CECA)
- The Comprehensive Economic Cooperation Agreement is an extension of the ETCA, for which negotiations are undergoing between India and Australia.
- It aims at broadening the scope of the agreement including areas like investment protection, intellectual property rights (IPR), digital trade, government procurement and regulatory framework.
- Key Goals of CECA:
- Comprehensive access to goods-services across various sectors involving finance, education, medical etc,.
- Enhanced mobility for skilled professionals, students and workers between the two nations.
- Digital trade collaboration to boost e-commerce
- Innovation collaboration in sustainable means like clean energy.
- Concerns regarding CECA
- Agriculture and dairy sector farmers in India are apprehensive about increased Australian agriculture products reading their income due to competition.
- Labour mobility issue: India wants IT professionals, paramedic staff, students and workers to have free mobility. But Australia opposes these conceptions due to concerns of locals.
- IPR: Australia wants a strict IPR regime, while India on the other hand is concerned about these stricter norms as it can impact the generic drug market of India.
- Current status: Negotiations for the CECA began following the success of the ETCA. Both countries have expressed strong political will to finalise the agreement, though there are certain sensitive issues like agriculture, intellectual property rights and labour mobility that require comprehensive discussion and consensus.
Conclusion: Both ETCA and CECA are crucial for boosting the trade between India and Australia. But concerns of farmers, labourers and professionals need to be taken under consideration with a detailed discussion. A well discussed development of CECA will open a new route for the Indo-Pacific Economic Framework (IPEF).