In the case of India and Australia, senior government officials have said the ITA with Australia will cover both countries’ areas of interest.

Next week, India and Australia will sign the first-ever interim trade agreement. This will be followed by a Comprehensive Economic Cooperation Agreement (CECA) by 2023 in which the remaining issues will be addressed once the ITA is operational. This will be one of the fastest deals either country can make.

What is this Interim Trade Agreement (ITA)?

Before a free trade agreement is signed, ITA or Early Harvest Trade Agreement is used to liberalize trade in certain goods between trading blocs or countries.

In the case of India and Australia, senior government officials have said the ITA with Australia will cover both countries’ areas of interest.

What are the areas of interest between India and Australia?

These include rules of origin, goods, services, customs procedures, sanitary and phytosanitary measures.

According to information available in the public domain, bilateral trade between the two countries was USD 12.5 billion in FY21 and over USD 17.7 billion in the first 10 months of FY22.

What did India import there?

India has imported gold, LNG and coal and India has exported precious stones and jewelry, diesel and gasoline to that country.

Ending talks with his Australian counterpart Dan Tehan, Union Minister Piyush Goyal said last month that the ITA is expected to cover several sectors, including renewables, health care, education, textiles and pharmaceuticals.

Both sides also noted that they had “respected each other’s sensitivities” during the negotiations. The Australian minister said his country understood that beef, dairy and wheat were sensitive sectors for India. This indicates that Australia would not seek market access for products in these sectors.

Australia is keen to phase out its wines as it seeks market access for wines and its agricultural products.

Visa and Education

The ITA will assist in accessing visas for both Indian students and professionals. As the Australian minister said last month, both countries are looking at mutual recognition of educational qualifications. This will help boost the number of Indian students seeking education in that country and vice versa. And this will also help boost tourism in both countries.

Both countries have signed an MoU to help increase tourist traffic between India and Australia.

Once the agreement is made, there will be deeper cooperation between the two countries on rare earth elements and critical minerals needed for various industries, including renewable and electric vehicles.

The Australian minister had said, according to reports, that his country had abundant reserves of rare earths and crucial minerals. Australia is looking for places to process these rare earths and minerals and get them into production in India.

How will such an agreement affect relations with QUAD members?

Australia already has free trade agreements with the US and Japan. And once the trade agreement with India is signed, all four countries will be further linked through free trade agreements that will help boost trade cooperation among all member states.

QUAD leaders will meet in Tokyo later in the summer for top-level discussions and are likely to discuss a framework for economic cooperation within members.

History of CECA Talks Between India and Australia

When the two sides met at the 17th India-Australia Joint Ministerial Commission meeting, which took place on September 30, 2021, the ministers of both countries formally restarted CECA negotiations. At that meeting, it was decided to reach an interim agreement by the end of the year that would deepen bilateral trade in goods and services.

The two countries agreed to conclude a full CECA by 2022.

The two countries had started negotiations on CECA in May 2011, and after nine rounds had decided to suspend the negotiations in September 2015.

In the midst of a global pandemic in June 2020, at the end of the first-ever top-level virtual talks between Prime Minister Narendra Modi and Prime Minister Morrison of Australia, it was decided to restart talks on bilateral CECA.

This post Historic India-Australia ITA to be completed next week; Knowing more

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