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EXCLUSIVE | Australian ministers to discuss trade deal hurdles during India visit

India had recently announced that a trade deal with Australia would be signed by 2021-end. But sources say the existing differences continue to plague the discussions

September 09, 2021 / 01:27 PM IST
SYDNEY Opera House, Sydney, Australia. Representational Image.

SYDNEY Opera House, Sydney, Australia. Representational Image.

India's demands for liberal services trade rules and Australia's insistence on being allowed to enter India's dairy and food markets will be discussed as Australian Foreign Minister Marie Payne visits New Delhi on September 11, sources said.

Payne will be joined by Aussie Defence Minister Peter Dutton as both of them take part in the first ever 2+2 ministerial talks on Saturday, with their Indian counterparts. While the visit will not be a negotiation round for the proposed Comprehensive Economic Cooperation Agreement (CECA) trade deal, two of the largest issues that continue to hold it up will be discussed, senior officials said.

"These may later feature in talks when both sides meet on the sidelines of the Quad summit later in September in the United States," one source said. The two sides are keen to quickly smoothen over all differences due to the expedited timeline for completing the deal, he added.

Commerce and Industry Minister Piyush Goyal had recently said that India will sign an early harvest trade deal with Australia by the end of 2021. But sources say the existing differences continue to plague the discussions.

Hurdles remain the same

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Discussions on market access for Australian dairy products and meat, apart from Australia’s discomfort with opening up services exports, have proved to be major sticking points in the deal, ever since talks started back in 2011.

In an effort to get around these two issues, December 2021 was recently chosen as the deadline for an 'early harvest' interim agreement to liberalise and deepen bilateral trade in goods and services, and pave the way for a comprehensive agreement in the near future.

An early harvest trade deal is one in which both parties sign off on a set of relatively easily achievable deliverables. Such pacts target specific goals such as tariff reduction and market access on select items while leaving more contentious items off the agenda.

But moving forward without addressing these legacy issues have not been easy, officials say. Since 2015, New Delhi has consistently focused on services trade norms, particularly on movement of natural persons, such as independent professionals (called Mode 4 services trade) and Mode 1, the cross- border supply of services.

These would allow free movement of trained Indian professionals such as information technology specialists, chartered accountants, teachers and nurses to work in partner nations without the need for bilateral mutual recognition agreements.

Meanwhile, Australia wants access to India's protected market for dairies and related processed foods like cheese and yoghurt, which are among the biggest industries in rural Australia. The country is keen to send agro goods to India and major food businesses have plans to enter the Indian marketsenior Australian trade official had told Moneycontrol.

Long-term negotiations

Talks on the CECA began in 2011. While more than 13 rounds of negotiations have been completed so far, India is now confident of finalising talks soon after positive signals from Canberra.

The deal was sidelined for a few years when both nations were negotiating the Regional Comprehensive Economic Partnership (RCEP) agreement.

Last year, India officially requested Australia to restart trade negotiations. This came after the Australian Prime Minister’s Office adopted a government report called, ‘An India Economic Strategy to 2035’, penned by former Australian High Commissioner to India Peter N Varghese.

At a time when trade tensions between Canberra and Beijing are rising, it bats for more economic linkages between Australia and India. Egged on by both governments, businesses have continued to scout for opportunities in each others’ markets. Both countries have also strengthened business ties in recent years through both government and private-led initiatives.

Exports to Australia jumped to a three-year high of $4.04 billion in FY21, even amidst COVID-19. Meanwhile, imports fell to $8.42 billion, a trend that has continued for the past four years. India’s yawning trade deficit has principally been due to imports of Australian coal and natural gas.
Subhayan Chakraborty has been regularly reporting on international trade, diplomacy and foreign policy, for the past 6 years. He has also extensively covered evolving industry and government issues. He was earlier with Business Standard newspaper.

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