INDIA-AUSTRALIA RELATIONS

• Recently, India and Australia have announced that they are set to conclude an Interim Trade Agreement in March 2022 and a Comprehensive Economic Cooperation Agreement (CECA) 12-18 months thereafter.
• The agreement will cover “most areas of interest for both countries” including goods, services, rules of origin, sanitary and phytosanitary measures and customs procedures.
• Earlier, India, Japan and Australia have formally launched the Supply Chain Resilience Initiative (SCRI).

Interim Trade Agreement

• An interim or early harvest trade agreement is used to liberalise tariffs on the trade of certain goods between two countries or trading blocs before a comprehensive FTA (Free Trade Agreement) is concluded.
• Government’s emphasis on interim agreements may be tactical so that a deal may be achieved with minimum commitments and would allow for contentious issues to be resolved later.
• The problem, though, is that these early harvest schemes potentially target the low-hanging fruits, leaving the tougher goods and services for later.
• This strategy can lead to significant delays in wrapping up the mode broad-based FTAs, which could potentially lead to impediments.
• India had concluded an early harvest agreement with Thailand in 2004 but has not been able to conclude a comprehensive FTA with the country.
• India also has a trade agreement with Sri Lanka dealing with goods but was not able to conclude an agreement on services and investments.
• Early harvest agreements that do not graduate into full-scale FTAs are exposed to legal challenges from other countries that are members of the World Trade Organisation (WTO).
• It is often beneficial to negotiate the entire deal together, as an early harvest deal may reduce the incentive for one side to work towards a full FTA.
• It is a pact between two or more nations to reduce barriers to imports and exports among them.
• Under a free trade policy, goods and services can be bought and sold across international borders with little or no government tariffs, quotas, subsidies, or prohibitions to inhibit their exchange.
• The concept of free trade is the opposite of trade protectionism or economic isolationism.
• FTAs can be categorised as Preferential Trade Agreement, CECA , Comprehensive Economic Partnership Agreement (CEPA).

QUAD’s Impact on Trade Relations between India and Australia

• India and Australia are both members of the QUAD (Quadrilateral Security Dialogue) along with the US and Japan.
• Recently, the fourth meeting of the foreign ministers of the QUAD grouping (India, the US, Australia and Japan) was held in Melbourne, Australia.
• Both countries have noted that the coalition has given impetus to increasing trade relations between all members of the QUAD.
• Australia noted that it already had FTAs with both the US and Japan and that all four countries could start building a framework for economic cooperation within the countries of the QUAD after they announced a deal with India.

SOURCE: THE HINDU,THE ECONOMIC TIMES,MINT