India, Australia to sign interim trade deal on Saturday

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India and Australia will on Saturday sign an interim trade deal encompassing goods and services that is expected to cement strategic relations between the two sides and enhance bilateral trade while lowering tariff barriers.

The India-Australia Economic Cooperation and Trade Agreement (IndAus ECTA) will be signed at a virtual ceremony by commerce minister Piyush Goyal and Australia’s trade minister Dan Tehan in the presence of Prime Minister Narendra Modi and his Australian counterpart Scott Morrison.

Hindustan Times had first reported on Wednesday that the interim or early harvest trade deal was set to be unveiled on April 2 as a precursor to a comprehensive free trade agreement.

The deal is a “balanced and equitable trade agreement, which will further cement the already deep, close and strategic relations” between the two sides and “significantly enhance” bilateral trade in goods and services, create new employment opportunities and raise living standards, an official statement said.

Growing India-Australia economic and commercial relations contribute to the “stability and strength of a rapidly diversifying and deepening relationship”, the statement added.

Dairy and certain agricultural items such as chickpeas were kept out of the agreement in view of India’s sensitivities and the lowering of tariffs was not as much as some other trade deals struck by Australia in the recent past, people familiar with the matter said.

At the same time, Australia didn’t give in to all of India’s demands for mobility of students and professionals but agreed to allow Indian science, engineering and IT graduates to stay longer after their studies and to grant 1,000 working holiday visas, the people said.

With the deal being finalised just ahead of the Morrison government calling the next general election, Australia’s ruling coalition hailed the agreement as a “significant step in its efforts to diversify export markets and reduce Australia’s economic dependence on China by opening up new opportunities in a large and expanding economy”, the Australian Broadcasting Corporation reported.

Tehan said the deal would boost trade with a crucial partner. “Tariffs will be eliminated on more than 85% of Australia’s export goods to India and that will rise to almost 91% over 10 years,” he was quoted as saying by ABC.

“There is comprehensive agreement here with the world’s fastest-growing major economy,” he added.

The agreement will be notified to the World Trade Organization, indicating it has the legal status of a full free trade deal. It will cut tariffs on Australian exports such as coal, lentils, lobsters and rare earth minerals, and also eliminate barriers to Australian sheep meat and wool. There will be a phased reduction of tariffs on wine and agricultural products such as avocados, cherries, nuts, blueberries, almonds, oranges, mandarins, pears and strawberries, ABC reported.

Tehan said the Australian government will continue to press India to ease trade barriers in future negotiations.

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