By Vanessa Picker:
As the world’s largest democracy, and with a market of 1.2 billion people, it is clear that India represents an integral trading partner. This is exemplified as the trading relationship between India and Australia has grown substantially in recent years. In particular, significant opportunity exists for Australian business, in the areas of agriculture, energy, manufacturing, mining and service sectors.
Recognising this, on May 12th 2011, negotiations were officially launched to conclude a Comprehensive Economic Cooperation Agreement between Australia and India, by Trade Minister Craig Emerson and Indian Minister for Commerce and Industry Anand Sharma. Two rounds of negotiations followed.
The implications of the Comprehensive Economic Cooperation Agreement, on India- Australia trade relations are clear. Ultimately, it results in enhanced economic integration between India and Australia. A comprehensive agreement assists with expanding the growth of trade in services, through minimising the barriers faced by Australian service suppliers and simultaneously enhancing regulatory transparency. Furthermore, an agreement facilitates and fosters investment, by increasing both transparency and investment protections. Finally, a comprehensive agreement addresses tariff barriers and restrictions on trade in goods, due to border restrictions.
As India is Australia’s third largest export market, enhanced economic cooperation and integration is integral for continued economic growth. Equally, Australia supplies key resources to India, thus fueling its own economic growth. The importance of achieving a trade deal with India that supports the multilateral trading system was emphasised by Dr Emerson, who noted that ‘The FTA negotiations form an important part of the wider economic objectives set by the Australia-India Strategic Partnership agreed in November 2009’.Importantly, Australia and India have a strengthened and growing energy and resources relationship, as noted by Parliamentary Secretary for Trade, Justine Elliot. ‘Australia and India share strong interests and values and we are working to reshape our relationship in the long-term interest of both nations’. Thus, the Comprehensive Economic Cooperation Agreement is fundamentally important as India and Australia share long term interests and goals; both in terms of trade and wider aspects such as energy and resources.
Individual businesses within Australia can certainly benefit from greater access to the Indian market. For instance, ANZ, a banking company with longstanding presence in the Asia Pacific region welcomed the agreement by the Indian and Australian Governments to enter into negotiations on a bilateral free trade agreement. This is because ANZ recognise that a comprehensive economic cooperation agreement that covers trade in goods, services and investment will lead to increased bilateral trade, thus resulting in deepened economic relations with Australia’s fastest growing trader. Enhancing market access is important for companies such as ANZ, which often face challenges such as licensing and regulatory requirements. Thus, the liberalizing effect of the Comprehensive Economic Cooperation Agreement will enable more banks and companies to open branches in India.
Therefore, the Comprehensive Economic Cooperation Agreement is integral for both expanding and diversifying Australia’s export base. This is currently crucial as demand for services and trade with India is continuing to grow.