India- Australia Comprehensive Economic Cooperation Agreement (CECA)


    In News

    • India and Australia are expected to sign the interim agreement in March and the India-Australia Comprehensive Economic Cooperation Agreement (CECA) is expected to be concluded in 12 months thereafter.


    • Australia and India launched negotiations for a Comprehensive Economic Cooperation Agreement back in 2011.
    • The deal will cover goods, services, rules of origin, sanitary and phytosanitary measures, customs procedure, and legal and Institutional issues.
    • Two-way trade in goods and services has grown in value from $13.6 billion in 2007 to $24.3 billion in 2020.
    • India’s merchandise exports in the first 10 months of the fiscal had hit $336 billion, which was higher than India had ever achieved in a full fiscal.
      • We are well on track to exceed our target of $400 billion.
    • Apart from Australia, India is in talks to conclude similar FTAs and early harvest deals with Israel, Canada, the European Union and the United Arab Emirates.
      • India and the UAE are very close to finalizing the draft agreement of the FTA which is likely to happen soon.

    Significance of the deal

    • Dairy and agriculture are India’s sensitive sectors as they are huge employers while Australia has been cautious with opening up its services sector.
    • It is important that members of the Quad (Quadrilateral Security Dialogue) the US, Japan, Australia and India reiterate the importance of all countries adhering to an international “rules-based order”.
    • FTA would bring opportunities across sectors including mining, pharmaceuticals, health, education, renewable, railways, gems and jewelry, tourism, defence and textiles.
    • Two countries were looking at mutual recognition of educational qualifications and cooperation in the areas of critical minerals and rare earth elements which are critical to future industries including renewable energy and electric vehicles.
    • The CECA would be a substantial opportunity for both economies and a significant moment in the India-Australia bilateral relationship.
    • The two nations also signed a memorandum of understanding (MoU) to boost tourism between them.

    Issues/ Challenges

    • Australia wants a phased reduction in tariffs for its wines, while India is seeking greater market access for its textiles, footwear, leather, and pharmaceuticals and easier entry for its professionals.
    • Indian farmers have consistently opposed the government’s plans to open the dairy sector for foreign dairy majors.
    • Indian farmers are fast losing land and many small farmers are dependent on dairy work and opening the sector to foreign countries like Australia will hurt millions of farmers and dairy workers.
    • India will be again pushed into a state of import dependence, jeopardizing nutritional security.
      • Cheap imports flood Indian markets which would hurt farmers and their profits pushing them to poverty.
    • Australia has raised disputes with China at the World Trade Organization over trade of wine and barley.

    India-Australia Relations

    • Diplomatic:
      • India and Australia established diplomatic relations in the pre-Independence period, with the establishment of India Trade Office in Sydney in 1941
      • The end of the Cold War and simultaneously India’s decision to launch major economic reforms in 1991 provided the first positive move towards the development of closer ties between the two nations. 
    • Strategic:
      • Australia looks at India as an important partner in promoting regional security and stability.
      • This led to upgradation of the bilateral relationship to a Strategic Partnership, including a Joint Declaration on Security Cooperation in 2009
    • Bilateral Engagement:
      • Bilateral mechanisms include high-level visits, Annual Meetings of Prime Ministers, Foreign Ministers’ Framework Dialogue, Joint Trade and Commerce Ministerial Commission, India-Australia ‘2+2’ Foreign Secretaries and Defence Secretaries Dialogue, Defence Policy Talks, Australia-India Education Council, Defence Services Staff Talks, etc.
    • Multilateral Engagement:
      • Both countries have close cooperation in multilateral fora like Food and Agriculture Organization (FAO) and G20.
      • The Quadrilateral Framework (QUAD) of India and Australia along with the US and Japan emphasize the collective resolve to maintain a free, open and inclusive Indo-Pacific region.
    • Bilateral Trade:
      • India is the 5th largest trade partner of Australia with trade in goods and services at Australian Dollar 29 billion representing 3.6 percent share of the total Australian trade in 2017-18, with export at AD 8 billion and import at AD 21 billion. 
      • India’s main exports to Australia are refined petroleum, medicaments, railway vehicles including hover-trains, pearls, gems, jewelry, made up textile articles.
      • India’s main imports are coal, copper ores and concentrate, gold, vegetables, wool and other animal hair, fruits and nuts, lentils and education-related services.
      • India Australia Circular Economy (I-ACE) Hackathon 2021 was an effort to strengthen bi-lateral innovations in Circular Economy.
    • Civil Nuclear Cooperation Agreement:
      • It was signed between the two countries in September 2014 during the visit of the Australian Prime Minister to India.
      • The Australian Parliament passed the Civil Nuclear Transfer to India Bill 2016 which ensures that Uranium mining companies in Australia may fulfil contracts to supply Australian uranium to India for civil use.
    • Defence:
    • In 2014, both sides decided to extend defence cooperation to cover research, development and industry engagement and agreed to hold regular meetings at the level of the Defence Minister conduct regular maritime exercises and convene regular service-to-service talks
    • The first-ever Bilateral Maritime Exercise, AUSINDEX, was conducted in Visakhapatnam (Bay of Bengal) in September 2015.
    • In 2018, the Indian Air Force participated for the first time in the Exercise Pitch Black in Australia.
    • INS Sahyadri participated in Kakadu, the biennial exercise of the Australian Navy held in 2018, in which 27 nations participated. 
    • The 4th edition of AUSTRAHIND (Special Forces of Army Exercise) was held in September 2019.
    • Environment:
      • It is an area where there is great opportunity for India and Australia to work together since both countries had similar commitments.
      • The flagship program of National Innovation for Climate Resilient Agriculture and collaboration with the research organizations of Australia.
    • Indian Community:
      • The Indian community in Australia continues to grow in size and importance, with a population of nearly half seven lakhs.
      • India is now the third-largest source of immigrants to Australia, after the UK and New Zealand and the largest source of skilled professionals for Australia.
      • There is a  constant flow of students and tourists from India
      • The growing significance of the community is reflected in the large-scale celebration of Indian festivals in Australia, especially Deepawali.

    Way Forward

    • The agreement is only a win-win with absolutely no negatives for both sides as it will satisfy the interests of people and businesses on both sides.

    CECA vs CEPA

    • CECA is mainly concerned with tariff reductions and the elimination of all items that are considered to be listed tariff rate quota items. 
    • On the other hand, CEPA has the same components of CECA with an additional focus and options in the terms of trade investments and services. 
    • In looking at the big picture, CEPA is much broader and more complicated compared to CECA.

    Source: IE