[ABS
News Service/02.04.2022]
Australian wool, wine and sheep
meat will be significantly cheaper in India as part of a $12.6 billion free
trade deal that ties the two countries economically closer as they confront the
rise of China and Russia as strategic adversaries.
The economic agreement will strip tariffs off 96 per cent of
Indian imports into Australia and 85 per cent of Australian exports, rising to
91 per cent over the next decade.
Prime Minister Scott
Morrison and Indian Prime Minister Narendra Modi will witness the signing of
the Australia-India Economic Cooperation and Trade Agreement on Saturday,
watching via video as Trade Minister Dan Tehan and
India’s Commerce Minister Piyush Goyal
sign it virtually. It is not the final free trade deal, with both countries
committed to signing a Comprehensive Economic Partnership Agreement in the
future.
Negotiations on the deal
have continued for years but accelerated last year after both prime ministers
made it a priority to complete. Australia has been looking to diversify its
export markets away from China after the Asian superpower launched a collection
of trade strikes on Australian products in retaliation for what it saw as a
series of slights.
“This agreement opens a
big door into the world’s fastest-growing major economy for Australian farmers,
manufacturers, producers and so many more,” Mr
Morrison said ahead of the deal being signed.
“By unlocking the huge
market of around 1.4 billion consumers in India, we are strengthening the economy
and growing jobs right here at home.
“This is great news for
lobster fishers in Tasmania, wine producers in South Australia, macadamia
farmers in Queensland, critical minerals miners in Western Australia, lamb
farmers from NSW, wool producers from Victoria and metallic ore producers from
the Northern Territory.”
Australia, the United States and Japan
have been working to bring India closer in response to the rise of China, but
the Quadrilateral Security Dialogue has struggled recently to reach a consensus
on the Russian invasion of Ukraine. India has been careful not to condemn the
invasion and has been working with Russia on financial trade options.
The
Australia-India deal will lift the percentage of Australian exports covered by
free trade deals. It was 27 per cent when the Coalition took power in 2013 and
is now at 75 per cent, but could hit 88 per cent once the Indian and
European Union deals are concluded.
Under the deal, sheep meat tariffs
of 30 per cent will be eliminated, boosting Australian exports that already
command nearly 20 per cent of the Indian market. Wool will also have its
current 2.5 per cent tariffs eliminated, making exports cheaper in Australia’s
second-largest market for wool products.
Tariffs on wine will be cut
immediately and then further reduced over 10 years, while tariffs on a series
of fruits, vegetables and nuts will be gradually eliminated or reduced.
Australian coal, gas, copper
and critical minerals will be tariff-free.
In 2020, India was
Australia’s seventh-largest trading partner, with two-way trade valued at $24.3
billion, and the sixth-largest goods and services export market, valued at
$16.9 billion. The government wants to lift India into the top three export
markets by 2035.
Mr Tehan said Australian services
suppliers in higher education, business services, research and development, and
many others would benefit from the deal as they will be guaranteed to get the
best treatment from India that it gives any future free trade agreement
partner. India was Australia’s third-largest market for services exports in
2020.
“This agreement will turbocharge our close, long-standing and
highly complementary economic relationship in areas such as critical minerals,
professional services, education and tourism,” Mr Tehan said.
Australia will
also provide new access for young Indians to participate in working holidays in
Australia. Places in Australia’s Work and Holiday program will be set at 1000
per year, which the government expects to contribute to the pool of available
workers and boost tourism.
Labor’s trade
spokeswoman Madeleine King recently accused the government of “laziness” over
the length of time it has taken to sign the deal. Labor has not always supported
free trade deals, often due to concerns about access to the labour
market for foreign workers, but has been keen to tie down an agreement with
India