Two-way trade exceeded $12 billion in 2015-16, a significant fall from the more than $18-billion worth of trade five years ago. India was also Australia’s 10th largest trading partner and fifth largest export market in FY16. But, compared to this, neighbouring China has become Australia’s largest trading partner, with bilateral trade reaching $116 billion in 2016. This is the result of the China-Australia Free Trade Agreement signed in 2015, which brought down tariffs for Australian beef, wine, fruits and other products entering the Chinese market.
“Australia is pushing for tariff reduction in dairy, fresh fruit, pharmaceuticals, meat and wines. On the other hand, India wants zero duty on auto parts, textiles and fresh fruit, including mangoes, and greater access in the services sector,” a senior government official said.
The countries had missed the last deadline to finish talks — January 2016 — set by Prime Minister Narendra Modi and Australia’s then PM, Tony Abbott, in September 2014.
India had pushed talks on the backburner, keeping an eye on the Regional Comprehensive Economic Partnership (RCEP) agreement, of which Australia is a part. But, with RCEP, too, moving slowly, India is keen on finishing the talks.
The RCEP agreement involves 10 countries of the ASEAN grouping and six of its free trade partners — China, India, Japan, New Zealand, South Korea and Australia. Under RCEP, India had earlier offered tariff elimination of 42.5 per cent of all traded goods to Australia, while that country has offered zero tariff on 80 per cent of such goods.
For India, the RCEP presents a decisive platform to influence its strategic and economic status in the Asia-Pacific region. Expected to be the largest regional trading bloc in the world, accounting for nearly 45 per cent of the global population with a combined gross domestic product of $21.3 trillion, it will also bring the biggest economies of the region into a regional trading arrangement.
During the Australian PM’s visit, both countries are likely to sign a number of memoranda of understanding (MoUs), covering a range of areas including defence and security, environment, renewable energy and sports.