India, Australia aim to finalise trade pact by end of next year

What is the news?

India and Australia are looking to finalise a Comprehensive Economic Cooperation Agreement (CECA) by the end of 2022, which will help expand trade between the two nations.

About the CECA between India and Australia

Both nations aim to sign an early harvest trade deal that will cover areas of immediate interest. Both the nations will exchange the first list of offers by October.

The trade deal will cover goods, services, investments, government procurement, logistics, standards, and rules of origin. The trade deal is expected to double the trade between the two nations.

In the past, a trade deal with Australia was put on hold as both countries were not able to reach a conclusion due to a lack of consensus on various issues.

About the trade between India and Australia

In 2020, India was Australia’s seventh-largest trading partner and sixth-largest export destination. India-Australia bilateral trade exceeded AUD 24 billion last year.

Major Indian exports to Australia are petroleum products, medicines, polished diamonds, gold jewellery, apparel, etc. The key Australian exports to India include coal, LNG, alumina, and non-monetary gold.

In services, major Indian exports relate to travel, telecom and computer, government and financial services. Similarly, the Australian services exports were principally in education and personal travel.

What is CECA?

CECA stands for Comprehensive Economic Cooperation Agreement. It is a kind of free trade pact that aims to provide an institutional mechanism to encourage and improve trade between the two countries.

CECA is different from the Comprehensive Economic Partnership Agreement (CEPA). “Cooperation” denotes a less intense relationship between two countries, while the word “partnership” denotes a more personal and more intense relationship between the parties.

What is an early harvest trade deal?

An Early Harvest trade deal serves as a precursor to an FTA between the two countries. It helps them to identify certain products and services for tariff liberalisation to further strengthen the confidence between the two trading partners.

Source:  This post is based on the article “India, Australia aims to finalise trade pact by end of next year” published in Business Standard on 01st October 2021.