Australia’s Parliament passed bilateral free trade agreement with India. The deals are crucial for Australia to diversify its exports from the troubled Chinese market to India and to forge new bilateral trade relations. This would help in taking bilateral trade to $45-50 billion in the next five years from$27.5 billion at present.
Speaking exclusive to Financial Express Online, Australia’s High Commissioner to India Barry O’Farrell said that Australia and India are forging the new security and defence partnership in the region, built upon the trust and confidence. This is going to redefine the dynamics of geopolitics in a time to come.
Here are some excerpts-
The ECTA- Economic Cooperation and Trade Agreement (ECTA) is ratified now. What would be the potential trade and investment?
This is terrific news for Australia and India as it increases economic activity in both countries and creates opportunities for extra jobs and better living standards.
We learnt some strategic lessons and economic lessons during Covid-19, when we realised that some of us had too many eggs in one basket. And we needed to diversify. Secondly, the economies of India and Australia are complementary in nature. So, the reduction in tariffs is a great news for both Indian and Australian consumers. The Indian government has estimated that in relation to textiles alone, that the reduction in tariffs will boost exports to Australia sufficiently to create up to 40,000 jobs annually in India.
This agreement also guarantees India’s access to Australia’s critical minerals, which will help fuel growth in the electric vehicles, batteries and solar panel sectors in India. Of course, the agreement also aids mobility between our countries. It assists Indian tech companies for instance, like Tata or Infosys in providing professionals to assist Australia’s economy. It extends the post study work rights of students in Australia and working holiday visas also seek to improve those people-to-people links.
Could it be a model FTA for India, perhaps to look and forge such partnership with EU?
The terrific thing is that countries want to engage with India. And that’s sensible, because India is the future. But as to how India negotiates with other countries, it will always be on a case-by-case basis.
Australia is just grateful that we managed after the UAE to get in place. This is significant for Australia- India economic cooperation and trade agreement. This is like the completion of the first innings in a test match. What I’m focused on and what I’m looking forward to, is the end of the second innings, when both India and Australia finally have their hands on that closer economic cooperation agreement that both countries have wanted for so long.
Ministers from both countries pledged in taking bilateral trade from $27.5 billion at present to $45-50 billion in the next five years. Do you think that as a feasible target?
Well, this agreement which is called in trade parlance, ‘an early harvest agreement’, is big enough to have had to be registered in Geneva. So, it’s a significant agreement on its own. But the end goal for both countries is to have the Comprehensive Economic Cooperation Agreement that covers things like digital trade that encourages more investment between our countries and covers the services sector. And that will again seek to boost the Indian and Australian economies create jobs in both India and Australia.
Is it also about migration and mobility? Is that part of the trade deal?
The Indian diaspora in Australia is already our fastest growing diaspora. But you’re absolutely right. The agreement passed by our parliament not only assists Indian tech companies who send people to Australia to assist us run our businesses, it also improves the ability and attractiveness of Australia as a study centre for Indian students. It improves working holiday visa arrangements. And that’s a good thing because people to people links are one of the ways in which I think both governments have seen this relationship grow in recent years.
There were visa issues for the Indian students/families to Australia. Has it been resolved?
The best answer to that question is that when then Aviation Minister Puri put in place the free Vande Bharat flights, 80 percent of Indian students studying in Australia, stayed in Australia, supported by the universities, supported by their state and central government and supported by the magnificent Indian diaspora.
What is the scope of collaboration in areas like critical minerals, cyber, new and renewable energy?
So, the point is that whether technology is critical, emerging or for a solar panels and battery industry, critical minerals and rare earths are required. What this trade agreement does is to reduce tariff on those products coming into India, which means India gets them cheaper. And that enables India to pursue its missions in seeking to grow industries in these areas. And not just Australia, the world has an interest in India, succeeding in its manufacturing missions in those areas. Because the world needs competition, we can’t have one player dominate.
These emerging technologies can be very beneficial in helping us do our jobs. But we also know and we learnt again through Covid-19, that they can be used for bad purposes as well. This deal, not only provides easier access for India to critical metals and rare earths, but of course, because it’s reciprocal, provides us with the opportunity to deliver to Indian households some of the finest wines in the world.
In 2021, Supply Chain Resilience Initiative was initiated with Japan, Australia and India at the end of the trilateral Trade Ministers meet in the Indo-Pacific region, what is the status?
In May, the Australian government changed, but the commitment to India did not. And as I said, this legislation, this trade deal was passed by the Parliament without dissent. It was supported by all those in Parliament, which speaks volumes about it.
Our desire to drive approval before the end of this year came with a lot of effort between Minister Piyush Goyal here in India, and Minister Farrell in Australia. And we look forward to India concluding and officially signing off on its part, because the sooner we both sign-off, this deal comes into place 30 days thereafter. We want that to happen by the end of the year.
The secure supply chain Initiative is a key learning from Covid-19 and it was an initiative from Japan that was taken up by Australia and India. I think that you will see as the coming year unveils, the most obvious area for that to be applied will be critical minerals and railroads. Japan and India are seeking to get more imports from other suppliers and they’ve used in the past. And that’s a good opportunity for Australia to do that.
We want to ensure is that if there should be another pandemic or disruption to the world, we don’t find ourselves in the same situation we did last time. You said in the introduction that the level of trust between both countries has grown and I think that’s exactly right. And when in democracies, trust grows between leaders, that usually produces results.
How does Australia look at tackling Climate change challenges, given the common thread it shares with India, in terms of similar kind of problems and dependence on fossil fuels?
We have a government that is far more focused on reduction in emissions and determined to join the rest of the world and addressing what is clearly the biggest problem that we face. So, I don’t think there’s anybody in Australia, who after massive bushfires, and then for the last six to eight months of massive floods across the East Coast, does not believe that climate has changed.
One of the great new areas of operation between Australia and India, is the renewable energy. We are talking to India already about a research breakthrough in Australia on low-cost solar panels, which would significantly reduce the cost, which would help countries not just in the Pacific and Indian Ocean region but across the world, in terms of solar panels. So, you know, domestically in Australia, we have a government delivering a settlement on climate policy.
A report points out that Australian government is spending some about $11 billion in subsidising the cost of fossil fuel. What are your thoughts on this?
We are quickly pivoting away from fossil fuel-based energy in Australia. We are the largest user of solar panels per capita. In the world where we’re embracing new energy forms, I had meetings recently with an Australian company that has a technology that not only can produce electricity at a good price, but can also assist both of us to get off the coal hook if you like. So, so there’s lots happening.
In fact, while travelling from Hampi from Bangalore, I was amazed at the number of wind power, perhaps with the windmills along that stretch of road. So, India is doing its bit and I’ve seen some of the great solar farms here in India.
Defence cooperation turns it truly strategic. We have reached a good level in military exercise but industrial cooperation remains elusive. How can we build military technologies together, especially in the Maritime?
Well, I think you’re right it, the defence relationship has always been stronger than other elements of the relationship. And I’m hoping that ECTA agreement means that business to business relationship will get just as strong.
Earlier this year, we were visited by each of our chiefs of the various Defence Forces. In November, we had our Deputy Prime Minister in India who travelled from Goa to India on a P8I aerial aircraft. And of course, this month, we started with the Indo Pacific endeavour in Vizag. We followed it with the Malabar exercises in Japan, with the four of us operating this week.
In Delhi, we have the Indo Pacific Regional dialogue. Our Defence Ministers also met in Cambodia recently. So, there is increasing cooperation. And you’re absolutely right, we live in the same region of the world. We have what your Prime Minister described as a sacred duty to protect and to ensure that the region remains safe, open and the sovereignty is respected.
We’ve had people, looking at the two defence production corridors in India, to see what opportunities exist. So, I can only see in future a continuing interest.
The point is that Australia is currently doing a new defence assessment. And I suspect all those decisions were made on the basis of what that assessment says.
Minister Tim Watts said the clearest way to end the war in Ukraine is for Russia to withdraw. But who is negotiating for that on the table?
We know that Prime Minister Modi has said face to face to Russian President Putin that the war should end. We know that in the G 20 statement that India used its influence to get a similar statement made. So India is doing far more than rhetoric in seeking to put an end to that conflict. Now, Australia is very firm. But I have to say that most people have been pressed by Prime Minister Modi’s direct efforts face to face to reminder to Vladimir Putin.
In the Pacific, threat is more visible, the Solomon Islands signed a security pact with China in April? How is Australia’s foreign policy shaping towards that?
So firstly, I go back to what Prime Minister Modi and Australian Prime Minister decided in June 2020 – which is that we have this sacred duty and that sacred duty across the Indo Pacific means providing support for all nations to be able to exercise so readily, freely, to live securely, and to not be concerned about collusion. And we do that in a number of ways. And the QUAD is doing incredible work in that sector, from climate change through to infrastructure, in order to ensure that these countries have the support they need to resist coercion that comes in. And as you know, over the past couple of years, we’ve experienced some economic coercion in relation to that country and to our previous exports.
We will still stand up for what we believe in. We will still talk out for our national interests. And as I say where we disagree, we will disagree.