Perspective- India- Australia Free Trade Agreement | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

Introduction:

Free Trade Agreements (FTAs):

• While Economic theory suggests that FTAs are not always foolproof strategies, given their potential to both create and divert trade, it is crucial to design them in a way that enhances synergies among partners and overcomes regulatory barriers. 
• Reports indicate that the FTA will be segmented into three distinct deals encompassing trade, investment, and geographical indications (GIs). 
• The investment deal is perceived as a standalone agreement, while the one involving GIs may be integrated with the trade agreement. 
• Coordinating all three negotiations simultaneously could be in India's interest. 
• Following the unilateral termination of bilateral investment treaties (BIT), including those with EU member states, the EU expresses a keen interest in concluding an investment deal with Investor-State Dispute Settlement (ISDS) provisions.

Economic and trade relationship:

• The economic ties between India and Australia have grown significantly, with India's rising economic profile being acknowledged by Australia at both federal and state levels. 
• In 2016, India's exports to Australia were around US$ 4.6 billion (A$6.1 bn), while imports from Australia during the same period amounted to US$ 11 billion (A$14.6 bn). 
• Notable exports from India to Australia include Passenger Motor Vehicles & machinery, Pearls, Gems and Jewellery, Medicaments, and Refined Petroleum, while major imports include Coal, Non-monetary Gold, Copper, Wool, Fertilizers, and Education-related services. 
• The Joint Ministerial Commission (JMC), established in 1989, facilitates government and business-level interactions on various trade and investment-related matters. Both nations are presently negotiating a Comprehensive Economic Cooperation Agreement (CECA) to offer enhanced market access to goods and services exporters.

Strategic:

• The Quadrilateral Security Dialogue (QSD), an informal strategic initiative initiated by Japan's Prime Minister Shinzo Abe in 2007, aimed at responding to China's growing power and influence. 
• Australia initially refrained from active participation but rejoined the dialogue in 2017, signaling renewed interest. 
• The defense relations between India and Australia, both bordering the Indian Ocean, center on mutual interests in maintaining freedom of navigation and trade. 
• Both nations commit to enhancing maritime cooperation, conducting joint naval exercises (AUSINDEX) since 2015 and joint military exercises (AUSTRA HIND) from 2016 to 2018.

Defence relation:

• India–Australia both borders the Indian Ocean and has a shared interest in the maintenance of freedom of navigation and trade.
• Australia recognizes India’s critical role in supporting security, stability and prosperity of the Indian Ocean region. Australia and India are committed to working together to enhance maritime cooperation and has a formal bilateral naval exercise (AUSINDEX) since 2015.
• From 2016-18, the armies of the countries conducted a joint military exercise dubbed “AUSTRA HIND”.

Consular Cooperation

• India and Australia signed The Mutual Legal Assistance Treaty (MLAT) and the Extradition Treaty in June 2008, coming into force in January 2011.

Possible intensive bilateral political and institutional engagements:

• Possible intensive bilateral political and institutional engagements:

  The spectrum of emerging issues, from reforming international organizations to technological advancements (5G) and addressing climate change and disasters, provides avenues for robust bilateral political and institutional engagement. 

• A strategic focus on the Eastern Indian Ocean can facilitate joint activities, including maritime domain awareness and marine scientific research.

Challenges:

• The region grapples with traditional security challenges related to China's rise and a lack of faith in a rule-based order. 
• Non-traditional challenges include terrorism, natural disasters, and pandemics. 
• Unfavorable trade balance with Australia remains a challenge for India despite talks for a comprehensive economic cooperation agreement since 2011.

Way Forward:

• Deepening India-Australia ties hinge on shared values, interests, geography, and objectives. 
• A sustainable momentum across economic, geostrategic, and people-to-people aspects is pivotal to navigate the geopolitical imbalance in the Indo-Pacific. 
• The future should be built around the three pillars of economic relationship, geostrategic congruence, and people-to-people ties.