India, Australia plan to sign FTA by December
Economic Times | 22 Apr, 2015
India, Australia plan to sign FTA by December
By Dilasha Seth, ET Bureau
NEW DELHI: India and Australia aim to conclude the comprehensive free trade agreement by December, following a renewed push to the pact months after Prime Minister Narendra Modi’s visit to Australia.
Australian trade minister Andrew Robb and his Indian counterpart Nirmala Sitharaman are expected to sort out the remaining issues on Thursday in a meeting that comes after the seventh round of bilateral talks on the issue concluded in Canberra last week.
"It was a good meeting between the two sides and we are targeting to conclude it by end of the year. Australia is very keen to sign a comprehensive pact with us. Though tariffs is not a big issue with Australia, with their average tariff close to 2 per cent, it is a slew of non-tariff barriers in IT, fruit and vegetables that we are asking them to address," said a government official. Australia is pushing for tariff reduction in dairy, fresh fruit, pharma, meats and wines.
India, on the other hand, wants zero tariff on auto parts and textiles, besides fresh fruit including mangoes. Pressure has intensified on India to speed up FTA with Australia after China signed an ambitious FTA with Australia last year after nearly 10 years of negotiations, eliminating tariffs on 93 per cent product lines.
The first round of talks for the comprehensive economic cooperation agreement was held in July 2011. The latest discussion covered key issues including market access for goods, services and investment, rules of origin, customs procedures and trade facilitation.
India, Australia plan to sign FTA by DecemberThe two-way trade stood at $12.1 billion in 2013-14, with trade balance skewed heavily in Australia’s favour. "I am determined to ensure that both services and investment are given real prominence in the CECA negotiations, along with improved levels of market access for goods trade," said Andrew Robb ahead of his New Delhi visit that began on Tuesday.
He added, "My aim is to keep the momentum building as there is definitely an enthusiasm on both sides to conclude a quality agreement this year. It won’t be easy, but it certainly remains an achievable goal." In case of wines, India might look at lowering tariffs for expensive varieties over a certain threshold.
On the other hand, tariff reduction on dairy is being stiffly opposed by India. "They want dutyfree access for dairy over a certain period, which is simply not possible for us to open up given that we ourselves have a huge dairy market providing large-scale employment. It is on our negative list," said the official.
India is seeking duty elimination on textiles and auto parts once the agreement comes into force. Australia imposes 5 per cent tariff on textiles, which it wants to keep in the negative list.
Australia is also pushing for relaxation in the financial services sector, to invest in banking and insurance. India is seeking freer movement of its professionals to Australia for greater collaboration in the services sector.
"Services represent around 70 per cent of Australia’s economy, yet just 15 per cent of our exports. This is an export we are determined to grow and there are strong prospects with India across a wide range of services, given it is one of the world’s most rapidly growing services markets on account of a rising middle class," said Robb.
The next round of talks is expected in June or July.
