Australia signs ‘groundbreaking’ trade deal with India to reduce dependence on China
- Australia wants to reduce its dependence on its largest trading partner China, after diplomatic spats led to Beijing sanctioning certain Australian products
- PM Scott Morrison is expected to call a general election within days, and has been eager to secure the trade deal before campaigning begins
Australia formally signed a trade deal with India on Saturday as the two nations signalled an intention to forge closer trade ties.
The Australia-India Economic Cooperation and Trade Agreement was signed in a virtual ceremony by Trade Minister Dan Tehan and India’s Minister of Commerce & Industry, Piyush Goyal.
Australia’s Prime Minister Scott Morrison and India’s Prime Minister Narendra Modi witnessed the virtual ceremony.
Morrison is expected to call a general election within days, and has been eager to secure the trade deal before campaigning begins, having been in negotiations with India for a decade.
Speaking to reporters in Tasmania, Morrison said the agreement with the world’s second most populous nation represented “one of the biggest economic doors there is to open in the world today”.
“These are never all or nothing deals as far as we’re concerned, we see all of these as the next step and the next step and the next step,” he said, expressing both countries intention to build closer trade links.
Morrison’s government is seeking to diversify export markets and reduce Australia’s dependence on its biggest trading partner China, after diplomatic spats led to Beijing sanctioning certain Australian products.
‘Fear of China’ pushing Australia and India towards trade pact
The deal with India removes tariffs on more than 85 per cent of Australian goods exports to India, worth A$12.6 billion (US$9.4 billion), rising to almost 91 per cent over 10 years.
Tariffs will be scrapped on sheep meat, wool, copper, coal, alumina, fresh Australian rock lobster, and some critical minerals and non-ferrous metals to India.
It will see 96 per cent of Indian goods imports enter Australia duty-free.
Both countries would continue to work towards a full free trade agreement, the federal government said on Friday.
The free trade deal is expected to help India forge deeper ties with the raw-material rich nation as it seeks to become a manufacturing hub to revive the pandemic-hit economy. For Australia, the agreement opens doors to a market of over 1.4 billion people, as Canberra grapples with China’s trade curbs on a range of commodities exports.
After signing the deal, Minister of Commerce & Industry Goyal said India wanted to progress a full free trade agreement with Australia in an “accelerated manner”.
Australia to increase defence spending, security with an eye on China, Ukraine war
Closer engagement between the two Quad alliance partners comes even as Australia, along with Japan and the US, push India to take a stronger stand on Russia’s invasion of Ukraine. The South Asian nation has stayed away from outrightly condemning Russia.
Trade Minster Tehan said he was confident negotiations would advance even if the Morrison government was replaced at the upcoming national election.
Scott Morrison lags in the polls leading up to the general election due in May.
“I have very strong hope, no matter who fills our chairs going forward, we’ll be able to … build on this groundbreaking agreement,” he said.
Additional reporting by Bloomberg
