Trade ministers of India and Australia say a shared security partnership with the United States and Japan has helped them strike a trade deal that is expected to reduce Australia’s dependence on exports to China.
Indian Commerce Minister Piyush Goyal is leading a business mission to the Australian cities of Melbourne, Sydney and Perth to explore new opportunities arising out of the interim deal signed virtually on Saturday.
India sees the agreement as a diplomatic coup that deepens its engagement with Australia at a time when it is under pressure to take a firm stand against Russia’s invasion of Ukraine. The two countries belong to a security bloc known as the Quad, which also includes the United States and Japan.
The deal is a political victory for India as it deepens its engagement with Australia, a participant in the security bloc known as the Quad, which also includes the United States and Japan, at a time when the new Delhi is under pressure to take a strong stand against Russia. invasion of Ukraine.
For Australia, the deal opens up a huge market for exporters before Prime Minister Scott Morrison’s conservative coalition seeks re-election next month. Friction between the Morrison government and Beijing has brought about a series of official and unofficial Chinese trade restrictions on Australian exports, including coal, beef, seafood, wine and barley.
Trade Minister Dan Tehan told a joint press conference with Goyal in Melbourne that the Australian-Indian bilateral relationship through the Quad is growing strongly.
Tehan said keeping the Indo-Pacific free and open as a place where liberal democracy can flourish is so important.
Goyal said Morrison and Indian Prime Minister Narendra Modi have been at the forefront of bringing like-minded countries together.
Now we have a quad between Japan, Australia, America and India which has many dimensions, both strategic, political. Goyal said that they are working to ensure peace and stability, greater economic partnership among the countries of the region.
I am sure that that dimension on geopolitics, that dimension on the larger world will bring our two countries closer, he said.
Australia generally insists that nothing is agreed until everything is agreed in its bilateral free trade talks, but has accepted an interim agreement with India.
India, the world’s largest democracy, prefers so-called early harvest agreements in its trade negotiations that reduce tariffs on some goods before reaching a comprehensive bilateral agreement.
The deal is India’s first trade agreement with a developed country in more than a decade. Negotiations started in 2011.
Last year, Australia’s special trade envoy to India and former prime minister Tony Abbott said that a bilateral free trade deal would signal that the democratic world had moved away from China.
However, Sonia Arakkal, Policy Fellow at Perth USAA Centre, said India cannot completely replace China as Australia’s main trading partner on its own.
China’s iron ore-hungry economy is four times larger than India’s.
It is an important first step, this interim free trade agreement, and in particular for the Morrison government. Arakkal said the way trade tensions (with China) have escalated in the last few years has made trade and industry wary.
However, to suggest that this is a solution to rising trade tensions with China is inconsistent as the economies are not equal in scale or complementarity, she said.
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