India-Australia trade deal: Australian parliamentary report questions deal over concerns of ‘child labour’ in India

The deal saw the elimination of duties on 96 per cent of value of Indian exports to Australia that included exports from a range of labour-intensive sectors. India’s total exports to Australia in FY24 stood close to $8 billion, 15 per cent higher compared to the previous financial year.

The parliamentary report tabled in April has said that Australia’s trade agreement with India does not recognise international labour rights, suggesting to the government to not enter into trade agreements with countries that violate international labour rights and for deals to include a labour chapter that aligns with commitments made to International Labour Organization (ILO) core convention. Query sent to the Commerce and Industry Ministry remained unanswered till the time of going to press.

Referring to Australia-India Economic Cooperation and Trade Agreement (A-IECTA), the report said, “India has a well-documented presence of child and (forced) labour, making significant contributions to the population of the world in modern slavery”. The report added that some trade agreements have operated in conflict with Australian government policy priorities by enabling lower labour and manufacturing standards, greater preferential migration flows, and an increase in imported goods with reduced environmental standards.

However, trade economists have pointed out that incorporation of international labour standards in trade agreements is in fact a protectionist measure in the guise of humanitarian concerns. In 2022, the Centre for WTO Studies, in a report by RV Anuradha and Nimisha Singh Dutta, had argued that the immediate imposition of international labour standards would lead to reduction in the total economic welfare worldwide in developing nations as well as developed nations.

“Attaching labour standards to the WTO and trade agreements, it has been argued, will not achieve the goal of better wages or labour standards, nor will it have the desired effect of keeping more jobs in the industrialised countries. On the contrary, such a policy could make things worse for many workers in developing countries,” the report said.

While countries which strengthen their core labour standards can increase economic growth and efficiency by raising skill levels in the workforce and by creating an environment which encourages innovation and higher productivity, there is no evidence to suggest that countries with low core labour standards enjoy a better export performance, an Organisation for Economic Co-operation and Development (OECD) study on the trade and labour linkage said.

India is home to about 1.01 crore working children between the age of five and fourteen years, as per 2011 census. As per an Indian parliamentary standing committee report, Bihar, Uttar Pradesh, Rajasthan, Madhya Pradesh and Maharashtra, employ over half of India’s child labour. “While the incidence of child labour declined between 2001 and 2011, it is more visible in rural areas due to migration.

Child workers might have actually increased in urban areas across all sectors and age categories due to the economic woes brought about by the Covid-19 induced crises,” the standing committee on labour, textiles and skill development said.

The Australian parliamentary report comes after diplomatic relations between India and Australia hit a rough patch after the Australian Broadcasting Corporation (ABC) reported that “Indian spies” had been “kicked out of Australia” after allegedly being caught trying to “steal” classified information on Australia’s trade relationships and secrets about sensitive defence projects and airport security. New Delhi has described the reports in the Australian media as “speculative”. The government of Australia has not confirmed the claims published in the media.

Australia’s Joint Standing Committee on Trade and Investment Growth also questioned the absence of labour or human rights provisions in the China-led Regional Comprehensive Economic Partnership (RCEP) trade deal where Australia is a member.

“The RCEP between the ten member states of the ASEAN and Australia, China, Republic of Korea, Japan, and New Zealand contains no labour or human rights provisions. Over half of the 15 countries party to RCEP are ranked among the worst countries in the world for workers’ rights,” the Australian parliamentary report stated. Notably, India is not part of RCEP.

The Australian joint committee report argued that labour rights should be included in Australia’s trade and investment agreements to ensure that domestic producers are not subject to competition from countries with lower labour standards and to avoid contributing to further exploitation of workers in those countries.

“Trade should not be a ‘race to the bottom on workers’ rights’ and contend that the inclusion of enforceable labour rights is important in setting a level playing field to ensure that companies cannot just locate themselves in jurisdictions with lower wages and conditions,” it said.