History is made in unusual ways and at interesting times. Consider this: When Prime Minister Narendra Modi arrived in Melbourne on November 2014, he was the first Indian PM to visit the city for a bilateral visit since Indira Gandhi. Unlike Indira Gandhi’s visit, which is remembered today for its insignificance, Modi’s Australian yatra was unarguably the most important ever made by an Indian PM for its impact on bilateral relations.
During the trip, the overarching message was remarkable in its clarity: The millennial long drift in bilateral relations, which began when Australia and India split from the same supercontinent, must now end. For the last seven years, almost on every front, the relationship made remarkable strides, but the challenge of economic integration remained elusive.
As reported in sections of the Australian press, on April 2, this Saturday, at least the strategic and economic drift will finally be brought to a firm closure because of the personal political heft of the Indian Prime Minister and his Australian counterpart, Scott Morrison. Both prime ministers will preside virtually over the signing of a bilateral Free Trade Agreement, negotiated in torturous detail over the last decade.
Fortunately, the agreement will neither be just an “early harvest” of low-hanging fruit nor an interim skeletal FTA as some cynics had predicted, but a deal whose nomenclature and substance seems to bear the firm imprimatur of the prime minister.
As reported, the INDAUS ECTA (India-Australia Economic Cooperation and Trade Agreement), reflects PM Modi’s vision of the essential unity of the two countries and of their future being as strong, steadfast and resilient as the mighty Indus. While the second phase of the agreement will be in place by the end of the year, the ECTA deal is apparently fully in compliance with WTO rules and Article 24 of GATT which, inter alia, allows countries to grant special treatment to one another by establishing a free-trade association, provided that “(1) duties and other trade restrictions would be eliminated on substantially all the trade among the participants, (2) the elimination of internal barriers occurred within a reasonable length of time….”
The history of India-Australia free trade negotiations has been one of lost opportunities, missed deadlines and niggardly bureaucrats fighting over trivial details. Negotiations for a bilateral Comprehensive Economic Cooperation Agreement began in May 2011. Even then modelling and forecasting by independent agencies in India and Australia demonstrated persuasively that there were absolute gains for both countries, while relative gains expectedly may be asymmetric over sectors. But the negotiations continued in fits and starts, without significant progress or indeed real political direction.
In June 2020, as part of the Joint Statement after establishing a Comprehensive Strategic Partnership, Prime Ministers Morrison and Modi decided to re-engage on a CECA “while suitably considering earlier bilateral discussions, where a mutually agreed way forward can be found.” Consequently, at the 17th India-Australia Joint Ministerial Commission meeting in September 2021, CECA negotiations were re-launched and there was “commitment to conclude a CECA, including to reach an interim agreement by December 2021, and to finalise a full CECA by the end of 2022”.
Even that deadline was not met. If news reports are good evidence, it was only once the two prime ministers put their political weight behind the deal, and read the riot act to the negotiators, that the deal that will be signed this weekend, was finally concluded.
On the face of it, this agreement is a win-win for both sides, and even protectionists and contrarians will be hard put to find fault with it. Details of the negotiations, as reported, suggest that the ECTA should give a boost to India’s labour-intensive manufacturing sector, with a considerable leg-up to the pharma, textile, gemstone and jewellery sectors. Indian students in Australia will find an easier pathway to employment, and there will be greater ease of visa for a range of skilled human capital from India in demand in Australia, including chefs and yoga instructors.
Most of the farming and dairy sector seems to have been kept away from the present agreement, given the sensitivities of domestic lobbies, but discerning Indian connoisseurs will be able to sample a Henschke Hill of Grace or a Penfolds Grange at a more affordable price, rather than rely only on the mass produced Jacob’s Creek wines. No less important, Australian coal will probably get relatively unfettered access to India.
The ECTA represents a watershed moment in bilateral relations, but also a significant turning point for India’s foreign policy — both in terms of geo-strategy as well as geo-economics. India and Australia today represent a partnership with a near complete convergence of interests and values. Two multicultural, federal democracies that share concerns about stability in the Indo Pacific, are apprehensive about Chinese hegemonic designs, and are increasingly coordinating their policies, are natural partners of the future.
What is clear is that the relationship has the backing of the leadership at the highest levels. It is rare that the two prime ministers meet twice over a fortnight. On March 21, Modi and Morrison’s virtual summit led to a communication which fleshed out areas of cooperation ranging from science and technology to climate change and defence to people-to-people ties, and included possibilities of joint surveillance and real-time intelligence sharing. On the eve of the summit, the Morrison government invested over USD 280 million to give a fillip to cooperation with India; to further grow its economic relationship and support jobs and businesses in both countries; as well as to empower the Indian diaspora.
At a time when Cassandras from both sides are busy predicting the demise of the Quad because the central theatre of conflict has moved to Europe, and because of India’s perceived “neutrality” over the war in Ukraine, the ECTA signals that India’s relations with Australia — two central pivots of the Quad — are as strong and resilient as ever. While Australia is headed for elections in May, the bipartisan consensus on India bodes equally well for the long-term future of the relationship.
This column first appeared in the print edition on March 31, 2022 under the title ‘Natural partners of the future’. The writer is professor at JNU & honorary professor at the University of Melbourne and founding director of the Australia India Institute
