CANBERRA – India and Australia’s trade ministers say a shared security partnership with the United States and Japan has helped them strike a trade deal that Australia hopes will reduce its dependence on exports to China.
Indian Commerce Minister Piyush Goyal is heading a business mission to the Australian cities of Melbourne, Sydney and Perth to explore new opportunities created by the interim deal signed virtually on Saturday.
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India views the agreement as a diplomatic coup that deepens its engagement with Australia at a time when it is under pressure to take a stronger stand against Russia’s invasion of Ukraine. Both countries belong to the security bloc known as the Quad, which also includes the United States and Japan.
For Australia, the deal opens a huge market to exporters before Prime Minister Scott Morrison’s conservative coalition seeks re-election next month. Friction between the Morrison government and Beijing has brought a series of official and unofficial Chinese trade sanctions on Australian exports including coal, beef, seafood, wine and barley.
Trade Minister Dan Tehan said at a joint press conference with Goyal in Melbourne on Wednesday that the Australian-Indian bilateral relationship was growing strongly through the Quad.
“Keeping the Indo-Pacific free and open as a place where liberal democracies can flourish is just so, so important,” Tehan said.
Goyal said Morrison and Indian Prime Minister Narendra Modi had been at the forefront of bringing like-minded countries together.
“We now have a Quad between Japan, Australia, the U.S. and India which has many dimensions, both strategic, political. They’re working to ensure peace and stability, greater economic partnership between countries in this region,” Goyal said.
“I’m quite sure that that dimension on geopolitics, that dimension on the larger world good is going to bring our two countries closer together,” he added.
Australia usually insists that nothing is agreed until everything is agreed in its bilateral free trade negotiations, but has accepted an interim deal with India.
India, the world's largest democracy, prefers so-called early harvest agreements in its trade negotiations that reduce tariffs on certain goods before a comprehensive bilateral agreement can be reached.
The deal is India’s first trade agreement with a developed country in more than a decade. Negotiations began in 2011.
Last year, Australian special trade envoy to India and former Prime Minister Tony Abbott said a bilateral free trade deal would signal the “democratic world’s tilt away from China.”
However, Sonia Arakkal, a policy fellow at the Perth USAsia Center, said that India on its own could not fully replace China as Australia's main trade partner.
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 especially for the Morrison government. Business and industry have been wary of the way trade tensions have escalated (with China) over the last few years,” Arakkal said.
“However to suggest that this is the solution to escalating trade tensions with China is disingenuous because the economies are just not the same in scale or in complementarity,” she said.