Why India-Australia FTA in News?
Recently, the free trade agreement(FTA) between India and Australia has been okayed by the Australian parliament.
When Australia-India FTA signed?
The Australia-India Economic Cooperation and Trade Agreement (AI-ECTA) was signed by then Australian Minister for Trade, Tourism and Investment Dan Tehan and India’s Minister of Commerce and Industry, Consumer Affairs and Food, and Public Distribution and Textiles of India Piyush Goyal on 2 April 2022.
What is India-Australia Economic Cooperation and Trade Agreement (AI-ECTA)?
- The India-Australia Economic Cooperation and Trade Agreement (AI-ECTA) is a free trade agreement to facilitate trade between the two countries.
- Under FTA, two countries agree to reduce customs duties, regulatory laws, subsidies and quotas on products under import-export. This will benefit both the countries.
- This agreement makes the cost of production even cheaper compared to other countries. The trade of the two countries is boosted and the economy of the two countries is boosted.
Why Australian parliament approval needed to implement AI-ECTA?
- India-Australia Economic Cooperation and Trade Agreement (AI-ECTA) required approval by the Australian Parliament before it could be implemented.
- In India such agreements are approved by the Union Cabinet.
What shall be the next step on India-Australia FTA?
- Following the approval, the India-Australia Economic Cooperation and Trade Agreement (AI-ECTA) would now become operational on a mutually agreed date.
- Customs authorities in both the countries will also issue a notification a day prior to implementation.
How India-Australia FTA is Unique?
India-Australia FTA is Unique as, excluding India-Australia and India-Japan FTAs, more or less all of India’s FTAs are with other developing countries (Singapore in 2005, South Korea in 2010, ASEAN in 2010, Malaysia in 2011 and UAE in 2022).
How will Australia-India FTA benefit both the countries?
- The Australia-India FTA will provide duty-free access to the Australian market for over 6,000 broad sectors of India. These include textiles, leather, furniture, jewellery and machinery.
- The deals are crucial for Australia to diversify its exports from the troubled Chinese market to India and to forge new bilateral trade relations.
- Under the FTA, Australia will provide zero-duty access to India for about 96.4% (by value) of its exports. This covers many products that currently attract 4-5% customs duty in Australia.
- A number of labour-intensive sectors will gain significantly from the Indian perspective. These include textiles and apparel, some agricultural and fish products, leather, footwear, furniture, sports goods, jewellery, machinery, electrical goods and railway wagons.
What is Rules of origin?
- Rules of origin (ROOs) are used to determine if products are eligible for duty-free or reduced duties under the FTA rules.
- Rules of origin are the criteria needed to determine the national source of a product.
- Their importance is derived from the fact that duties and restrictions in several cases depend upon the source of imports.
- The General Agreement on Tariffs and Trade (GATT) has no specific rules governing the determination of the country of origin of goods in international commerce.
- Each contracting party was free to determine its own origin rules, and could even maintain several different rules of origin depending on the purpose of the particular regulation.
What is Existing Trade between India and Australia?
- India exported goods worth $8.3 billion to Australia in 2021-22. India’s imports from Australia, on the other hand, stood at $16.75 billion during the period.
- The agreement would help in taking bilateral trade from USD 27.5 billion at present to USD 45-50 billion in the next five years.
Conclusion
The signing of the India-Australia Free Trade Agreement(FTA) is a historic day for India and Australia relations and is particularly important for India because it is the first agreement with a large developed economy in the last decade. It covers the entire gamut of trade & commercial relations, removing trade barriers and opening a plethora of opportunities in both goods and services.
Also Read: India’s FTA’s
FAQs
Q. What is AI-ECTA?
Ans. The Australia-India Economic Cooperation and Trade Agreement (AI-ECTA) is a free trade agreement which was signed on 2 April 2022.
Q. What is Rules of origin (ROOs)?
Ans. Rules of origin (ROOs) are used to determine if products are eligible for duty-free or reduced duties under the FTA rules.
FAQs
What is AI-ECTA?
The Australia-India Economic Cooperation and Trade Agreement (AI-ECTA) is a free trade agreement which was signed on 2 April 2022.
What is Rules of origin (ROOs)?
Rules of origin (ROOs) are used to determine if products are eligible for duty-free or reduced duties under the FTA rules.
