If it feels like the Australia-India Comprehensive Economic Cooperation Agreement (AI CECA) has been a long time coming, it’s only because it has…
Negotiations commenced in May of 2011 and suspended in 2015 while both countries pursued multilateral agreements before recommencing in June of 2020. On the 2nd of April 2022, however, an interim Australia-India Economic Cooperation and Trade Agreement (AI ECTA) was signed, effectively fast-tracking some of the key economic benefits whilst the larger AI CECA continues to be negotiated.
The interim agreement focuses on supporting trade through promoting services, including mutual recognition for education and qualifications, removal of red tape in regulatory systems, and reduction and/or elimination of tariffs for Australian originating raw materials and produced goods. The removal of tariffs on Australian goods imported into India is a particular win for Australian agriculture, miners, and producers. Upon implementation, duty will be eliminated on Australian-origin imports into India for:- Sheep meat (currently 30% tariff)
- Wool
- Certain minerals, non-ferrous metals, and metallic ores
- Coal
- Alumina
- Titanium Dioxide
Additionally, phased tariff reductions (over 3, 5, 7, or 10 years) include:
- Infant formula (currently 50% tariff)
- Pharmaceutical products
- Medical devices
- Wood and paper products
- Wine
- Seafood
- Certain legumes, nuts, fruit, and vegetables
- Petroleum and LNG
- Cotton (access to duty-free quota)
While the interim measures are a welcome sign of life for business, it is important to note that the agreement still needs to pass through a legislative process which is unlikely to see it implemented in 2022. This process will also establish the rules of origin and documentary requirements to utilize the agreement, although the expectation is that it will not be as liberal as some recent FTAs, which have included the provision of a Declaration of Origin. It is also currently unclear if there will be any impact from the planned federal election in Australia in May this year.
Nevertheless, businesses in trade, or businesses looking to trade, for goods and services with India should take the opportunity to prepare for an imminent agreement to capitalize on the opportunity immediately upon commencement.
For any assistance with AI ECTA, or any trade agreement, don’t hesitate to reach out to the Tradewin Australia team.
