The Hindu Business Line : Australia keen to engage India in more trade: Minister

Mumbai, Jan. 28 The two countries have not been engaged closely in the past; yet, the two-way trade between India and Australia is currently valued at $ 14billion.

Admittedly, India is Australia’s fastest growing export market in goods and services. It should, therefore, come as no surprise that Australia (population about 20 million) is keen to engage India and explore greater trade and investment opportunities here. It is by now common knowledge that as one of world’s fastest growing significant economies, India offers tremendous trade and investment opportunities in sectors as varied as agribusiness, energy, metals, infrastructure, health and education services as also leisure and entertainment.

With strong production, technology and skill base, Australia is in a position to meet a significant part of India’s needs in these sectors. In a freewheeling chat with Business Line in Mumbai recently (en route to New Delhi to meet the Commerce Minister, Mr. Kamal Nath, for what was described as ‘development of a relationship’ to find some common paths, common agendas and shared commitments), the Australian Trade Minister, Mr. Simon Crean, dwelt at length on a number of bilateral and global issues that are currently seen engaging the attention of his government.

Clearly, as an enthusiast of the Doha Round of multilateral negotiations, the Australian Trade Minister is keen that WTO trade talks conclude successfully soon enough. He seems to be convinced that only on successful conclusion of trade talks at the global level would regional level negotiations help enhance the trade arrangements, developed further through free trade agreements. Frustration at the multilateral level has, over the past 6-7 years, resulted in proliferation, a sort of noodle-bowl, of free trade agreements with preferential deals and exclusions, which make the task of the multilateral run harder, he remarked.

Free Trade Agreement

At the initiative of the Indian Government, Australia is investigating an FTA between the two countries. At the moment, the proposed FTA is at the feasibility stage, and the terms of reference and time lines will be drawn up soon. According to Mr. Crean, any FTA’s chances of success would heighten if it were multilaterally consistent. In other words, Australia’s priority is to get the Doha Round concluded. “By far the biggest opportunities in trade come through a successful multilateral. But in many senses, the bilateral relationship also needs to be pursued, including possibly through an FTA, so long as the FTA is multilaterally consistent", said the minister.

Australian capability

Asserting that Australia possessed the requisite expertise to cater to varied needs of the Indian market, Mr. Crean said, “We have the ability to help satisfy (India’s) longer-term energy needs; assist in infrastructure solutions; and assist in terms of skill formation through the education proposals. But, importantly (our desire is) to open up more liberalised trading opportunities between the two countries”.

“Both economies have common interest not just in terms of their strength in agriculture base, but also in their service base. We would like to see some greater liberalisation in terms of access for our service economy, particularly, financial services”.

Opening up trade

The Minister strongly believes India should get into the trade cycle by embracing more openness. “The truth is, growth of world trade is significantly greater than growth of world production; and so the opportunities for nations in terms of securing their future is to get into trade cycle too, not just in production cycle. It is in the interest of all large trading nations”.

Suggesting that opening up trade opportunities was only part of the trade equation, Mr. Crean pointed out that trade negotiations were equally important, adding that when a country faced capacity constraints, its ability to fulfil pent-up would be limited, and so, opening up the market to overseas goods and services would be imperative.

The minister asserted that energy was the number one issue of interest and concern to India; and Australia was in a position, over the longer term because of long lead times, to meet India’s requirements in a sustainable manner. In addition, metals and mining as also food were two perceived areas of importance for both the countries. Not only has Australia a lot to offer to India, but also present plenty of opportunities (for India) - another strong reason to support trade openness, he remarked.

According to Mr. Crean, in the context of India’s trying to strengthen its manufacturing sector, climate change would be a big challenge; and here too, there are important opportunities for bilateral exchange, technological solutions and the like. “I suppose, climate change is not just the environmental imperative but the economic opportunity as well”. Australia is said to be investing heavily in ’clean coal technologies’, something that India is looking for.

The two countries can approach the climate change debate jointly, the Minister believed.

Two-way FDI flows

Indian investments are already present in Australia in the services sector and information communication technologies (ICT) sector. Australian investments in India would depend on the investment policy climate in India. Mining would provide opportunities for direct investment in India (subject to government policy and official response to the Hoda Committee recommendations).