Australia shows flexibility in services in proposed free trade agreement with India

Australia has offered to be flexible in the area of services and customs procedures to get an early agreement on the proposed bilateral free trade pact with India.

“Canberra has agreed to accommodate New Delhi’s concerns on the large number of horizontal limitations or curbs imposed across sectors in the services offers made by it and has suggested moving to a negative list that would specify sectors it wants to protect. The rest would not face restrictions,” a government official told BusinessLine .

The services sector is of utmost importance to India as it wants to gain wider access for its professionals in Australia as part of the Comprehensive Economic Cooperation Agreement (CECA) being negotiated.

“The average duties on goods are already low in Australia. Although there are certain sectors such as textiles and automobile parts where we would gain with a duty cut, the gains would be much higher in services where India also has a competitive edge,” the official said.

The proposed CECA is expected to result in lower import duties on industrial and farm goods, greater access to the services market and easier investment norms in both countries.

The two countries have also agreed to make the Trade Facilitation Agreement (TFA) of the World Trade Organisation (of which both countries are members) as the baseline for customs procedures, the official said.

A team of senior officials, headed by Australia’s special envoy for trade Andrew Robb, will be in New Delhi this week to push the CECA to an early finish.

“In the series of meetings that we had in the last couple of months with our Australian counterparts, we have made progress. But, it remains to be seen whether it is enough to clinch a deal,” the official said.

Australia, on its part, wants India not only to take on binding commitments in areas such as insurance and retail but also give an assurance that future openings in sectors such as legal and education would get incorporated in the pact.

The country, however, has softened its earlier demand of large-scale market openings in dairy products because of India’s sensitivity towards the sector, the official added.

India-Australia bilateral trade was about $14 billion in 2014-15, with Australian exports at $11 billion and Indian exports just at $3.2 billion. Australia’s engagement with China is much larger with annual bilateral trade at $160 billion.

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