India and Australia have missed the Christmas deadline for an interim free trade agreement but have decided to intensify work to deliver the limited trade pact early in the New Year, to be followed by a full-fledged Comprehensive Economic Cooperation Agreement (CECA). New Delhi, however, is not ready to give any major concession in the area of agriculture and dairy in the early harvest package as this would be one of its major negotiating chips for the full CECA, sources tracking the matter told BusinessLine.

“In the area of goods, Australia has the highest ambition in agriculture as it wants more market access for items including dairy, processed food, meat, grains, oilseeds and pulses. It is by giving concessions in some of these areas that India can gain in areas of its interest such as easier visa norms for movement of workers. That is why it is not keen on including many farm products in the early harvest pact,” the source said. “The ministers appreciated the progress made in various rounds of talks between the chief negotiators of both sides and discussed the way forward for an early conclusion of interim agreement. In this regard, both the ministers appreciated that bilateral trade talks have been very progressive and both the ministers have decided to deepen the engagement and directed the officials to speed up the negotiations to pave the way for a comprehensive agreement,” as per a statement issued after the meeting. “Working out an interim trade agreement turned out to be more difficult than imagined as Australia wants to cover as many areas as possible in it. Ambitions have to be lowered if an early harvest package is to be reached quickly,” the source said.

The India-Australia CECA will cover a large number of areas such as goods market access (tariffs and quotas), rule of origin, e-commerce, non-tariff barriers to trade in goods, cross-border trade in services, financial services, investment, including investor-state dispute settlement, government procurement, intellectual property, movement of persons and competition policy.

Binding commitments

“Australia wants to secure binding commitments in most of the areas to be covered under the CECA. This would mean that even if India decides to change the country’s overall policy in a particular area, it would be difficult to do so in relation to Australia. India is not comfortable with giving binding commitments in some areas,” the source said.

Tehan in October said Australia was hopeful of gaining market access in wines, something the country has been pushing for. The Australian processed food industry, meat producers and grains, oilseeds and pulses industry also have high expectations from the India-Australia CECA. “The Commerce Ministry has been in talks with the Agriculture Ministry on the areas where duty concessions and other market access can be offered without causing distress to farmers. This is a sensitive area for India and Australia also understands that,” the source said.

India was Australia's seventh-largest trading partner and sixth-largest export market in 2020, driven by coal and international education. Bilateral trade in 2020-21 was at $12.29 billion with India running a deficit of $ 4.2 billion.

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