Historic trade deal: How Australia-India ‘ECTA’ is a global model

Why Australia’s trade deal with India has shown the path for dealing with the world’s fastest growing major economy

Hindol Sengupta August 12, 2022 06:38:37 IST
Historic trade deal: How Australia-India ‘ECTA’ is a global model

(File) Prime Minister Narendra Modi and his Australian counterpart Scott Morrison (R) during virtual signing ceremony. PTI

Recent reports suggest that the Business Council of Canada has urged the government of the north American nation to try and seal a trade deal with India on the lines of the Australia-India Economic Cooperation and Trade Agreement (popularly acronym-ed ECTA because it sounds like the Hindi word for ‘unity’).

The Canada business body has argued in a report that ECTA represents a great example of building business ties with India, currently the world’s fastest growing major economy of nearly 1.4 billion people. It has also suggested that such a trade deal would be the ideal inroad for Canada into the Indo-Pacific, the world’s most potent global political site of the future.

The ECTA deal between Australia and India is historic in every sense — India’s first such successful negotiation in more than a decade after one with Japan in 2011 — and it allows the Quad partners to strengthen their relationship and boost each other’s economies even as they collaborate with the US and Japan (to form the Quad) in facing down Chinese ambitions in the Indo-Pacific.

Such a deal is particularly important as India has refused to be part of two major China-led initiatives in multi-nation trade deal making, the Regional Comprehensive Economic Partnership (RCEP), and the Belt and Road Initiative. Border tensions between India and China continue as the countries remain deadlocked in the high Himalayas with difficult protracted negotiations.


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The question, in such a scenario, is how to engage effectively with India, one of the world’s biggest markets, manufacturers, talent pool, and technological destination. The country is hitting record highs in exports of goods and services, inflow of foreign direct investment, and even digital financial transactions (highest in the world). Doing effective business with India, therefore, is an important task in modern geopolitics.

ECTA also shows how this can be achieved with ambition — the deal not only seeks to double trade between Australia and India in five years, but it also allows for new strategic dimensions (not just business) and imagination on how ties with a country as large as India can be forged without any overlap of political issues. Australia, for instance, had a stance different from India on the crisis in Ukraine and on the Russian question, but since Russia is a longstanding partner of India, a position of respect allowed both countries to develop individualistic responses to the crises without it affecting the surge in bilateral ties between Australia and India.

It is also clear that such agreements lead to wider cooperation, for instance, India and Australia have now signed a plan to promote the co-production of films, and Australia has announced its biggest ever scholarship programme for Indian students.

The core point of such a deal, which the Business Council of Canada seems to have picked up, is that it is one of the most effective paths to build ties with India, a partner vital both in strategic and economic ways. Such a deal creates space and opportunity to do business beyond the shifting sands of alliances and geopolitical loyalty within them.

As ties between the US and China deteriorate, not least after the visit of the American House of Representatives Speaker Nancy Pelosi to Taiwan, and the centrality of the Indo-Pacific re-emphasised in the future of the global order, the impetus for countries to develop individual ties is ever-increasing. The great ‘decoupling’ between the US and China is shifting global supply chains at unprecedented speed, and India is a natural home for the money and the supply chains to relocate.

Countries want to develop unique and advantageous Indo-Pacific strategies and one of the potent ways of doing this is to build critical ties with India, the fifth-largest economy in the world, one of the largest armies in the world, and a global hub of technology talent and resources.

The India-Australia ECTA deal has given a kind of blueprint for a successful engagement with India in the current global scenario and its importance must be judged in those terms. Expect more such negotiations to come on the table.

The writer is a multiple award-winning historian and author. The views expressed are personal.

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