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India-Australia
FTA
to benefit
Labour-intensive
exports
The proposed free
trade agreement
(FTA) between
India and Australia
could result in
better market
access for labour-intensive
Indian exports
including textiles,
clothing and footwear
where existing
tariffs are high
in Australia.
While the sectors
are perceived
as "sensitive"
in Australia,
the country believes
in elimination
of tariffs on
all sectors in
its FTAs, Australian
trade officials
say.
"We believe
in eliminating
all tariffs on
all goods in our
FTAs," said
Todd Mercer, Director,
WTO, Regional
and FTAs section
of the Department
of Foreign Affairs
and Trade (DFAT).
For sensitive
products, the
time frame could
be longer. The
catch, however,
is that Australia
also expects the
same of its FTA
partners. In its
recent FTA with
the US, the only
product which
it allowed the
US to keep out
of tariff elimination
was sugar.
Australia wants
the proposed FTA
with India to
give it more market
access in agriculture,
mining and financial
services sectors.
The two sides
are hopeful of
concluding the
FTA by the end
of the year. "We
were very excited
when India proposed
a feasibility
study on an FTA
with India in
August this year,"
said Michael Wood,
Director, Australia-India
FTA study, DFAT.
He added that
models showed
that both the
countries could
have GDP gains
and trade growth
through the FTA,
but some adjustments
had to be made
by the two sides.
Wood pointed out
that while average
tariffs in Australia
were relatively
low at about 3.9
percent, tariff
elimination would
definitely help
India. "A
4.0 percent tariff
advantage over
other competitors
will give Indian
exporters an edge,"
he said. For products
like textiles,
clothing and footwear,
where the tariffs
are higher at
about 15 percent,
the gains would
be much bigger.
Top-end farm products,
especially in
the dairy sector,
is an area where
Australia is keen
to get market
access. While
India allows imports
of dairy products
from European
countries like
Switzerland and
Italy, it disallows
Australian farm
products. "India
has to understand
that we are not
seeking to replace
its staple products,"
said Judy Barfield
from the Department
of Agriculture,
Fisheries and
Forestry. Australia
is seeking removal
of quarantine
restrictions on
dairy and other
farm products,
which India has
in place, probably
in answer to strict
sanitary and phytosanitary
norms observed
by Australia.
According to Wood,
the proposed FTA
could help easing
the situation
by helping exporters
from both sides
in meeting the
standards.
Australia also
wants India to
ease regulations
in financial services
including banking
and insurance.
"Our insurance
companies are
in talks for tie-ups
with Indian companies
including IAG
which is tying
up with SBI,"
Wood said adding
that more liberal
investment norms
will help these
countries. It
is also looking
forward to more
opportunities
in the banking
sector as Australia
has already proved
its "credentials"
in the sector,
he said.
A major exporter
of minerals including
coal, diamond
and bauxite, Australia
is looking forward
to a more liberalised
mining regime.
"It is a
shame that India
does not allow
green-field mining.
Australia can
carry out new
mining in the
country which
will be more efficient
and productive
than what has
happened so far,"
Wood said. Australia's
exports to India
has risen sharply
over the last
few years to $6.46
billion in 2007
while India's
exports to the
country stood
at $1.01 billion
in the same year.
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