As both India and Australia have strained relations with Beijing, the signing of the India-Australia free trade pact on April 2 is rooted in a desire to reduce their economic dependence on the world's No. 2 economy, China.
India-Australia Economic Cooperation and Trade Agreement (IndAus ECTA) signed on April 2 offers obvious economic benefits. Annual bilateral trade is expected to almost double from USD 27.5 billion in 2021 to about USD 45 billion or USD 50 billion in the next five years. The deal eliminates tariffs on over 85 pc of Australian exports to India, rising to 91 pc in a decade while 96 pc of Indian goods entering Australia will become duty-free.
With the trade pact being signed, both sides have their eyes on China. Even when the Australian High Commissioner to India Barry O'Farrell did not name China directly, he told an event arranged by the Australia India Institute on Monday, "There's a panda in the room," reported Asia Nikkei.
"India has faced border tensions (with China). Australia has faced economic coercion... Those issues are not going to disappear overnight." he added while laying out why the deal between India and Australia makes sense.
In addition to this, many analysts are of the view that there are strategic implications in the partnership. Both the members of the Quadrilateral Security Dialogue along with the U.S. and Japan, look to manage difficult relations with China and promote a "free, open and inclusive Indo-Pacific."
Australian Prime Minister Scott Morrison said the agreement "has been built on our strong security partnership and our joint efforts in the Quad, which has created the opportunity for our economic relationship to advance to a new level."
Prime Minister Narendra Modi called it "a watershed moment" for bilateral relations. "On the basis of this agreement, together we will be able to increase the resilience of supply chains and also contribute to the stability of the Indo-Pacific region," he added.
Srikanth Kondapalli, a professor of international studies at Jawaharlal Nehru University in New Delhi, told Nikkei that "the supply chain resilience initiative among the three Quad members provides a certain advantage, which can be seen as conducive for the Australia-India trade agreement," as per Asia Nikkei.
He said that while economic and trade agreements are generally based on complementarities, supply-demand conditions and mutual benefits, the Quad provided a "cushiony background" for the deal.
( With inputs from ANI )
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