Canberra pushes hard for fresh deal with India
The Australian | August 20, 2007
Canberra pushes hard for fresh deal with India
By Greg Sheridan
AUSTRALIA will attempt to negotiate a free trade agreement with India as part of a historic shift in relations with the emerging economic powerhouse of South Asia.
The new strategic approach towards India has been endorsed by Cabinet and is considered as important as the embrace of China in the 1980s and ’90s and Australia’s earlier engagement with Japan.
The submission by Foreign Minister Alexander Downer went to the full Cabinet, unlike the decision to allow the sale of uranium to India, which was considered by the national security committee.
Analysts believe an FTA would be a substantial challenge, but no more so than pursuing an agreement with China or Japan, which Australia is doing.
Trade pacts with India, China, Japan and the US would give Australia almost a complete hand of interlocking treaties with its most important partners, and the world’s most dynamic economies.
These agreements also provide an important defensive barrier for Australia against any rise in international protectionism, and they are an important advance in trading opportunities for Australian companies in the absence of a successful conclusion of the Doha Round of World Trade Organisation negotiations.
Government figures have been surprised at how rapidly the Indian economy has grown, although the country is experiencing political problems. The Indian Government lurched towards crisis over the weekend as left-wing parties threatened to walk away from the ruling coalition unless the country’s civilian nuclear deal with Washington was scrapped.
Apart from the obvious synergy in energy trade, the familiar common-law system in India, and its dazzling success in IT, mean that an FTA should also provide enormous opportunities for Australian companies in the services sector.
This could be worth billions of dollars to Australia.
The submission regarding India contains a raft of specific initiatives, and is designed to elevate the India relationship to a core element in Australia’s international orientation, along with the US, Japan, China and Indonesia.
As well as attempting to negotiate an FTA with India, Canberra will continue its fully fledged engagement in the quadrilateral talks involving the US, Japan and India, despite Chinese opposition.
The Cabinet submission recognises India’s growing importance to Australia, given its growing economic and strategic power. It also notes India’s increased engagement with East Asia and the Pacific and Australia’s rapidly growing trade ties.
The submission contains a series of specific proposals to enhance relations. Apart from allowing the export of uranium — approval for which was announced last week by John Howard — these include formal and active diplomatic support for India’s bid to become a permanent member of the UN Security Council.
This is a move that indicates Canberra’s elevation of India to core relationship status. Australia has been a long supporter of Japan becoming a permanent member of the Security Council and the Howard Government in the past has also suggested Indonesia should acquire such status. The other two core relationships are with countries that are already permanent members — the US and China.
Much of the submission is devoted to the sale of energy to India. Given India’s rapid economic growth, energy security is becoming as important to India as it is to China and Japan. The submission envisages elevating the joint working group on minerals and energy to ministerial level, as a key tool in managing the energy relationship.
The submission contains a wide range of proposals for enhanced security co-operation. Chief among these are joint naval exercises, as well as intensified co-operation in counter-terrorism, peacekeeping, all aspects of maritime security and greater engagement on border and transport security.
A permanent presence in New Delhi by the Australian Federal Police is also being sought. All these recommendations were accepted by cabinet.
Australia is also looking at establishing an Indian studies centre that would parallel the American Studies Centre, which is being set up at Sydney University.
Similarly, it is giving consideration to the establishment of an Australia-India forum for government, business and other leaders to promote bilateral co-operation. This would follow the example of the Australian American Leadership Dialogue.
The Government will move to provide more legal co-operation mechanisms. It wants to strengthen the education, training and science relationship, including the provision of more scholarships for Indian students to study in Australia.
Federal Cabinet does not yet believe Australians fully recognise the dimensions of Indian economic growth, nor their vast implications for Australia.
According to Cabinet figures, India will this year become Australia’s fourth-largest export market, and Australian exports to India have been growing at more than 30 per cent a year throughout this decade. India is Australia’s fastest growing export market, growing faster even than China.
India is also Australia’s second largest source of overseas students and long-stay business visitors.
The Government has identified mining, agriculture, services and investment as sectors for potential large-scale expansion in Australian trade with India.
Similarly, the Cabinet submission recognises that India is increasingly central to global issues such as climate change.
The raft of actions to which Cabinet has committed has the potential to transform the Australia-India relationship.
