Don’t get too excited about the new India and Australia talks on CECA

The relationship between these two might hold the key to the current CECA talks

INTO INDIA is optimistic that some deals will emerge from the current round of talks on the Australia-India Comprehensive Economic Cooperation Agreement (CECA) – spearheaded by Australian Trade, Tourism and Investment Minister Dan Tehan and, Commerce and Industry Minister Piyush Goyal.

But a look at Australia’s stance and recent Indian trade policy actions is not reassuring.

India withdrew from the negotiations for the Regional Comprehensive Economic Partnership (RCEP); it renegotiated a number of its free trade agreements; it terminated most of its bilateral investment agreements; and it has failed to agree a mini-economic deal with the United States. Not to mention India’s stance in the World Trade Organisation which has been unchanged.

At the domestic level, India has imposed prohibitive tariffs in several sectors and introduced a range of incentives to attract reshoring and investment.

How does Australia’s record stack up? Eager to send more resources and agriculture to India, Australia has been reluctant to allow great services access and people movement from India. This is a thorny issue.

So our word is CAUTION – don’t get your hopes up too high – there has been little progress to show after ten years of negotiations.

So, why be optimistic now?

First, Australian professional trade negotiations have loosened up on what was a cornerstone article of faith for them – preferring the “single undertaking” negotiating model – in which nothing is agreed until everything is agreed. Now even they are talking about “early harvest” deals. But can they change their spots? The Morrison government, desperate for a trade win, hopes they can.

Second, India has direct concerns about China and is nervous about the US-China rivalry. It has sensibly decided to build up strategic and economic partnerships as a hedge. There is much talk in India about potentially good trade outcomes arising from China’s “trade war” on Australia.

But the stalemate is always market access.

Australia wants agriculture access – India is hesitant because this sector employs 40% of India’s population. India wants liberalisation of the services “mode 4”, specifically the short-term entry of business persons. India has argued that Australia’s short term business visitor regime constitutes a barrier to India’s services exports. Australia has pushed back on these demands, reflecting concerns at the potential impact on the labour market. In a nutshell – one big stalemate!

Overall, India is not a fan of Free Trade Agreements, seeing most of them widening its trade deficit. That is, India feels the other party benefits most. It has negotiated on five FTA’s over the last 11 years and only one has been signed.

True, India is looking eager, having revived trade talks with the European Union, United Kingdom, United States and Australia. But is it all just a lot of talk?

Remember, India is primarily after foreign investment, exports, making domestic industries competitive and incentivise other countries to manufacture in India. Can Australia play a role in any of this?

The key for Australia and India is to somehow align Australia’s export goals with India’s investment and new exports priorities.

Australia could partner India on technology, innovation and R&D.

Australian companies could boost investment into India – and there are good economic and government subsidy reasons to do so.

Australia has one big advantage here – critical minerals. India has high sustainable energy and e-mobility goals and will need these minerals.

Add to that, Australia has growing expertise in the hydrogen industry, while India has a National Hydrogen Mission. There are good R&D opportunities for both.

While India is the “pharmacy of the world”, Australia is a leader in biotech R&D. Biotech in dairy, marine and more could provide trade deal motivation.

But finally, there is the big blockage.

India wants to increase skill migration to Australia. Australia has opposed it. Most of the talks in the last decade have faltered at this point.

What has changed?

Border closures have left Australian businesses struggling to fill roles. Australia needs an ‘early harvest deal’ to attract skilled professionals from India.

So, despite the gloom of the past, there are reasons to have some optimism for these talks on CECA.

Watch this space.

India now chasing trade deals – having resisted for decades

Indian PM Narendra Modi meets recently on trade with former Australian PM Tony Abbott

What has changed for India? It seems that having resisted trade deals for years, it now plans by the end of March 2022, to complete multiple quick-fire bilateral trade agreements.

Something has not changed however – the Indian government, distrustful of full scale FTA’s, is prioritizing “early harvest” pacts over comprehensive free trade agreements.

What has changed is the pandemic and the rise of China.

Therefore, the Indian government is focusing on strengthening the trade with G-7 nations with strong Indo-Pacific strategies and those with growing influence in central Asia such as the United Arab Emirates.

Australia, at a key position in the Indo-Pacific, is a high priority. As a fellow member of the QUAD, India and Australia have never been so close strategically and are keen to add trade now.

In large part, this is India’s push to do well as supply chain realignments take place – there is only a narrow window of opportunity to get these deals done.

How big is this? The government is negotiating bilateral trade agreements with 20 countries and expects to complete half a dozen deals, including those with Australia and Britain by this December and March 2022. 

India is ambitious – Mr. Piyush Goyal has set kept a target of US$ 400 billion for annual merchandise exports – almost 38% higher than US$ 290 billion achieved in last year and plans to achieve US$ 2 trillion annual merchandise exports by the end of this decade.

Outcome? Lots of deals that will not be quite world class Free Trade Agreement (FTA) but which will have some wriggle room.

India and the USA have very different world views – the 10 differences

Indian PM Modi meets with US President Biden in the White House recently

There has been a lot of talk recently about India becoming part of some formal military alliance with the US – in response to the rise and actions of China.

But is this likely?

Here are 10 key differences in the world view of India and the USA

New Delhi is wary that any formal alliance with the US could draw it into almost constant military activity such as the Iraq war

India prefers to do its own strategic deals on a country by country basis – rather than manage these through a dominant US strategic alliance. For example, India and Australia have a Mutual Logistics Support Arrangement allowing each to uses each other’s bases

Historically India has never agreed to open-ended commitments that might lead to future military involvement

Of the four countries speculated to be invited to join the Five Eyes security arrangement (the four are Germany, India, South Korea and Japan) – India is the only one of these four to NOT have a treaty alliance with the US

An example of differences between India and the US is Iran and the Nuclear Non-proliferation Treaty (NPT) – the US attacks Iran on the nuclear issue, sees the NPT as something to be enforced – but India has not signed the NPT itself and sees it as discriminatory

There are differences on the “threat” from China – the US is most assertive on freedom of navigation in the South China Sea while India has been quite reserved on this issue

India is more concerned about its Himalayan border conflicts with China than the South China Sea

India generally has little or nothing to say about human rights issues in other countries. Whereas the US and its allies such as the UK and Australia are constantly calling out human rights abuses around the world

The US wants “all in” commitment from allies but India has always been non-aligned and refuses to get drawn into “us versus them” views of the world. One current example is India is finalising a logistics deal with the UK while also negotiating a similar deal with Russia

India is content to be “the world’s biggest democracy” but is not evangelical about it, accepting that all countries are different – a sharp contrast to the US wanting to remake countries in its own image and championing democracy for all

New “Business Champions” group to provide much needed top level links between India and Australia

Indian Commerce Minister Mr Piyush Goyal

A new “Business Champions” group will lead top level business engagement between India and Australia – and it was launched last week in India.

INTO INDIA welcomes this move to bring the “top end” of both countries together. Business engagement at this level has not worked well in the past. Most of the business councils and chambers have provided lower level SME engagement – important as this is.

“Supply chains” is behind the enthusiasm of India for the new Australia-India Business Champions Group’s role. Mr. Piyush Goyal, Minister of Commerce & Industry, Consumer Affairs, Food & Public Distribution, Textiles, Government of India said this when addressing the Inaugural Meeting of the Australia India Business Champions.

The Minister is co-chairing the group with Australian Trade Minister, the Hon Dan Tehan.

“The Australia-India Business Champions Group’s key aim is to liberalise and deepen bilateral trade between both the nations and pave the way for collaborative economic growth.” stated Mr. Dan Tehan MP, Minister of Trade, Tourism and Investment, Government of Australia.

Major business organisations leading the group are the Confederation of Indian Industry (CII) and the Business Council of Australia (BCA). Both represent almost all the major business corporations in both countries.

Mr. Chandrajit Banerjee, Director General, CII, pointed to areas such as mining, education, defence, space and emerging sectors which the group can take forward.

Ms. Jennifer Westacott AO, CEO, BCA, highlighted that we must strengthen and reform regional and global institutions, so they deliver for our citizens.  She said the Business Champions would engage directly with the top tier of Australian and Indian Governments on matters critical to business. 

Other panelists at the meeting included H E Mr. Manpreet Vohra, High Commissioner of India to Australia, H E Mr. Barry O’ Farrell AO, High Commissioner of Australia to India, Dr. Anish Shah, MD & CEO, Mahindra & Mahindra Ltd, Ms. Julie Shuttleworth, CEO, FFI, Mr. Rakesh Bharti Mittal, Vice Chairman, Bharti Enterprises, Mr. Mike Cannon-Brookes, Co-Founder and Co-CEO, Atlassian, Mr. Nitish Jain, President, SP Jain School of Global Management, Ms. Verena Lim, Asia CEO, Macquarie Group, Mr. Girish Ramachandran, President, Tata Consultancy Services Asia Pacific, Professor Duncan Maskell, Vice Chancellor, University of Melbourne.

It’s his birthday today, so what does Gandhi say for our modern world?

India’s Mahatma Gandhi was born on 2 October 1869 and died in 1948

The Mahatma Gandhi memorial in New Delhi, known as Raj Ghat, expresses his values – it is peaceful and quiet, a green open space with a marble tomb in the middle, marked by one word “Ram” – God, the word Gandhi uttered when shot on 30 January 1948. Here there are no lengthy accolades, just a simple and lasting tribute.

I first visited this on a warm afternoon with time alone – but you are not alone for long in India. I was soon joined by a family of four, there to show the children and pay their respects to this great human being. In doing so, their shining eyes invited me into their circle, we talked, laughed, turning back regularly to gaze at the marble tomb. The moment was defined by simplicity and love.

This was how he lived – you can see this in Mumbai at Mani Bhavan (Gandhi House), a three story home with shuttered windows, a residence that Mahatma Gandhi was able to use when in that bustling city. The house is in a leafy and relatively quiet street.

The austere dwelling seems a long way from our consumer society, for here in Mani Bhavan, the feeling is respectful and quiet. No one rushes. This was indeed the man who said there was enough in the world for everyone’s need but not for everyone’s greed.

Knowing this, it becomes redundant to ask what Gandhi means for our modern world. He means everything.

The world is nervously watching the rise of China, and the contest for leadership in a rapidly changing world. Believing that in situations like this, hatred is the real enemy, Gandhi urged us to hate the sin, love the sinner. His view on answering violence with violence was “An eye for an eye makes the whole world blind”.

Gandhi knew that around the world, people are different – and they see the world differently. He knew that much hostility began because we each tend to believe that our own world view is the correct one.

It was the pragmatist in Gandhi (which infuriated extremists) who accepted that all of our differing world views are neither right nor wrong – they are just differing world views.

There is a story that showed how different this person was – while boarding a moving train one day, one of Gandhi’s shoes slipped off and fell upon the track. As he was unable to retrieve it, Gandhi – to the astonishment of his fellow travelers – calmly removed his other shoe and threw it down the track to where the first had landed. “The poor man who finds the shoe lying on the track,” Gandhi explained, “will now have a pair he can use.”

Tony Abbott might have overstated it – but he is more right than wrong on India

Tony Abbott wants Australia to make a big shift towards India and away from China.

Despite some hysterical responses from two former Aussie PM’s, Tony Abbott has by and large got it right on India and we should work towards the closer relationship he believes is possible – and necessary!

Consider this verbal stoush:

“The answer to almost every question about China is India. Although currently not as rich as China … India is perfectly placed to substitute for China in global supply chains … India has revived the Quadrilateral Security Dialogue, and the first in-person Quad summit is expected before the end of the year. Under Modi, India has invited Australia to join the annual Malabar naval exercises that will soon involve India, the US, Japan, Australia and also the UK … It will be an impressive show of strength, demonstrating the democracies’ commitment to a free and open Indo-Pacific … If Australian business and officialdom were to make the same effort with India that they’ve long made with China, there’s potential for a ‘family’ relationship with India that was never likely with China.”

– Former prime minister Tony Abbott in The Australian (10/8/21)

“No, (Abbott’s comment) is just wrong. We all agree our relationship with India has been underdone over the years … India has got a very deep longstanding protectionist political culture. They weren’t even prepared to sign up to RCEP … You have got to be realistic about what you can achieve in terms of trade. They are different countries, different economies. We should be aiming to have much stronger deeper relations with India …  Every prime minister should and will do that. But the idea that can sort of delete China and insert India is just nonsense.”

– Former prime minister Malcolm Turnbull at a La Trobe University webinar (10/8/21)

“We have got to be deeply realistic about one thing (about the Quad). Is it the assumption of future Australian governments, like Tony Abbott’s view in today’s press, that the Indian navy is going to go steaming into the South China Sea to defend Uncle Sam’s interest if the balloon goes up over Taiwan? I think not   …  We need to ask some very hard military questions about the core strategic utility of this (the Quad) for the longer term … We need to go into this with wide eyes open, not the blithering idiot remarks we’ve seen from Abbott in today’s newspapers.”

– Former prime minister Kevin Rudd also at La Trobe University

“The one thing we should not be doing is saying to India, this is to line you up to be the next member of ANZUS to take on China. I agree with what Kevin said, that equally just plays into the paranoia of China … We have to just move gently, avoid extravagant language (with India) …  Frankly, extravagant claims of the type we were talking about a moment ago are not helpful.”

– Malcolm Turnbull again

“India is the world’s emerging democratic superpower and my god don’t we need another democratic superpower in the world right now. Isn’t it so important that a country like Australia do everything it can to ensure India does take its rightful place up there at the head of the world’s great democracies.”

– Tony Abbott, Australia India Address (17/8/2021) 

Well, what do you think?

Australian Trade Minister announces boost to India FTA talks at launch of Australia India Chamber of Commerce chapter in Canberra

Major announcements made at launch of Canberra chapter of Australia India Chamber of Commerce.

The Australian Trade Minister, The Hon Dan Tehan MP, chose the launch of the Canberra chapter of the Australia India Chamber of Commerce to announce both a speed up to negotiations on a Free Trade Agreement and an update of the India Economic Strategy.

The Minister said he had asked former Prime Minister, Tony Abbott, to visit India for meetings around the Comprehensive Economic Cooperation Agreement (which is an FTA).

He announced to the AICC that both countries were hopeful of concluding negotiations this year – a dramatic ramping up of the pace.

The Minister pointed to trade and investment in areas such as critical minerals, infrastructure, energy, technology, agribusiness, education and space.

AICC in Canberra is led by Tony Huber, a Director within DFAT and former Consul in Mumbai, and Deepak Raj Gupta, former Member of the ACT Legislative Assembly.

Indian Independence Day is joyful and optimistic

Have you been in India on Independence Day, 15 August? It is a most joyful and optimistic day, in a country which has many joyful and optimistic celebrations.

India proudly celebrates Independence Day to cherish the idea of oneness and remember the sacrifices that freedom fighters made during their struggle against the British empire.

What really hits me about this day is the feeling people have about the glory of India’s struggle. It is a kind of mindset that “if we can do this, then anything is possible”.

Well done India – have a great celebration.

Despite a shift towards USA and Japan, India maintains close friendship with Russia and a “multipolar” world view

External Affairs Minister S Jaishankar along with Russian Foreign Minister Sergey Lavrov address a joint press conference, in Moscow. The visit was aimed more at reiterating the importance both nations accord each other.

India has long been able to see both sides of an argument in international affairs – and today is a champion of a multipolar global order.

This frustrates countries like the USA and Australia, which clearly see the world in terms of goodies and baddies – for them, the world order is either run by “us or them”.

India’s independent approach was seen in the recent reinforcement of its long held close friendship with Russia. At a time when the rise of China has pushed India into closer relations with the US and Japan, the Indian External Affairs Minister, Dr S Jaishankar held a three day visit to Russia, to reassure an old friend.

Russia could be described as India’s oldest and strongest allies since independence.

“I think what makes our working together so natural and comfortable is our belief in a multipolar global order,” Jaishankar said.

In the complexity of our pandemic world, “multipolar” could be something that takes us forward in peace.

Can India teach the west and China about co-existence?

With India’s role as a rising power, plus its long record of peaceful co-existence with multiple countries, can it help the west and China live together?

Here is the situation as outlined by Michael Spence, a Nobel laureate in economics, Professor of Economics Emeritus and a former dean of the Graduate School of Business at Stanford University:

“At the recent G7 and NATO gatherings, China was singled out as a strategic competitor, a calculating trading partner, a technological and national-security threat, a human-rights violator, and a champion of authoritarianism globally.”

Not a great recipe for co-existence.

Spence continues: “China denounced these characterizations, which its embassy in the United Kingdom called “lies, rumors, and baseless accusations.” The risks that such rhetoric poses should not be underestimated.”

Also not a recipe for co-existence.

He concludes: ” The real danger, however, is that officials on both sides seem to have embraced a zero-sum framework, according to which the two sides cannot simply co-exist; one side must “win.”

But India has long experience of getting along with all sorts of regimes and managing to see both sides of the argument.

As India plays a bigger role in global groupings, can it influence both the west and China to drop “zero sum” thinking and work to co-exist?