Context

• Officials from the Australian government said that the Economic Cooperation and Trade Agreement (ECTA) signed between India and Australia is a transformative agreement which will unlock the next level of potential in trade and investment. 
• In 2022, India is Australia’s 9th largest trading partner. Major exports to Australia include petroleum products, textiles and apparels, engineering goods, leather, pearls, mechanical appliances, iron and steel and gems and jewellery. Major imports include edibles, dyeing extracts, chemicals, wool, minerals & precious stones.
• The Agreement was signed in April last year.

About ECTA

• The ECTA is expected to increase trade between the two sides to $45-50 billion over five years, from the current estimate of $27 billion, and create over 10 lakh additional job opportunities. 
• Under this agreement, India will give 85% of Australia’s exports zero-duty access to its domestic market. India is expected to get zero-duty access to Australia for its goods over five years. 
• As per the agreement, India will get zero duty benefit on 98.3% of its exports to Australia, and on 100% of tariff lines within five years; tariffs on 85% of Australia’s exports to India will be eliminated immediately. 

What are the main features?

• The ECTA is guided by a Preamble and is divided into multiple sections that will govern what is hoped to be the most expansive bilateral trade since the two countries established diplomatic ties before India attained independence. 
• It has a section on goods exports, and lays out clearly “Rules of Origin” that are aimed at creating anti-dumping measures. There are also sections that are aimed at providing remedies and mechanisms for resolving trade disputes. 
• This is the first trade deal signed by India that has a compulsory review mechanism after 15 years of implementation.
• Under this agreement, Australia will get the opportunity to export certain varieties of agricultural produce like potatoes, lentils, and meat products with some caveats. However, bovine meat is not part of the agreement. Australia may also send machineries that are required for food processing under this agreement. 
• Australia will provide ‘preferential access’ to all the labour-intensive sectors of export items from India such as gems and jewellery, textiles, leather, footwear, furniture, food, engineering products, medical devices and automobiles. 

What is the dispute settlement mechanism in place?

• Both parties have agreed to hold consultations — and make every effort to find a solution — in case of disputes that may emerge in the course of trade in goods or services. 
• They have also recognised that in case they have to resort to international arbitration, they may opt for an organisation (i.e, World Trade Organization) where both are members. 
• The dispute resolution may range from 45 days to 15 months.

What are the rules of origin included in the agreement?

• The rules of origin are based on the principle that they should be wholly obtained or produced in the territory of one or both of the parties. 
• This section ensures that waste material will not be exported by either side unless they contribute to the production of any of the items listed in the ECTA.

Indo-Australian Relations 

• India and Australia enjoy excellent historical bilateral relations which have further matured into a friendly partnership. This partnership is also fortified by shared values of a pluralistic society, parliamentary democracies, and commonwealth traditions.
• India and Australia are partners in the trilateral Supply Chain Resilience Initiative (SCRI) arrangement along with Japan which seeks to enhance the resilience of supply chains in the Indo-Pacific Region. 
• Further, India and Australia are also members of the Quad, also comprising the US, and Japan, to further enhance cooperation and develop partnerships across several issues of common concern.
• Currently, Australia is the 17th largest trading partner of India and India is the 9th largest trading partner of Australia. India-Australia’s bilateral trade for both merchandise and service trade was valued at US$ 27.5 billion in 2021.
• ECTA creates a channel of reciprocal trade benefits for both countries, wherein they gain economic precedence in each other’s markets, supporting several sectors and services.
• This also opens up the participating economies for mutual investment and furthers the cause of an interconnected world. 

https://pib.gov.in/PressReleasePage.aspx?PRID=1905387