THE INDIAN government has this week completed its domestic requirements to enable the implementation of the Australia-India Economic Cooperation and Trade Agreement (ECTA).

The agreement is to deliver new market-access opportunities for Australian businesses and consumers from 29 December.

Australia finalised its domestic requirements for the trade agreement last week with the unanimous passage the government’s bills through Parliament.

From 29 December, tariffs on 85% of Australia’s exports to India will be eliminated and high tariffs on a further 5% of goods will be phased down.

As part of the agreement, two tariff cuts will come in quick succession: one as the agreement comes into effect and a second on 1 January 2023.

Benefits for Australians

According to a statement from the Australian government, ECTA will save Australian exporters around $2 billion a year in tariffs, while consumers and business will save around $500 million in tariffs on imports of finished goods, and inputs to our manufacturing sector.

The tariff commitments provided by India in the agreement will open up access for Australia’s exporters of products including critical minerals, pharmaceuticals, cosmetics, lentils, seafood, sheepmeat, horticulture and wine.

Australia and India are now progressing a comprehensive economic cooperation agreement to build on ECTA.

Current and aspiring exporters can explore ECTA’s tariff market access outcomes on the FTA Portal.

Strategic partners

Prime Minister Anthony Albanese said Australia and India are increasingly working together as strategic and economic partners.

“We elevated our relationship with India to a Strategic Partnership in 2009 and to a Comprehensive Strategic Partnership in 2020,” Mr Albanese said.

“The Australia-India Economic Cooperation and Trade Agreement is the next step in elevating our relationship with India, the world’s fastest growing large economy.” 

Minister for trade and tourism Senator Don Farrell said the ECTA’s two tariff cuts in quick succession intensify the up-front benefits of this agreement for our exporters.

“Businesses are encouraged to get on the front foot and prepare themselves now to take advantage of the substantial improvements in market access to India under the new agreement,” Mr Farrell said.

“Austrade can assist existing and potential exporters benefit from the lowering of trade barriers into the Indian market.”

Rigby Cooke Lawyers partner Andrew Hudson said the ECTA has been described as a harvest of “low hanging fruit” between the countries but there is still significance in the commencement of this part of the trade deal.

“It also helps to advance the negotiations towards the full deal between the countries in the Australia-India Comprehensive Economic Cooperation Agreement (also known as the AI-CECA) which is hoped to be completed in 2023,” he said.

“Those wishing to take advantage of AI-ECTA should now work with their freight forwarders and licensed customs brokers to ensure that advantage can commence on 29 December 2022.”

Side letters

Mr Hudson said it is important to remember that many free-trade agreements have additional provisions known as annexes and side letters.

“On occasion, reading the whole of the FTA including the side letters reveal issues which may be of little interest to most but are of real interest to those involved in trade on certain items who have lobbied their governments to include such commitments in the FTA for future work outside of provisions which fit into the FTA framework,” he said.

Mr Hudson said the side letters represent agreements to agree between the parties for work to be undertaken in the future on items of mutual interest but which do not properly fit into the terms of the FTA.

“The AI-ECTA has 14 side letters, which include commitments to undertake further work amongst which are interesting commitments on providing Most Favoured Nation status for a range of alcoholic beverages produced in each country,” Mr Hudson said.

“Even more interesting are the side letters on whisky and ‘other alcoholic beverages’, which also oblige Australia to work on ‘maturation requirements’ for those beverages. This commitment arises out of the terms of section 105A of the Customs Act 1901, which states that imported whisky (and rum and brandy) can only be released from customs control in a licensed premises for entry into home consumption if certain maturation requirements are met.”

Mr Hudson said the Australian Border Force has been reviewing this provision as there is a demand for alcohol like whisky, rum or brandy made overseas, but which does not meet the maturation requirements and can’t be released from customs control.

“There is general agreement that this is an impediment to trade, and I have been involved with a number of parties who were keen to import Indian whisky for retail or restaurant sale but which whisky was not matured as required by the act and could not be could not be released from the licensed premises into home consumption. This led to my involvement with the ABF review,” he said.

“Now Australia has promised to work on the ‘maturation requirement’ relating to whisky (and other alcoholic beverages) from India to facilitate its retail sale even if the current maturation obligations are not met.”