Why in News?

• On April 2, India and Australia signed an Economic Cooperation and Trade Agreement (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.

Elements of the Agreement

• ECTA has a Preamble and is divided into multiple sections to govern the bilateral trade.
• Under ECTA, 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.
• In the goods exports section, “Rules of Origin” is mentioned. This is aimed at creating anti-dumping measures.
• Sections aimed at providing remedies and mechanisms for resolving trade disputes are also incorporated.
• This is the first trade deal signed by India that has a compulsory review mechanism after 15 years of implementation.

Access to India’s agriculture market

• Under ECTA, Australia will get the opportunity to export certain varieties of agricultural produce like potatoes, lentils and meat products with some caveats.
• Bovine meat is not part of the agreement.
• Australia may also send machineries that are required for food processing under this agreement.
• India may open up to a widerange of alcoholic and non-alcoholic drinks including Australian beer.
• A Joint Dialogue for Wine may be created to ensure cooperation and benefits for both countries.

For services sector

• Australia has “offered wide ranging commitments” in around 135 sub-sectors and “Most Favoured Nation” in 120 sub-sectors which cover key areas of the Indian services sector like IT, ITES, business services, health, education and audio-visual services.
• Indian chefs and yoga teachers will get specific entry quotas into Australia.
• Indian students in Australia will be able to secure work visas for periods ranging from 18 months to 4 years on a ‘reciprocal’ basis.

Pharmaceutical sector

• India and Australia have agreed to enable fast track approval for patented, generic and biosimilar medicines.
• Therapeutic Goods Regulators of both sides will have a role to play in monitoring and ensuring smooth trade in pharma products between the two sides.
• Both sides have agreed to audits of imports that require sanitary and phytosanitary inspection as per the law of the land.
• The importing side will ensure that plants and plant products, animal products and other goods, and their packaging are inspected through recognised methodologies.
• If either party finds examples of non-compliance, remedial measures will be taken by both sides.

The dispute settlement mechanism

• 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.
• In case of international arbitration, they may opt for an organisation where both are members.
• They may also use “good offices” and form panels with qualified members drawn from government and business to resolve the disputes.
• The dispute resolution may range from 45 days to 15 months.

Rules of origin 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.