Trade and Industry Minister Piyush Goyal will be in the UK to speak with his counterpart Elizabeth Truss this week, while Australian Trade Minister Dan Tehan is scheduled to be in the capital later this month to bring forward the dialogue. Although the discussions are still in an exploratory phase, the Center has begun to mark the red areas, many of which may turn out to be contentious as the talks progress.
For example, in an interview, UK Chancellor of the Exchequer Rishi Sunak had indicated to TOI that his government was interested in both countries liberalizing services. While India’s interest is in Mode IV (visas for its tech professionals, doctors and nurses) for the UK, the playing field will open up to legal services and those “taboo areas”.
When it comes to some of the previous banned territories, such as lower tariffs on Scotch whiskey, the signs are that India will be more accommodating in its booth than before, in hopes of getting the UK to offer easy access to the Indian textiles. and engineering goods.
Similarly, when it comes to Australia, the government is willing to participate in sectors such as coal, where imports for power plants are in any case. But the dairy sector is a sector that has proven to be a red zone, as seen during the aborted negotiations of the Regional Integral Economic Association (RCEP) agreement, where India withdrew at the last minute.
For Australia, dairy products have been a key area of focus, but India has been cautious about lowering tariffs, especially on products such as skimmed milk powder, given their likely adverse impact on the national economy. Unlike the big farms in Australia, India’s dairy sector has millions of small farmers.
Further complicating matters for the talks with the UK, Australia and the European Union is the fact that almost half of the goods exported by India are already in the zero tariff category, and these countries have their defensive interests. on some of the items where there are customs duties. .
Although it is early, the position taken by the negotiators also evolves as the talks progress, depending on what the other side is willing to bring to the table. Furthermore, discussions for free trade agreements must also be seen in the context of the new geopolitical alignment taking place in the post-Covid world.
As ties with Australia have strengthened in recent months as Canberra has signaled that it wants to depend less on China, the government hopes to achieve what is called an early harvest plan by December, covering about half of the tariff lines. But with elections planned in Australia, it is unlikely that the trade deal could be ratified by Parliament until at least the second half of the year.
In any case, the government’s interest in such an agreement is not shared by some of the other parties, such as the European Union, which is another focus partner for a trade and investment treaty.