Describing India as a major emerging economy that is gaining heightened prominence on the world stage, Australia's High Commissioner to India, Harinder Sidhu, said Wednesday that it is pleasing to see the bilateral relationship between New Delhi and Australia in such good shape.
"The texture of the bilateral relationship has become much richer than it once was. Some have described it as having reached 'a high watermark'.
"Almost half a million, out of a total Australian population of 24 million, are of Indian origin. There are 53,000 Indian students studying in Australia today, our second largest source of overseas students. And 233,000 Indians visited Australia in 2015, making India our eighth largest source of visitors. There is an increasing network of collaborative work and other links between our universities and other institutions. And, commercial ties have developed significantly," Sidhu said.
"Trade and investment between Australia and India now spans a wide range of industries, products and services - from mineral and energy commodities, to sophisticated manufactured goods; from large-scale business services and skills training, to niche products in many different sectors. But, on the economic front, I have to say there is also a lot of unfulfilled potential in the relationship too," she added.
One comparison that a number of observers have made is that, while Australia's two-way trade with India is at A$18 billion, it is barely more than one-tenth of our two way trade with China, which stands at A$150 billion.
And investment, too - in both directions - is well below what it could, and perhaps should, be.
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Sidhu said leaderships of both countries have given a commitment in 2014 to reinvigorate negotiations on the Australia-India Comprehensive Economic Cooperation Agreement (CECA).
She said that the opening of the two economies would have to be visualized through three broad themes:
First, Explore perspectives on the relationship between trade liberalization and economic development
Second, Look at the different types of 'trade architecture' which help both move collaboratively toward trade reform
And third, Survey current developments in regional trade agreements and consider where these, as well as bilateral endeavours such as the CECA could take both nations.
On the first theme, Sidhu said, "Australia has fared best when we have allocated our productive resources to the things we do best, using part of the income from these to import things we are relatively less efficient at producing."
"India, of course, has a much larger population. And there is a view in some quarters that this means India can satisfy its growth requirements through its large domestic market. But I think India would be selling itself well short were it to take this stance. We can look at China, a country of similar dimensions to India, to see an example of the enormous contribution that international trade can make to national economic growth."
On the theme of trade as part of the reform agenda, she said, "India is today recognised as an emerging economic giant - now the third largest economy if measured on a purchasing power parity basis. India has reaped substantial benefits from its reforms. GDP growth has risen to an average of around 6.5 per cent since the 1990s. The Indian government continues to press ahead with its program to improve the workings of the economy, including in important areas such as tax reform, bankruptcy legislation and cutting red tape. Australia welcomes these efforts."
She, however, said that it is equally important to achieve reform on the trade policy front, because experience shows that reform contributes most powerfully to national growth when it is taken forward comprehensively, across the spectrum of economic policy areas.
On the theme of trade agreements and trade liberalization moving together, she said, "With the benefits it offers, trade reform has often been undertaken unilaterally. Both Australia and India have done this at various times. That said, the fact is that trade liberalisation also often occurs through negotiated trade agreements - be they multilateral, regional or bilateral. Over and above the benefits yielded by unilateral trade liberalization, trade agreements can provide a further stimulus to trade through the greater access they provide to trading partners' markets."
She added, "Modern trade agreements are not just about getting tariffs down. They are much more than that. They usually cover services and investment as well as goods. They are as much about removing barriers behind the border as at the border. Trade agreements also deliver that most valuable commodity to business - confidence about the operating environment. They provide more certainty about the rules under which business operates. And trade agreements should be comprehensive if the full benefits are to be delivered. They should set an environment that is broad enough for trade and investment between the partners to evolve over time - to grow into new areas, beyond products and services already traded between the partners."
However, she said, trade agreements are not about balancing bilateral trade flows between partner countries. In a multi-country world, and one where imports from one source are often the inputs for exports to another destination, it makes no sense to try to 'even up' the exports and imports between individual countries.
"The fundamental insight on trade is that both parties can benefit from the one commercial transaction. Trade is not about winning more than the other party. It's about win-win. This is so whatever the relative size of the partners. A bigger economy might have bigger markets, but it will probably also have more consumers, more businesses to benefit from global inputs, and more exporters ready to enter new markets," she said.
"Australia, like India, sees the multilateral route as the 'first-best' option to achieve trade liberalization and reform. We believe that maintaining a strong and effective multilateral trading system should remain a core trade policy objective for us all. That said, at the present time, there seems no viable prospect of a big multilateral deal," Sidhu said.
"From my perspective, India should have a regional voice commensurate with its size and economic weight. Australia supports India's growing participation in the economic architecture of the region. Our increasing reference to the 'Indo-Pacific', rather than the earlier term of 'Asia-Pacific', reflects this desire to embrace India as a key contributor to building regional cooperation and integration," she said.