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Comprehensive Economic Cooperation Agreement (CECA):

GS Paper 2:

Topics Covered: Bilateral Relations.

 

Context:

The interim trade agreement between India and Australia is unlikely to include items that both sides consider “sensitive”.

  • The Indian and Australian negotiators will have the final “interim agreement” ready in 30 days and that the agreement will be a “win-win” document.

 

Background:

Both sides expressed confidence about signing a comprehensive Free Trade Agreement — CECA — and argued that the “interim agreement” is an “early harvest deal” aimed at boosting bilateral trade before the completion of the negotiations on the final CECA.

 

Current Affairs

 

India- Australia bilateral trade:

  • India’s exports to Australia amounted to $4.04 billion while imports were $8.24 billion in FY21.
  • Major Indian exports to Australia are petroleum products, medicines, polished diamonds, gold jewellery, apparel etc, while key Australian exports to India include coal, LNG, alumina and non-monetary gold.
  • In services, major Indian exports include travel, telecom and computer, government and financial services, while Australian services exports were principally in education and personal travel.
  • In 2020, India was Australia’s seventh-largest trading partner and sixth largest export destination, driven by coal and international education.

 

Significance of the deal for India:

The interim agreement will mark the beginning of a phase of FTAs that India is aiming to achieve in the coming year.

  • Apart from Australia, India is in talks to conclude similar FTAs and early harvest deals with Israel, Canada, the European Union and the United Arab Emirates.
  • The Gulf Cooperation Council – the six country block – has also shown interest in concluding an FTA with India. The GCC includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and also the UAE.

 

Insta Curious:

Difference between CECA and CEPA:

  1. CECA – Comprehensive Economic Cooperation Agreement.
  2. CEPA – Comprehensive Economic Partnership Agreement.

The major “technical” difference between a CECA and CEPA is that CECA involve only “tariff reduction/elimination in a phased manner on listed/all items except the negative list and tariff rate quota (TRQ) items.

  • CEPA also covers the trade in services and investment and other areas of economic partnership”.
  • So CEPA is a wider term that CECA and has the widest coverage.
  • Usually CECA is signed first with a country and after that negotiations may start for a CEPA.

 

InstaLinks:

Prelims Link:

  1. About CECA.
  2. About CEPA.
  3. India’s FTAs with other countries.

Mains Link:

Discuss the significance of India- Australia CECA.

Sources: the Hindu.