Context: India and Australia are expected to complete negotiations for an interim free trade agreement (FTA) soon, a move aimed at boosting economic ties between the two countries.
Comprehensive Economic Cooperation Agreement (CECA)

• The final agreement is officially dubbed as the CECA is expected to be completed by the end of 2022.
• The pact covers areas such as goods, services, investment, rules of origin, customs facilitation, legal and institutional issues.
• This new strategic economic agreement is expected to increase bilateral trade in goods to $100 billion within five years.
• It also increase trade in services to $15 billion.

Note: A similar agreement with the UAE is likely to be signed in March 2022.

About Free Trade Agreement (FTA)

• A FTA is a pact between two or more nations to reduce barriers to imports and exports among them.
• Under a free trade policy, goods and services can be bought and sold across international borders with little or no government tariffs, quotas, subsidies, or prohibitions to inhibit their exchange.
• The concept of free trade is the opposite of trade protectionism or economic isolationism.

Key benefits offered by FTA

• Reduction or elimination of tariffs on qualified: For example, a country that normally charges a tariff of 12% of the value of the incoming product will rationalize or eliminate that tariff.
• Intellectual Property Protection: Protection and enforcement of intellectual property rights in the FTA partner country is upheld.
• Product Standards: FTA enhances the ability for domestic exporters to participate in the development of product standards in the FTA partner country.
• Fair treatment for investors: FTA provides treatment as favorably as the FTA partner country gives equal treatment for investments from the partner country.
• Elimination of monopolies: With FTAs, global monopolies are eliminated due to increased competition.

How many FTAs does India have?

• India has signed it’s first Free Trade Agreement (FTA) with Sri Lanka in 1998.
• Likewise, India had FTAs with: Nepal, Bhutan, Thailand, Singapore, ASEAN, Japan and Malaysia.

India has signed Preferential Trade Agreements such as

• Asia Pacific Trade Agreement (APTA) with Bangladesh, China, India, Lao PDR, Republic of Korea, and Sri Lanka
• Global System of Trade Preferences (GSTP)
• India – MERCOSUR PTA etc. with South American countries