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India’s last-minute RCEP exit smart & shrewd move, former Australia PM Tony Abbott says

New Delhi and Canberra can clinch a ‘bigger rather than smaller’ early harvest trade deal by end of 2021 or early 2022, which will be followed by a larger FTA, says Tony Abbott.

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New Delhi: India’s last-minute decision to walk out of the Regional Comprehensive Economic Partnership (RCEP), the ASEAN-led mega trade deal, was a “smart” and “shrewd” move, according to former Australian Prime Minister Tony Abbott. New Delhi, he said Friday, can now position itself as a “trusted” and “reliable” trade partner and replace Beijing.

Abbott said New Delhi and Canberra can clinch a “bigger rather than smaller” early harvest trade deal by end of this year or early 2022, which will be followed by a larger free trade agreement (FTA), officially called Comprehensive Economic Cooperation Agreement (CEPA).

Abbott is visiting India as Australian PM Scott Morrison’s special trade envoy for New Delhi. He met Commerce Minister Piyush Goyal and Indian industry leaders in Mumbai during his three-day visit.

Speaking at a select-media meet while concluding his visit, Abbott said Australia had decided to join the RCEP much before he came to power and was “optimistic” about Beijing, but it has now realised that China uses trade for politics and geopolitics.

“For Australia, the RCEP train left the station long before I became the PM. While I was PM, we were still pretty optimistic about China. What became more abundantly clear in the more recent years is that for China, trade is politics, and in fact geopolitics by other means. And at least in Australia’s case, China was quite prepared to weaponise trade against us,” he said.

“Now, there is also no doubt. As far as China was concerned, RCEP was part of its political as well as its economic diplomacy, and that’s why it is very significant when at the eleventh hour PM Modi and Minister Goyal said this is a step too far and not good for long-term period… It was a shrewd move on India’s part,” he said.

“Once India withdrew from RCEP, I think that was a very smart move if I may say so, from PM Modi and from minister Goyal, we put our own bilateral talks back onto the fast-track and again all credit here to PM Morrison for being every bit of keen as I was,” added Abbott, who also visited Mumbai during his visit.

The RCEP is currently the world’s largest FTA that has been signed by 10 ASEAN (Association of Southeast Asian Nations) members — Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam — and their five trading partners, China, Australia, New Zealand, Japan and South Korea. It encompasses 30 per cent of global GDP.

Abbott said all countries are currently experiencing “trade tensions” with China and hence it is the most opportune time for India because “much of the world is looking to substitute for China in supply chains”.

“India is the obvious alternative because almost no country has India’s capability to manufacture at that scale. This is why I believe India is on the threshold of a real economic take-off not just domestically but internationally as well,” he said.

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Australian wine ‘may get more market access in India’

A comprehensive trade deal between India and Australia will not only give an economic dimension to the Quad grouping, it will also enable New Delhi to clinch many such trade deals with other countries that are democracies with a rule of law, Abbott said.

Abbott also hinted at the fact that, under the early harvest deal, Australian wines may get greater access to Indian markets by way of reduced tariffs, an issue that became a major stumbling block between the two countries when they were negotiating a deal after the talks began in 2011.

“One of the titanic areas where I think we can make strong progress even in an early harvest (agreement) is wine. I am not encouraging anyone to become a drinker. But nevertheless if you do enjoy the occasional glass of wine then nothing better value than Australian wine,” he said.

“I think those who currently enjoy Australian wine know just how good it is. I am hoping more and more people in India get an affordable opportunity to experience the great Australian wine in the months and years ahead,” he added.

Abbott said exports of wines and spirits from Australia will also be part of the larger comprehensive deal. The issues of export of dairy products from Australia, which proved to be a hurdle before, will be smoothed out, he added.

“Dairy is one of the sensitive sectors… Australia is not a predatory trader. We are a free and fair trader and our objective is not to disrupt, our objective is to partner,” he said.

He also underlined that a trade deal with Australia would mean easy access to rich resources of coal, iron ore and lithium for India. “These are exactly what is needed to make ‘Make in India’ the best possible deal for India and indeed for the wider world,” he said.

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Australia accepts ‘India’s sensitivities on agriculture’

The former Australian PM said the timetable for the early harvest deal that was set between Commerce Minister Piyush Goyal and his Australian counterpart Dan Tehan in October is on track.

“We can do a very good early harvest deal, which is larger rather than smaller, by the end of the year or the least very early in the New Year. Now is the appropriate time,” Abbott said.

“Australia absolutely accepts that because of the particular nature of Indian agriculture — there are very much small family farms as opposed to the much larger commercial operations in Australia. We absolutely accept that there are some important sensitivities in Indian agriculture,” he said.

“There, almost inevitably, have to be some important carve-outs for Indian agricultural elements in what is a good and fair deal between our two countries. That said, I believe, we can make strong progress,” he added.

‘Xi’s China is more like Mao’s China’

Abbott noted that it was under him that Australia inked a comprehensive free trade deal with China, which was Beijing’s first trade pact with a G-20 economy. But China isn’t the same anymore, he said, adding that this is an opportunity for India.

“Back then, all of us in Australia were very optimistic about China. What we have seen in the last few years though is really a very different China from the China of Deng Xiaoping. Xi Jinping’s China is much more like Mao Zedong’s China than it is Deng Xiaoping’s China,” he added.

“We are seeing a weaponisation of trade. Something like $20 billion worth of Australian trade has been arbitrarily disrupted by China. It’s very difficult under the circumstances to see China as a trusted partner,” he said.

“The difficulties with China mean India has quite an opportunity to step in particularly with supply chains and you know is absolutely reliable,” he added.

(Edited by Amit Upadhyaya)

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