‘Fear of China’ pushing Australia and India towards trade pact

China’s blocking of Australian exports and its border stand-off with India have fuelled efforts for a deal showing ‘how to stand up to Beijing’, experts say

But Australia might find the Indian economy – where its dairy, wine and agricultural goods will be a hard sell – is no substitute for the Chinese market

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A woman holds a vandalised photograph of Chinese President Xi Jinping at a protest near the Chinese embassy in New Delhi, India. Photo: AP

Published: 6:36pm, 11 Dec 2020Updated: 9:52pm, 11 Dec 2020

Plans for a free-trade pact between Australia and India are gaining ground amid rising fears of Chinese bullying and trade coercion, analysts say, following the latest signal of support for a deal from New Delhi’s top diplomat.

Indian Minister of External Affairs Subrahmanyam Jaishankar this week confirmed talks on a possible trade deal following New Delhi’s exit from the Regional Comprehensive Economic Partnership, nearly a decade after the sides first entered negotiations on a pact. In November, India pulled out of the RCEP, which is made up of the members of the Association of Southeast Asian Nations (Asean), China, Japan, South Korea, Australia and New Zealand, following concerns the terms of the agreement were skewed in favour of Beijing. Australia and India held nine rounds of talks on a trade deal between 2011 and 2015, before Prime Ministers Scott Morrison and Narendra Modi in June agreed to restart negotiations.

“There is a discussion on a free-trade agreement, a bilateral free-trade agreement as well because, as you know, we didn’t sign the RCEP,” Jaishankar said on Wednesday at an event hosted by the Australia-based Lowy Institute.

India’s Minister of Foreign Affairs Subrahmanyam Jaishankar. Photo: AFP

Both Australia and India have been mired in major disputes with China in recent months that have fuelled a flurry of activity toward greater cooperation between the sides. Beijing has restricted billions of dollars of Australian exports since Canberra publicly called for an international inquiry into the Covid-19 pandemic, while Chinese and Indian troops have faced off in deadly clashes along the disputed Himalayan border.

Vinay Kaura, an assistant professor at Sardar Patel University of Police, Security and Criminal Justice in Jodhpur, said efforts to seal a trade pact served as a message to countries “looking for ways on how to stand up to Beijing”.