Last month, Australia’s joint standing committee on trade and investment growth recommended that its goverment should include human rights, labour and environmental chapters in its trade agreements and also expressed worries over child labour in India.
Business Standard takes a look at the possible impact of such recommendations on free-trade agreements (FTAs) as well as the legislative ratification process of trade deals in developed countries.
Will the Australian Parliamentary Committee recommendation impact the existing interim trade deal between India and Australia?
The recommendation is unlikely to have an impact on the interim trade agreement or Economic Cooperation and Trade Agreement (ECTA) that was signed by India and Australia one-and-a-half years ago.
However, these new-age trade issues such as labour and environment could become Australia’s focus area in the Comprehensive Economic Cooperation Agreement (CECA) or the comprehensive trade agreement that both countries have been negotiating since February 2023.
Indian government officials had earlier said that during exploratory discussions, convergence was achieved in areas like micro, small and medium enterprises (MSMEs), competition policy, sports, innovation, labour and gender.
Trade experts said that government officials generally reach out to their counterparts to discuss any major concern flagged by the trade partner’s Parliament during FTA negotiations.
What is the FTA ratification process in India?
India’s FTA ratification process is fairly simple. The department of commerce holds multiple rounds of inter-ministerial and stakeholder meetings before the FTA text is finalised.
Thereafter, the department seeks approval of the Union Cabinet and it does not need a nod from Parliament.
What is the FTA ratification process in developed countries?
Most developed nations such as the United States (US), United Kingdom (UK), Australia and the European Union (EU) need to seek Parliamentary approval. This results in greater scrutiny of FTAs in these nations as compared to India. As a result, these countries take longer to ratify the deal.
For instance, the India-Australia ECTA was signed in April 2022, but kicked in from December 29, 2022. This is because of elections as well as the time taken to seek Parliamentary approval.
What are the FTAs currently being negotiated by India?
India is actively engaging in FTA negotiations with the EU, UK, Oman, Sri Lanka, Australia (for a comprehensive trade deal) and Peru.
India and the European Free Trade Association (EFTA) signed a trade deal earlier in March 2024. It needs to be ratified by the Parliaments of Switzerland, Iceland, Norway, and Liechtenstein.
Pacts with Mauritius, United Arab Emirates (UAE) and Australia were signed between 2021 and 2022.
 "Decoded: How trade deals are ratified by India's partner countries")
