Aus looks to India, China to prop up trade

K J M Varma

Adelaide, Mar 7 (PTI) As its economy inches towards
recession due to the global downturn, Australia hopes to tide
over the much feared financial slow down by working out a host
of Free Trade Agreements (FTAs) especially with the "big
fellows" India and China to get more investments from these
countries and to expand the base of exports.

Australia which appeared safe with two per cent GDP
projections up until last week, suddenly faced the spectre of
recession, the first in two decades with national accounts
figures revealing that the economy shrank dramatically in the
December quarter.

Hopes that the country can fend off the recession receded
after its economy contracted by 0.5 per cent.

"There has been a savage contraction in global demand. It
is ripping through economies in all sorts of predictable and
unpredictable ways," Treasury Minister Wayne Swan said.

Prime Minister Kevin Rudd has already announced dollar
(Aus) 42 billion bailout package under which households were
being given about 1000 dollars to spend on consumer goods.

The bailout, government believes, would stimulate
spending and thereby increase the money supply and keep the
demand for goods.

Disquieting news also came from the just concluded
conference of Australian Bureau of Agricultural Resources
Economics (ABARE) in Canberra, which predicted that the value
of the Australian commodity exports were forecast to plunge by
17 per cent this year.

ABARE study said that commodity exports are forecast to
drop from (AUS) dollars 196 billion to 162 billion this year.

The country's economic growth in past five years have been
largely based on increasing demand for minerals and energy in
the world markets leading to a 48 per cent surge in exports.

Australian officials, however, hope to tide over any
fears of economic slow down by improving trade with a number
of countries, especially China, India and South Korea to boost
its exports.

Australia considers Indian government's decision, this
week, to permit Australian dairy products in their markets as
significant because it would open a new market for the
country's diary products.

India gave its nod after Australia banned the use of
artificial oestrogen, (a steroid used for improving female sex
hormones) as demanded by New Delhi.

Australia hopes that the Indian market would provide a
new opening to its 8000 odd farmers whose dairy products were
currently exported to 122 countries, making it one of the high
value of exports of the country.

During a media briefing here, senior Trade and Foreign
office officials expressed keen interest in expediting the FTA
with India, for which both the countries have already
commissioned a study.

Australia, which has emerged as the second most popular
destination among Indian students seeking an overseas
education with 97,000 of them enrolling in different courses,
has also opened its markets for Indian mangoes and table
grapes.

Education exports to India in 2007-08 totalled more than
(Aus) dollar 2.0 billion, they said.

New prospects continue to emerge in sectors such as ICT,
biotechnology, education, tourism, health, film and insurance.

Australian foreign direct investment in India was worth
(Aus) dollar 471 million in 2007. This investment covers
manufacturing, telecommunications, hotels, minerals
processing, food processing, oil and gas, and the automotive
sector.

Seeking strategic tie up with India, much on the lines of
the US, Australia wants to balance its burgeoning trade
relations with New Delhi by working out an FTA with China
also.

"China is strategically very important for Australia from
trade point view," an Australian official said.

With two-way trade reaching (Aus) dollars 63.8 billion in
2007-08, a 16.5 per cent increase from 2006-07, China became
it's largest trading partner.

The Asian giant is also Australia's second largest export
market, accounting for 13.5 per cent of its total exports.

Australia also hopes to conclude an early FTA with India
in order to increase the rate of Indian investment there as
well as to push more exports.

Already several Indian companies have invested there.
Reliance has invested in a joint venture with a local company
in uranium mines.

Despite close ties, Australia, which has 35 per cent of
world's uranium resources declined to supply nuclear fuel to
India on the grounds that New Delhi has not signed NPT.

Australian officials say that the two-way trade in goods
between India and Australia totalled over (Aus) dollar 10.9
billion in 2007-08, with India emerging as Australia's 11th
largest merchandise trading partner.

Australia, with services worth (Aus) dollar 2,524 million
exported to India, emerged as the 6th largest export market in
2007-08.

Australian merchandise exports to India reached (Aus)
dollar 9.3 billion last financial year, 5.2 per cent of it's
total exports. PTI KJV
AM