Western Australia stands to gain billions of dollars in extra revenue - the most of any state in the country - under a free trade agreement being negotiated this week between Australia and India, economists predict.
But analysts warn that while overall the deal would particularly benefit WA, some jobs would be at risk if there was greater competition from Indian imports and cheaper labour.
Bilateral negotiations will begin in Canberra this week to nut out a comprehensive agreement that could include services, agriculture, resources and energy, and - according to the Centre for International Economics - add more than $40 billion to the economic output of each country by 2030.
University of Western Australia economist Michael Dockery said WA would likely be the biggest winner in a trade agreement with the rapidly developing country.
"If the resources boom keeps going the way it is, I would certainly think WA would be the main beneficiary," he said.
"[In] both India and China ... for years to come the growth is going to be phenomenal.
"We don't have a significant manufacturing base so ... some other states would experience the negative effects more than we would, so we ought to get more of the upside."
Premier Colin Barnett said there had already been a surge of business between WA and India and a free trade agreement would strengthen the economic relationship even further.
"India is rapidly becoming involved with the WA economy through LNG [liquefied natural gas] purchases, the Perdaman Urea project in Collie, and Lanco's purchase of Griffin Coal adding to the Birla Group's Nifty copper mine investment," he said.
"Western Australia's exports to India were valued at $7.2 billion in 2010 and India is Western Australia's fourth largest trading partner."
Mr Barnett called for the agreement to include agriculture, which would increase trade because the harvest seasons were complementary.
However, India is reportedly unlikely to give many concessions on agriculture, in particular rice and wheat, which are heavily protected.
Chamber of Commerce and Industry Western Australia international trade services manager Keith Seed also said reducing or removing tariffs on agriculture, including wine, would be a windfall for WA.
He warned some businesses, particularly in manufacturing industries, would cry foul over a free trade agreement but overall it would boost the state.
"A lot of people think there might be down sides with free trade, I don't think so," he said. "It opens up trade and communication between the countries.
Read more: http://www.watoday.com.au/business/was-multibilliondollar-windfall-to-come-at-a-cost-20110504-1e82t.html#ixzz1SnnyQh12
