Prime Minister Christopher Luxon and Trade and Investment Minister Todd McClay today announced New Zealand and India have formally launched negotiations on a Comprehensive Free Trade Agreement.Mr McClay held extensive discussions with his Indian counterpart Piyush Goyal in New Delhi today, where they agreed to launch negotiations.
“This announcement is a major breakthrough in the economic relationship between India and New Zealand,” Christopher Luxon says.
“When we came into Government 16 months ago, we made it clear that closer economic ties with India was a key priority.
“Currently the fifth-largest economy in the world, with a population of 1.4 billion people, India holds significant potential for New Zealand and will play a pivotal role in doubling New Zealand’s exports by value over the next ten years.
India is the fifth largest economy now, it is expected to move up two places to third soon.
“This announcement comes off the back of a major lift in political engagement with India. Todd McClay has visited five times and had eight meetings with his Indian counterpart. Foreign Affairs Minister Winston Peters has also visited, and I had a highly productive meeting with Prime Minister Narendra Modi last year.
A Comprehensive Free Trade Agreement is only one part of the Government’s commitment to stepping up all facets of the New Zealand-India relationship.
Trade and Investment Minister Todd McClay says alongside trade agreement negotiations, New Zealand will continue to invest in stronger, deeper, more sustainable connections with India across all pillars of the relationship, including our political, defence and security, sporting, environmental, and people-to-people connections.
“One in four Kiwi jobs rely on trade and last year our export revenue added $100 billion to the economy. Strong agreements and relationships like this ensure every New Zealander has good job opportunities, higher wages and access to world-class public services,” Mr McClay says.
Negotiations will start next month.
That both parties are committing to a comprehensive agreement is especially good news for New Zealand’s dairy sector, which has been seen as a stumbling block for an FTA with India.
Luxon acknowledges this is a sensitive area, given it’s a key export industry for New Zealand, but India will want to protect against setting a precedent that could lead to international dairy giants threatening the make-up of India’s agricultural sector.
And there has been differing opinion over whether an imperfect deal (one without dairy included) is worth it, or whether the Government should hold off for something better.
Newsroom asked McClay whether an interim agreement that doesn’t include dairy is a potential option; something akin to Australia’s economic cooperation agreement, which has led to 85 percent of the country’s goods (by value) exported to India becoming tariff-free.
(From January next year, that will rise to 90 percent, but dairy products – also one of Australia’s key exports – continue to attract tariffs.)
McClay’s answer suggested that’s not what he has in mind: “The joint text that we launched … says a comprehensive free trade agreement. Both sides are aiming for a comprehensive agreement.”
And his promise to dairy farmers (many of whom would be National Party voters): “We’ll get the very best deal we can for all New Zealanders.”
Fonterra group director of global external affairs Simon Tucker told Newsroom he was “delighted” by Sunday’s announcement.
Tucker, who is travelling with the Prime Minister as part of the business delegation, said given dairy was the country’s largest primary export, it wouldn’t shock anyone to hear the Government wanted to include it in any deal that’s done.
“I am very confident that a deal including dairy could be worked out,” he said.
Tucker said between the significant growth in India’s dairy consumption and the complementary products Fonterra sells into India – highly tailored products like whey protein isolates aimed at wellbeing and healthy ageing – he believed it would be possible to find a “mutually acceptable arrangement”.
While it was hard to know how much growth potential could be unlocked by a free trade deal, Tucker said European research had projected India’s dairy consumption would outstrip its supply somewhere between 2040 and 2050. While New Zealand would never be in a position to sell huge quantities of dairy into India, that growth (especially in the middle class) would present opportunities for New Zealand.
Tucker acknowledged negotiations wouldn’t be easy. “But any day when you’re announcing the commencement of a new trade agreement is a good day, I think, for farmers.”
India has a large Hindu population who don’t eat meat, but there are millions of others who do and an FTA would be good news for our red meat sector.
Meanwhile, Meat Industry Association independent chair (and former National Party MP) Nathan Guy said Sunday’s announcement had “put a spring in the step” of the travelling business delegation, and upped the ante for this week’s discussions.
Red meat was currently up against a 33 percent tariff in India.
“The size of this economy is ginormous, and a growing middle class of about 500 million consumers. So we know the size of the prize is significant, and we’re excited by the opportunity of this comprehensive free trade agreement, and we’ll do our utmost to support the Government to get this across the line,” Guy said.
Guy was involved in trade negotiations under Key’s government in 2014, and after the previous negotiations stalled, he said this was positive news for sheep farmers who had been doing it tough during the past couple of years.
“This is a massive market of 1.45 billion people, and the world is in a state of flux at the moment,” he said. “The geopolitical issues are creating a huge amount of concern, both outside and inside the farm gate, and having a potential comprehensive free trade agreement with India just helps to diversify some of the headwinds that processes are facing at this point in time.” . .
Those headwinds include uncertainty about trade with both China and the USA.
Now more than ever, New Zealand must eschew protectionism, stand up for free trade and seek to get our export eggs in more, and freer, baskets.
India is a very big basket and while the announcement is just the beginning, it does signal that an FTA is possible, and potentially sooner than has previously been thought.
The announcement is also opportune for a reminder that the only really fair trade is free trade.
Ele Ludemann is a North Otago farmer and journalist, who blogs HERE - where this article was sourced.
6 comments:
Anyone can get a 'free' trade deal if they bend over enough. Luxon will be so desperate for some good news he will sign anything put in front of him.
After all, in his own words, he is sorted.
Interesting that this morning ZB is reporting: Indian Prime Minister Narendra Modi is calling for the New Zealand Government to support its efforts to curb “illegal anti-India activities” in Aotearoa as he condemns “terrorists, separatists, and radical elements”
When is Luxon going to realise he has to deal with the racial/treaty issues at home? Who wants to invest here when for example large payments are required to gain cultural consent to development of any kind. Now it seems India is questioning trade due to poor behaviour in nz, such as the targeting Indian shopkeepers for ram raids, assaults, theft. Turning a blind eye isn’t working so well Prime Minister.
Thumbs up to Luxon for getting on with the important stuff. I'm sick of keyboard warriors bitching about his so called lack of leadership when he is focusing on doing what he promised to do without being distracted by the culture wars other are obsessing over. Seymour is handling that task quite competently.
Well-spoke Anonymous #2. Not only India, but Vietnam, where PM Luxon and hangers-on negotiated continuing expansion of trade with that country. With the US in such disarray, and Canada fighting back, the markets are there, if only our Brains Trust will seize upon the increased opportunities.
With 61 million dairy cows, won't India be exporting dairy products to NZ? Surely their products will be cheaper due to Indias lower labour costs?
Isn't that what consumers need, a bit of in competition in the domestic market to get prices down for NZ consumers?
Anon 10.31. The culture war as you so frivolousy describe it, is infact a concerted effort to destroy New Zealands liberal democracy. Free trade agreements won't be much good if the country's in a state of civil war.
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