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The National Party wants to restart trade talks with India, in the hope of getting a trade agreement over the line.
Leader Christopher Luxon said this morning his ministers would be on the plane to India immediately, trying to improve the relationships and that he himself would visit India in his first year of taking office.
He described a deal with India as a “strategic priority”, saying trade with India had gone backwards under Labour.
“With a population of more than 1.4 billion people, India’s economy grew by $560 billion last year and by 2030 India is expected to become the third largest economy in the world.
“Despite Labour launching a policy in 2020 called ‘India – New Zealand 2025, Investing in the Relationship,’ two-way trade between our two countries has declined since 2017 – from $2.8 billion to $2.3 billion. By comparison, two-way trade with China amounts to $30 billion [it is actually closer to $40b],” Luxon said.
Luxon noted that other countries were getting deals over the line with India, although some of these deals are so-called “early harvest” agreements, which leave contentious sectors off the table in order to get an agreement over the line.
“Australia has just signed a Free Trade Agreement with India and the UK are close to signing one too. Yet Foreign Affairs Minister Nanaia Mahuta has said that a Free Trade Agreement between New Zealand and India is no longer a priority,” Luxon said.
Foreign Minister Nanaia Mahuta has said a trade agreement with India is no longer a priority. There is a lack of enthusiasm on the Indian side, largely because areas where New Zealand would be looking to make significant gains are areas which are heavily protected by the Indian state.
Foreign Affairs Minister Nanaia Mahuta said the relationship was shifting focus away from an FTA. Photo / Mark Mitchell
Earlier this year, MFAT Deputy Secretary Trade and Economic Vangelis Vitalis told a Parliamentary select committee that New Zealand was in a difficult position when it came to trade agreements with India because of the significance of the dairy sector in both countries.
“India is a critical partner of ours and the Australians have a free trade agreement. That FTA does not include dairy… it is impossible for NZ to do an FTA that does not include dairy… because it is such a significant part of our export profile,” Vitalis said.
He said that some of the highest trade barriers in India related to dairy and were in excess of 200 per cent.
National’s trade spokesman Todd McClay, who was in that select committee meeting said that National would still look to bring India to the negotiating table.
He said the party would not be looking for an “early harvest” agreement, but a full Free Trade Agreement.
McClay said that despite the apparent impossibility of squeezing dairy into an Indian FTA, he would leave it on the table - noting it was poor form to conduct negotiations via the media.
“We think we would start from the position of everything is on the table,” McClay said.
He said that if negotiations produced a deal that was not in New Zealand’s interest, the Government could choose to walk away.
“If you get to the point where a deal is not commercially meaningful enough for New Zealand then ultimately a government makes a choice at that time,” he said.
McClay said that the current Government had “not been interested enough” in India.
“We are sending a really clear message to India - the Government hasn’t been interested enough,” McClay said.
Trade Minister Damien O’Connor said the issue of including dairy in any trade deal had frustrated trade talks, ”because we would not consider an FTA without dairy being incorporated and the Indians would not accept one with it being incorporated”.
He said, despite this, the Govovernment was looking to strengthen business ties with India, and he had this week welcomed a delegation of Indian businesses.
“We have committed to building better relationships with India - we have had three ministerial visits over the past three months,” O’Connor said.
O’Connor said he was pitching New Zealand’s dairy industry as ”complementary” to India’s and said a trade deal could engage the sharing of technology and expertise in the sector.
While Foreign Minister Mahuta has visited India, neither Jacinda Ardern nor Hipkins have visited India in Labour’s nearly six years in office - although New Zealand’s borders were closed for roughly two of these years.
Former Prime Minister John Key launched an India strategy in 2011, of which a trade agreement with India was a key part.
During Key’s visit to India in October 2016, he and Indian Prime Minister Narendra Modi issued a joint statement that included a commitment to work towards a Free Trade Agreement.
These talks have stalled.
Last October, New Zealand hosted India’s External Affairs Minister Dr Subrahmanyam Jaishankar on the first visit of an Indian foreign minister to New Zealand in 21 years.
Mahuta said following her meeting with Jaishankar that the relationship had shifted from focusing on the trade agreement, to attempting to strengthen business ties.
