Phil Goff –
Why isn’t India our largest trading partner?
As Minister of Trade in 2008, together with then Indian Commerce Minister Kamal Nath, I launched a joint feasibility study into a Free Trade Agreement (FTA) between our two countries.
Having just concluded a FTA with China, I wanted to put our trade with India on the same footing. Trade with China was increasing rapidly at that point and has done so even more quickly under the FTA to become New Zealand’s biggest trading partner.
Paling comparison
By contrast, trade with India was only increasing gradually and is now only our 15th trading partner. Our two-way trade with India has doubled in the past five years but is only about $1.1 billion, compared with two-way trade with China of $20 billion.
It did not make sense for me that the development of our trading relationship with India was so limited.
India has a shared history with New Zealand. Both have inherited a strong democracy, the British system of justice and use of English language. We have enjoyed long friendship, fought beside each other at Gallipoli and have shared heroes in Mahatma Gandhi and Sir Edmund Hillary.
Joint Study
I believed that we could do much better and that a FTA could be a catalyst.
The joint feasibility study that Kamal and I commissioned gave support to these views.
It noted that our economies were complementary and that both countries would benefit from the freeing up of trade between us.
I wanted to push ahead with a FTA because while there are areas where we produce the same things, our areas of expertise and speciality are different.
India’s manufactured goods and IT services are attractive to us.
Mutual benefits
New Zealand produces agricultural goods for which demand in India is increasing among a growing middle class and in the hospitality industry.
India’s access to New Zealand’s primary produce in a world where demand for protein is growing and concerns about security of food supply exist is important.
For New Zealand, access to the India’s market, expected to be the third largest in the world by 2025, is very important.
Free trade talks began in 2010 and are now in their fifth year.
Slow progress
However, progress has been slow.
As the Minister who started the free trade process, I want to see those negotiations move forward as does the Labour Party.
One of the problems is that New Zealand’s major exports are primary products and India has an average tariff rate on agricultural goods of 34% and on milk powder of 60%.
In horticulture and meat, there are significant non-tariff barriers.
New Zealand cannot reach a deal without significant concessions in these areas.
Sweetened deal
To sweeten a deal on agriculture, we should be making offers to assist India’s dairy and agriculture industry with New Zealand’s latest agri-technology and animal husbandry skills, and with efforts to improve India’s supply chain to prevent current high levels of food wastage.
In arguing for freeing up of imports, we can also point out that the most successful area of India’s economy is ICT, which has become world leading without protection or subsidies.
It would be good too to open up direct air links between New Zealand and India to facilitate growth in tourism and international education, which are growth areas in the service sector.
As New Zealand’s Indian population grows, we have more knowledge and skill locally in our country that can facilitate our trading relationship with India.
However, we need a FTA to act as a catalyst for this growth and a launching pad to realise the benefits to both countries.
We need to increase the efforts that our own Government is making, and lift negotiating meetings from just one per year.
We also seek to engage the Indian High Commission in New Zealand so that it talks up, not down, the prospects of a high quality agreement.
Phil Goff is former Foreign Affairs and Trade Minister. An elected Member of Parliament from Mt Roskill, he is Labour Party’s Spokesperson for Auckland Issues, Defence, Disarmament, Ethnic Affairs and Veterans’ Affairs. The File Photo here shows him speaking as Trade Minister at the ‘New Zealand-India Day’ organised by the New Zealand Institute of International Affairs on March 27, 2007. Seated near him is Russell Marshall, the then Tertiary Education Commissioner and former Minister and High Commissioner to London.
