A Free Trade Agreement (FTA) or a Closer Economic Cooperation Agreement (CECA) with India is critical to the GDP growth of New Zealand and lifting the standard of living of the people, ANZ New Zealand said.
In its submission to a Parliamentary Select Committee last fortnight, the Bank provided a detailed analysis of the Indian economy and the overall benefits that a free trade pact with India would accrue to the New Zealand economy.
ANZ has been active in the Indian business community both in New Zealand and in India. The Bank’s Auckland based India Segment Head Sunil Kaushal has been ANZ’s ambassador, hosting events of the India New Zealand Business Council and other business meetings and seminars both in New Zealand and India.
Negotiations for an FTA are in advanced stage with New Zealand Prime Minister John Key and Indian Prime Minister Dr Manmohan Singh saying that the pact will be inked by March 2012. This announcement was made by both leaders during the former’s State visit to India from June 27 to 29, 2011.
Growth Engine
ANZ Managing Director (Institutional) David Green said that India was a major engine for economic growth and its trade, investment and people with the Asia Pacific region, including New Zealand, were on the growth path.
“India’s trade with Asia has doubled over the past five years and its investment across the Asia Pacific region, particularly in natural resources, has increased significantly in the past 12 months. India is now Australia’s fourth largest export destination. There is every reason to believe similar benefits are available to New Zealand exporters,” he said.
According to Mr Green, New Zealand would also benefit by shifting its focus from Europe to the emerging economies in Asia-Pacific.
“Such a shift in trading relationships, formalised by comprehensive trade agreements, will provide new, exciting and enriching opportunities for New Zealand exporters. The 2008 FTA with China, the region’s biggest and fastest growing Asian economy represents a huge step forward for New Zealand.
“A similar arrangement with India will, over time, bring significant direct and indirect benefits to the New Zealand economy,” he said.
The submission paper said that direct benefits of an FTA would include growth in export receipts and more jobs. Indirect benefits would include a more open domestic market that focuses individuals and businesses into areas of specialisation and change where they have a comparative and income-generating advantage.
The ANZ submission contained several interesting economic indicators.
It said the Indian economy would grow by 8.5 % in 2011 and overtake China’s growth rate by 2013. Over the next 25 years, the urban population would be more than 600 million, while 291 million people will be out of poverty and the population of the middle class would be more than 563 million.
ANZ in India
ANZ Grindlays was a Subsidiary bank in India from 1984 to 2000.
ANZ India, led by its Chief Executive Subhas DeGamia, is keen to expand its presence in that country.
ANZ Chairman Sir Dryden Spring, said the Bank had a strong Asia focus.
“ANZ Group’s super-regional strategy has anticipated the importance of Asia to our economic future and the huge potential the Asia Pacific region offers our exporters, our businesses that are seeking new sources of funding and the thousands of New Zealanders with family connections in Asia and the Pacific. We are an economy transitioning from a focus on traditional markets in Europe to one seeking to engage with our Asian neighbours. ANZ New Zealand has an important role to play in helping that transition,” he said.
ANZ New Zealand Chief Executive David Hisco said the Bank supported the efforts of the New Zealand Government to negotiate FTA/CECA with the Indian Government.
“While we acknowledge the benefits that accrue to all counties from a liberalised global trading environment, such agreements are particularly important to countries like New Zealand with a small population and where the health of its economy largely depends on export success. In turn, successful exporting countries generally have higher wages and a standard of living to match,”
he said.
