Immigration Minister Dr Jonathan Coleman told a gathering in Mumbai last month that the negotiations for a Free Trade Agreement (FTA) with India were progressing well and that his Government was confident of signing ‘a comprehensive agreement at the earliest.’
“India constitutes the eighth largest export market for New Zealand with total value of bilateral trade at $1.2 billion. We want to make it easier for movement of goods and persons between New Zealand and India,” he said.
There are several implications in these statements, all of which would counter practical difficulties. Firstly, FTAs alone cannot guarantee easier movement of goods and people. New Zealand has stringent bio-security laws, which will restrict ‘fast flow of goods’ that Dr Coleman envisages. Besides, there are other requirements that would preclude such moves.
Secondly, free movement of people would also be impossible, unless the New Zealand Government relaxes its immigration policy, which again, remains beyond the scope of any FTA. We have our own terms and conditions for granting visit, work, business and other permits. It would be wrong for anyone to expect ‘visas on arrival in New Zealand the day after the FTA is signed.’
Politicians may be forgiven for their enthusiasm, because they are keen to implement policies and programmes that are progressive and exciting. But the reality is far removed from aspirations.
But as we have mentioned often, FTA negotiations are not easy to come by.
India would not allow negotiations on the agricultural sector, for uninterrupted import of agricultural commodities and dairy products would hurt its economy and no Government that wants to stay in power can afford to upset a vast majority of the population that is dependent on it.
Agriculture is also the mainstay of New Zealand and the economy depends largely on its exports from this sector.
Besides, India has not yet indicated if it would ease the tariff (a whopping 500%) on wine imports from New Zealand – another major export from this country.
The imponderables are many and it would take patience, perseverance and negotiating skills to walk through the FTA process with success.
There are indications that the Indian Government may insist on joint venture partners investing substantially (at least 30% of the value of contracts) to boost the Indian economy, employment and of course foreign exchange earnings.
Having said all these, there are several areas in which progress can be made without much haggling. One of these would be export of agro-technology, in which New Zealand has a global edge. India is keen to modernise its agricultural sector and this country’s assistance would generate enormous goodwill and ease the process for talks.
Timber export is another area in which New Zealand has immense potential but the current price war perpetrated by some New Zealand exporters is seen as self-inflected wound, hurting no one but the exporters themselves.
The New Zealand Government will do well to address the issue and discipline the exporters in order that everyone involved stands to benefit.
Several other areas of export including coal, wool, hides and skin, machinery and (some) dairy products have potential for enlargement.
India is allergic to any suggestion for concessions on dairy and agricultural exports from New Zealand, apart from offering preferential tariffs on a number of goods.
