New Zealand-India trade ties caught in geopolitical knot


Venu Menon
Wellington,6 September 2023

Prime Minister Chris Hipkins has pledged to lead the first trade delegation to India within the first 100 days of a new Labour government taking office.

Making the announcement in Auckland today, Hipkins acknowledged that a Free Trade Agreement (FTA) with India “of the gold standard  that we’ve been able to negotiate elsewhere is still a way off.”

The impetus to build the relationship with India and create opportunities for New Zealand businesses, exporters and service industries goes beyond merely improving the optics of bilateral relations, or keeping pace with the poll-eve rhetoric of the Opposition alliance, in the run-up to the general election.

Engaging with India

The big difference now is that India has raised the stakes for countries wishing to be aligned to it in terms of trade and foreign policy, who face the risk of being left out of the reckoning. New Zealand is no exception in that global rush to engage with India.

Presiding over the G20 and setting new benchmarks in space have no doubt helped raise India’s global standing, and New Zealand certainly does not wish to lag behind Australia in cuddling up to India.

Trade and geopolitics

But Wellington has to navigate a pricklier pathway than Canberra to earn India’s favour, largely because New Delhi is linking trade with geopolitics.

Though the Commanding Officer of INS Sahyadri, the first Indian warship to visit Wellington in 22 years, skirted the questions posed by Indian Newslink around India’s growing maritime presence and importance  in the Indo-Pacific, it does not strain the imagination to see that the recent goodwill visits by the two Indian Navy ships to New Zealand had a geopolitical significance that Wellington is unlikely to have missed.

Militarisation of the Indo-Pacific

The militarisation of the Indo-Pacific region was set off with the AUKUS submarine deal, a trilateral security pact inked early this year between Australia, the UK and the US, which tacitly was a strategy aimed at containing China.

New Zealand is not part of the AUKUS security pact, but the door has been left ajar for it to enter the club.

India is setting its sights on a heightened role in promoting its security interests in the Indo-Pacific region, and is a natural ally in any security arrangement focused on the containment of China.

Nuclear Suppliers Group (NSG)

India’s interests in the Indo-Pacific region go beyond the soft power diplomacy of mango exports to New Zealand. New Delhi seeks a more meaningful engagement with Wellington that envisages the removal of the roadblock to India’s membership of the Nuclear Suppliers Group (NSG).

The new government that takes office in New Zealand after the upcoming general election must contend with the weaponisation of trade by India as a means of achieving its security goals in the Indo-Pacific region.

Ministerial talks

It is worth noting that the joint statement released following the New Zealand and India ministerial talks in New Delhi on 29 August 2023 makes no mention of any prospective  FTA between the two countries. Hipkins was at pains to point out in Auckland: “India has made it pretty clear that they want to see us building up our relationship before they are willing to go into negotiations [on FTA].”

That goes to the core of the longstanding deadlock around India’s membership of the NSG. If the onus of fast-tracking efforts to reach an FTA lies with India, the initiative to let New Delhi into the elite nuclear club rests with Wellington. This appears to be the reciprocal trajectory that trade ties between India and New Zealand are moving on.

Minister of Trade and Export Growth Damien O’Connor and his Indian counterpart Piyush Goyal, Minister of Commerce and Industry, ticked all the boxes in their August 28 bilateral meeting in New Delhi. They noted the strong people-to-people linkages between the two countries, the contribution of the diaspora, the annual meeting of the Joint Trade Committee (JTC) established under the 1986 India-New Zealand Trade Agreement.

The lexicon of bilateral engagement was in place.

The two ministers noted the “existing initiatives and bilateral consultative forums, designed to strengthen trade and industry cooperation and collaboration” between the two sides, specifically in agriculture and horticulture (including Kiwi fruit). Timber import from New Zealand to India was discussed, while improving air connectivity between the two countries was a top priority item.

The ministers parted with the promise to “review progress at regular intervals.”

But there was little indication of any engagement between New Delhi and Wellington on India’s bid to join the Nuclear Suppliers Group (NSG).

New Zealand has withheld its support to India’s membership of the NSG.

This could have a chilling effect on bilateral relations.

Wellington is not opposed in principle to India’s entry into the NSG, but wants clear criteria for admitting countries that are not signatories to the Nuclear Non-Proliferation Treaty (NPT), such as  India, Pakistan and Israel.

New Zealand’s Ministry of Foreign Affairs and Trade (MFAT) sees agreement on these criteria as an important first step for NSG membership.

Elusive goal

But building a consensus around objective criteria remains an elusive goal. While the US backs India’s bid for membership of the NSG, China is staunchly opposed to it.

New Zealand’s two-step solution, based on criteria and consensus, to India’s pending application for membership of the NSG means India has a long wait ahead.

Trade may emerge as a means of persuading New Zealand to agree to let India into the nuclear suppliers club.

Venu Menon is an Indian Newslink reporter based in Wellington

 

 

 

 

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