Luxon’s push for trade pact with India an uphill task



Christopher Luxon (INL File Photo)

Venu Menon
Wellington, April 21 ,2023

National Party leader Christopher Luxon plans to restart trade talks with India, which is among New Zealand’s top 15 trading partners and accounts for two-way trade worth nearly NZ $ 2.2 bn.

Achieving a Free Trade Agreement (FTA) with India will be a “major strategic priority” for the National Party, if elected.

Luxon reeled off data while addressing the India-NZ summit held in Auckland on April 18: “With a population of more than 1.4 billion people, India’s economy grew by $560 bn last year and by 2030 India is expected to become the third largest economy in the world.”

Luxon has been quick to blame the Labour government for the decline in two-way trade between the two countries since 2017 and slammed Foreign Affairs Minister Nanaia Mahuta for the deceleration in the momentum to achieve an FTA between New Zealand and India.

“Well, it might not be [a priority] for a Labour government, but it will be for a National government that I lead,” Luxon has pledged.

The National leader intends to push harder for a trade agreement with India than both John Key and Jacinda Ardern who “hadn’t been trying hard enough.”

But Luxon will need to go beyond pre-election rhetoric and ponder the low-key outcome of the last round of trade talks held between India and New Zealand last year.

Joint Trade Committee talks were held between the two sides on 24 June 2022 in New Delhi.

Mark Sinclair, Deputy Secretary, Americas and Asia Group, Ministry of Foreign Affairs and Trade ( MFAT) led the New Zealand delegation, while the Indian team was led by Rachna Shah, Additional Secretary, Department of Commerce, Ministry of Commerce and Industry, Government of India.

Joint Trade Committee talks were preceded by Foreign Ministry Consultations the previous day, where officials reiterated New Zealand and India’s commitment to “deepening bilateral ties and engagement across a range of areas including trade and investment, defence and security and people-to-people ties.”

A similar diplomatic ritual had played out the previous year when the two countries held Foreign Office Consultations virtually, with Mark Sinclair leading the New Zealand side and Riva Ganguly Das, Secretary (East), Ministry of External Affairs (MEA), leading the Indian delegation.

At the trade talks held in Delhi last June, officials from both countries “shared views on the global trading environment and discussed opportunities to further develop New Zealand and India’s bilateral trade partnership,” according to MFAT.

The focus areas from the New Zealand stand point remains to “reduce market access barriers, and strengthen economic cooperation in agriculture, renewable energy and the Indo-Pacific Economic Framework.”

The last round of trade talks between India and New Zealand came in the wake of the FTA between New Zealand and the European Union as well as the Economic Cooperation and Trade Agreement (ECTA) signed between India and Australia.

But Australia’s recent FTA with India has raised the urgency for New Zealand to follow suit.

Luxon’s current posture is aimed at building on the inconclusive bid launched during the John Key era of 2016 to forge an elusive FTA between India and New Zealand, especially since former prime minister Jacinda Ardern had shown little appetite to take her predecessor’s commitment forward.

Ardern gave priority to working out FTAs with the UK and the EU instead.

India is lukewarm about signing an FTA with New Zealand and is yet to commit to reducing market access barriers for New Zealand businesses.

Foreign Minister Mahuta’s maiden visit to India in February has not brought the two countries any closer to signing a Free Trade Agreement. But it has helped keep the goodwill flowing between the two countries.

Clearly, National’s Luxon is aiming to harvest that goodwill in the lead-up to the general election in October.

Venu Menon is an Indian Newslink reporter based in Wellington.

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