Wellington, December 12,2023
Prime Minister Christopher Luxon says trade with India will be a priority for the new coalition government.
“There’s going to be a big emphasis on trade, in doing business with the world,” he told media following the weekly Cabinet meeting held on Monday, 11 December 2023.
The PM, who was accompanied at the press conference by Workplace Relations Minister Brooke van Velden, said New Zealand was a small country and that “we don’t get rich selling stuff to each other. We get out there with 194 other countries and actually sell our product and services to the world.”
While India is inevitably lumped with China and Southeast Asian countries, such as Singapore, as New Zealand looks outward to deepen “commercial opportunities for New Zealand businesses,” Luxon also recognises that dealing with India is a challenge.
It involves the recognition that “India is the most populous country on earth this year, it’s going to be the third biggest economy by 2030. A two-way trade with India, I think, has gone from $2.8 billion down to $2.3 billion in the last six years.”
Visit to India
Minister of Trade Todd McClay’s planned visit to India before Christmas, via Singapore, is part of a two-pronged strategy to increase opportunities in Southeast Asia as well as “reestablishing top-to-top connections and relationships with India, and to start the dialogue from there.”
But the critical question is whether the conversation with India will include dairy products?
“It will be very difficult, as we well know,” Luxon concedes.
The new government’s approach to improving trade with India hinges on building the relationship. “We want to see more trade with India, but that starts with the relationship, first and foremost. From there will flow a series of things, about how we can flow capital, investment, trade, people-to-people connections,” Luxon notes.
In other words, the new government is in tacit acknowledgement with its predecessor Labour government that negotiating a Free Trade Agreement (FTA) with India is still a way off.
But the impetus to build the relationship with India and create opportunities for New Zealand businesses goes beyond merely keeping pace with the poll-eve rhetoric of Election 2023.
Aligning with India
The new government will find that aligning its trade and foreign policy with that of India is intertwined with geopolitics and India’s growing maritime presence and importance in the Indo-Pacific.
India is wary of its security interests in the Indo-Pacific region.
India’s security goals
Wellington may have to brace up to pressure from New Delhi to reopen the issue of India’s membership of the Nuclear Suppliers Group (NSG).
In other words, the new government that has taken office in New Zealand must contend with the possible weaponisation of trade by India as a means of achieving its security goals in the Indo-Pacific region.
India will be looking for reciprocity in unforeseen directions as the Luxon government pushes to increase trade between India and New Zealand.
Reinventing the wheel
Minister McClay’s imminent visit will likely tread the same path taken by former Labour Minister of Trade and Export Growth Damien O’Connor, who met Piyush Goyal, India’s Minister of Commerce and Industry, in New Delhi last August.
The bilateral meeting ticked all the usual boxes, including people-to-people ties 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, and so on.
Bilateral talks between New Zealand and India to develop their trade partnership has played out as a diplomatic ritual in the past.
The focus areas from the New Zealand standpoint remain to “reduce market access barriers, and strengthen economic cooperation in agriculture.”
Legacy of the past
Prime Minister Luxon may need to temper his enthusiasm to “build a relationship” with India by drawing lessons from the inconclusive bid launched during the John Key era of 2016 to forge an elusive FTA between India and New Zealand.
India remains lukewarm on the issue and is yet to commit on reducing market access barriers for New Zealand businesses, with dairy still a no-go area.
The Indo-Pacific Economic Framework, a regional strategy launched by the US which involves the four Quad countries (India, the US, Japan and Australia), as well as New Zealand and South Korea, underlines the strategic importance of India as an emerging power.
The potential inclusion of this on Trade Minister McClay’s agenda when he visits India could be Wellington’s thoughtful Christmas gift to New Delhi.
Venu Menon is an Indian Newslink reporter based in Wellington