Keeping a realistic eye on the India prize

ATRADE lobbyist for some of New Zealand’s biggest primary exporters does not foresee a free trade agreement with India any time soon and is hosing down talk of a limited deal for less sensitive sectors such as meat and horticulture.

Stephen Jacobi, executive director of the International Business Forum, which includes export heavy hitters Fonterra, ANZCO and Zespri among others, said NZ negotiators spent over a decade working on a deal to free up trade with India but got nowhere.

Bilateral talks started in 2011 before being absorbed by the mega regional trade deal the Regional Comprehensive Economic Partnership (RCEP), which concluded in 2019 but only after India pulled out.

“The bilateral negotiation was transferred over to RCEP and it continued actively right until the end when India pulled the plug on that,” Jacobi said.

Reports at the time said India’s principal concern with RCEP was that it risked a flood of cheap manufactured imports from China by signing up.

Opening its large and heavily protected dairy sector to increased competition from NZ and Australia is understood to have been a close second in India’s reasoning for pulling out.

“The point here is that if the other party does not want to do the deal then what are you going to do?” Jacobi said.

The National Party believes Labour has been asleep at the wheel over its two terms in government with limited ministerial travel to India and no prime ministerial trips.

NZ’s sluggish approach is being contrasted with that of Australia, which made its relationship a priority and was rewarded with a free trade agreement last year.

National Party leader Christopher Luxon has said he will make a deal with India a “strategic priority” if he is elected prime minister later this year.

As such Luxon said he will travel to New Delhi within six months of being sworn in, to resurrect talks. Jacobi, who travelled to India to meet business and government representatives twice in the past eight months, reckons such a trip by Luxon would be only the first step on a long road to a free trade agreement.

“Good on the National Party but they might not find a very willing partner on the other side.

“The smarter thing at the moment is to focus on building up the relationship, which will indeed require a lot of investment from the government.

“There is a bit of agreement among a number of the business organisations that this needs to be the focus at the moment and not re-starting a FTA negotiation that cannot be concluded, but rather putting the effort into understanding how NZ can contribute to India’s future growth and building up the exchanges and visits and research, which is what we have not been doing and which Australia has.”

NZ will also need to allow in more Indian migrants, as Australia has done.

Where Jacobi sees little profit following Australia, however, is allowing the idea of a limited trade deal to take root with the Indians.

When NZ finally gets back to the negotiating table, dairy market access cannot be off-limits.

“We have just done a FTA with the EU that has the barest fig leaf of inclusion of dairy products and I do not think the government wants to go any further in that direction and nor do I think they should.”

That’s likely to have been a difficult conversation for Jacobi’s meat industry colleagues, who are itching to get rid of a 35% tariff on sheep meat – something Australian rivals no longer face by virtue of their own FTA.

Jacobi, a former trade negotiator, said NZ could not do a deal like that. It would mean all the future ones we wanted to do are going to be prejudiced.

“If you want big numbers and transformational gains from FTAs you have to include dairy products and meat products and horticultural products.

“It is a point of principle that might seem like cutting off our nose to spite our face but these things are important.”

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