Conflicting interests impede FTA Path

Delegates, guests and media personnel attending the annual summit of India New Zealand Business Council (INZBC) on June 13, 2016 at Langham Hotel in Auckland would agree that the concluding session was somewhat embarrassing.

Arvind Mehta, Additional Secretary at Commerce & Industry Ministry and Lead Negotiator of Free Trade Agreement (FTA) told the assembly that his country was ready to offer a pact in the services sector.

“Let us sign a Free Trade Agreement on investments, technology and other services and then cap it with a pact on agriculture,” he said, with a veiled implication that the latter would be subject to Delhi’s norms.

Prime Minister Jon Key, who was among the listeners responded, “We cannot go to other countries and ask them for a full FTA, New Zealand prefers a comprehensive pact and not on piece-meal basis,” he said.

You could say that that the exchange between a senior Indian government official and the Prime Minister of New Zealand was ‘revealing,’ ‘unfortunate’ or ‘out-of-place,’ but the fact that it reflected reality was inescapable.

While there is a pronounced need for closer relationship between New Zealand and India on trade, commerce and investment, there has been no progress at the government level, except for repeated rhetoric at all levels.

The main problem appears to be a mismatch of ambition and willingness to move forward. New Zealand has been seeking a FTA since 2007 (when the first move was made unofficially by Tim Groser, then in Opposition during his private visit to Delhi in March that year and the official kick-start by then Trade Minister Phil Goff). Since then, except for ten meetings in both countries and the ‘promise of returning to the discussion table,’ nothing much has happened.

Difficult talking

Former Finance Minister Palaniappan Chidambaram had told this newspaper during his visit to Wellington in November 2006 (more than a year before an official feasibility study was launched) that it would be difficult for India to negotiate on agriculture, dairy and food sectors.

His implied message was, “Talk to us about other issues but do not ask us to reduce (leave alone remove) tariffs on New Zealand’s agricultural and dairy products, meat and other related exports.”

He also said, “To India, agriculture is livelihood, to New Zealand, it is trade.”

We have heard our ministers and diplomats say, “To India, Trade is livelihood.”

That was in effect the song played by Mr Mehta in Auckland last fortnight.

Free Trade was also the tune of Mr Key.

But they sang from different sheets and orchestration.

Unrelenting position

The Indian government led by Narendra Modi is business-friendly but it is doubtful if India would relent from its position relating to removal of tariffs on agricultural imports. This has been the main thorn in the flesh of several non-starter FTAs, including those with the US and Australia. These countries anxiously await the successful conclusion of an FTA between New Zealand and India, without either country giving up its stand on the core sectors of agriculture, dairy and meat.

On its part, New Zealand has not demonstrated its enthusiasm strong enough to convince India that it is serious about a more constructive engagement with the world’s largest democracy (except for saying forever that we share democratic traditions) and soon-to-be the world’s most power economy (unimpressive trade performance as mentioned above).

INZBC had grand plans of working with such mammoth organisations as the Federation of Indian Chambers of Commerce & Industry, the Confederation of Indian Industry (CII), Associated Chambers of Commerce of India (ASSOCHAM) and the Punjab, Haryana & Delhi Chambers of Commerce & Industry.

However, these plans have remained largely on paper, and save for a few meetings, there has been no concrete activity. INZBC is genuine in its intention and approach but its Indian counterparts are too busy chasing their bigger cousins to heed to the calls for closer cooperation from New Zealand.

New initiatives

New Zealand should consider its alternative strategy of boosting individual sectors, the most important of which would be business, trade and investment.

We heard the other day that New Zealand would be a partner in the establishment of Asian Infrastructure Investment Bank with about $150 million as its investment. The Chinese-led initiative would hopefully provide some opportunities for New Zealand to be involved in infrastructure of the emerging economies of Asia.

We will await further developments with interest.

Add a Comment