India-New Zealand Free Trade Agreement (FTA) Talks
The relaunch of Free Trade Agreement (FTA) negotiations between India and New Zealand marks a significant development after a decade-long hiatus. This decision was announced following a meeting between New Zealand’s Trade Minister Todd McClay and India's Commerce Minister Piyush Goyal.
Context and Background
- India aims to conclude trade negotiations with major partners such as the United States and the European Union within the year.
- Comprehensive trade talks with Australia and renegotiations with ASEAN are also underway.
- Previous challenges in the India-New Zealand FTA talks centered around New Zealand’s demand for greater access to India's dairy market, which India has traditionally protected.
Challenges and Influences
- The Global Trade and Research Institute (GTRI) suggests that US pressure on India to open its agriculture and dairy sectors might influence current negotiations.
- Another significant hurdle in past negotiations was India's demand for better access for its skilled professionals and IT services in New Zealand.
- New Zealand’s low average import tariff of 2.3% compared to India’s 17.8% presents a notable challenge, making traditional FTAs less appealing to India.
Trade Dynamics
- India’s primary exports to New Zealand include clothing, fabrics, home textiles ($72.8 million), medicines and medical supplies ($67.5 million), and refined petroleum ($52.2 million).
- New Zealand’s key exports to India are agricultural products, minerals, and scrap metals, with significant items being apples ($22.6 million) and kiwifruit ($6.6 million).
- The disparity in market access and tariff structures requires strategic negotiation to balance both sides’ interests.
Political and Economic Implications
- Prime Minister Christopher Luxon's visit to India with a high-profile delegation underscores the importance of these negotiations.
- The talks aim to enhance supply chain integration and market access, reflecting a shared vision for stronger economic partnerships, resilience, and prosperity.