Before being appointed New Zealand’s trade minister, Tim Groser served as the chairman for agriculture negotiations of the World Trade Organization. In an interview with Rituparna Bhuyan, he talks about the future of India-New Zealand trade ties and the impasse at the Doha Round of world trade talks. Excerpts:
How do you see trade ties between the two nations?
The way I look at India is this: New Zealand has looked at China very seriously in the last 20 years. We are the first developed country in the world to have a comprehensive Free Trade Agreement (FTA) with China. I see India as the next emerging superpower in the developing world. So we got to do with India what we did with China over the last 20 years.
We understand that India accounts for less than 1 per cent of New Zealand’s imports.
It is a measure of how under-done this relationship is. Total imports into India from New Zealand are far less than one per cent of total Indian imports. It is the exact way other way round. In comparison, China will soon overtake Australia to become New Zealand’s largest source of imports. India should be a very large exporter to New Zealand.
What are the areas that Indian exporters can explore in New Zealand?
It is across the board. The problem from Indian exporters’ perspective is not so much from the barriers to trade but simply people haven’t thought about the New Zealand market. If you look at the economic literature behind the FTAs, economists call it the demonstration effect of these agreements. They act as a signal to companies in the countries concerned to start (giving) direct attention to each other. So they have a wider benefit than just simply formal econometric analysis of the impact of falling trade barriers would give you. That is widely accepted in the economic literature.
New Zealand is known for its strict standards [sanitary and phyto-sanitary (SPS) measures] that one has to comply with be able to export goods, especially farm products. Do you think that could come in the way of trade between the two countries?
We are not going to lower our standards. The thing you have to understand is that New Zealand has very strict SPS measures because it is the most distant country. If you throw a circle around a European city, you could have three hundred million people. If you do that in New Zealand, you would find seagulls. The consequence is that New Zealand’s disease profile is unique.
For example, Canadians used to complain about our SPS measures for trout and salmon imports. They would point that Whirling disease was common everywhere. But we are one country that did not have this disease because of the geographical isolation. The strict barriers are to protect this unique advantage. So this is not going to change. But what we will do is to try and work with India to establish protocols to deal with these issues in a realistic way.
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What are the areas of interest for a New Zealand exporter in India?
Again, it is across the board. Seismic and food technologies are two examples. My country is deeply earthquake-prone and we have developed technologies to deal with it. Then, as the Indian middle class grows in power, it will demand more sophisticated food products. We have technology to do that in certain areas.
You had earlier said that India and New Zealand had very few sensitivities as far as trade was concerned. But if you take agriculture, it is a sensitive topic, as seen in the Doha Round of world trade talks. So how to tackle this sensitive issue?
It (agriculture) is always a political issue in India on the global side, as India basically produces everything. If we look in terms of just these two countries, we do not produce any rice or sugar or oilseeds. It is basically a very limited range of products. I think it is manageable.
But dairy products and apples, for example, could be sensitive for India?
This can be handled as well. For example, in apples there is complementarity of seasons. We can negotiate a seasonal tariff solution to that.
Apart from merchandise trade, do we see complementarity in services trade?
Absolutely. As the Indian economy is opening in the last 20 years, it has unleashed on the world markets its huge intellectual capital. In 2000, total services exports by India were worth $18 billion. This figure has risen to $61 billion in 2007. I find this hugely encouraging.
What is your assessment of the current stalemate in the Doha Round. It has been projected that differences between India and the United States on the Special Safeguard Mechanism on farm products are responsible for the current limbo. What is your assessment?
When I was the chairman of the agriculture negotiations, we had developed a proposal that had two points specifically designed for countries like India — Special Products and Special Safeguard Mechanism. That principle has been accepted. I believe there is a technical solution to the issues. People would not formally agree to a proposal until all other proposals are lined up in a row.
How does one strike a balance between protecting the interests of marginal farmers and market access ambitions of developed countries?
Conceptually, this is not that hard. There has always been a balance to be achieved between liberalisation and safeguards. The reality is that when you liberalise your economy, you have a working hypothesis of what you think is going to happen. But you do not know precisely what is going to happen because there are too many factors than any model can tell you. So you do not take a leap in the dark towards a direction which you think is right. If it turns sour you will have to take a temporary step backwards. That is what safeguards are for. We have this in the form of Article 19 in the GATT (General Agreement on Tariffs and Trade). I expect that if we do this deal, all this brouhaha over issues like SSM will appear historically to have been hugely exaggerated.