While India and New Zealand are working on a free trade agreement (FTA), there is pressure from New Zealand to deal with labour issues and sustainable development. New Zealand Trade Minister Tim Groser explains the rationale for the link to Nayanima Basu and says he is seeking further opening up of the agricultural sector. Edited excerpts:
How much potential is there for increased trade between India and New Zealand and in which areas?
The FTA offers an opportunity to take our relationship to a new level. The trading relationship is very underdeveloped, so there is a lot of potential for growth. Bilateral trade between India and New Zealand, which is around $620 million, is roughly one-tenth of our bilateral trade with China. An FTA is intended to foster increased trade and investment flows in both directions.
When do you think the negotiations can be concluded? What is the current state of negotiations, particularly on market access?
Talks have started only recently, with the first round being held in New Zealand in April. It is too early to say when negotiations are likely to conclude. The second round has tentatively been scheduled for August this year. An FTA must, of course, benefit both the partners. New Zealand’s comparative strengths lie in agriculture, forestry and fisheries. So, market opening through removal of tariff and non-tariff barriers in these sectors is very important for us. India has comparative advantages in a range of manufactured products and in services, and so it will likely be looking for improved market access to New Zealand in these areas.
India is hoping for more market access in your food processing industry and services. Do you think both the countries will be able to agree on the modalities for the same?
New Zealand is an efficient and unsubsidised producer of quality food and beverages, and one which manufactures products largely complementary and often counter-seasonal to what Indian farmers produce. Our products are also likely to target different market segments from those of most of your own farmers, responding to demand from a growing middle class for a greater range of value-added products as well as those seeking a wider range of choice and quality. New Zealand’s products should pose no threat and may help to build demand for some locally grown products, including where our seasons are complementary. We see enormous scope to boost trade between us in this area. We also have well developed skills in the agricultural technology, not only in the processing of food products but also in their production and in getting them to market. We would see great opportunities for this expertise to be drawn on as you look for ways to strengthen the productivity of your farmers and the efficiency of your supply chain.
But the opportunities extend beyond this also to services where India has great strengths and where New Zealand often has strong innovation which can be built on and operationalised for your own much larger market or the wider global market. As business relationships expand, so also will the potential for investment in both directions.
In the joint feasibility study conducted last year, you have categorically mentioned that issues related to sustainable development would be considered in terms of climate change and labour laws. This has become a bone of contention in India’s bilateral trade talks with the EU. Why do you think this is necessary as India regards them as ‘non-trade issues’ and should be handled in a different forum? What could be the consequence in the event India does not agree to these conditions?
Sustainable development seeks to take an integrated approach to the goals of economic, social, environmental and cultural development. Consistent with this, it is important to ensure that trade and labour and trade and environment considerations are integrated with trade agreements. We believe that economic growth and conservation of environment go hand in hand, and that free trade and labour standards are complementary rather than competing ways to improve standards of living.
Giving appropriate recognition to these issues in the context of an FTA shows the shared commitment of the parties to the principles of sustainable development in the context of trade and acknowledges increasing interest in how goods and services are produced. It also provides a means by which the parties can engage on issues of shared interest on labour and the environment. We believe that there would be a range of areas for potential engagement between New Zealand and India which could be of mutual interest and benefit, perhaps including in relation to common efforts to address the challenges of climate change if both of us saw scope for this.
What kind of roadmap for international trade do you expect to emerge when heads of state meet in the upcoming summit of G20 in Canada?
What I hope to see emerge from the Toronto G20 Summit is commitment from leaders to maintaining the momentum on the Doha Round negotiations. We have seen that setting deadlines does not necessarily help progress this process. What is needed is commitment to the end-goal, knowing of the great stimulus that a successful conclusion to the Doha Round would provide. Leaders must reaffirm their commitment to a successful conclusion and, in line with that, provide their officials with the necessary flexibility in order for them to bring the negotiations forward to a point at which the necessary political decisions can be made.
