Public opinion sought on trade pact with India

Tim Groser

The government has sought public opinion on entering into a Free Trade Agreement (FTA) with India, negotiations for which are expected to begin shortly.

Such a pact will also lead to a comprehensive economic cooperation agreement (CECA) between the two countries.

It is understood that a timeframe for talks will be set soon after the general elections are over in India later this month.

Wellington is upbeat about the prospects of an FTA with one of the most promising economies of the world, although negotiations will be exacting and protracted, covering a host of issues, not the least of which will involve removal of tariffs relating to export of agricultural and dairy products.

But there appears to be political will on both sides to progress an agreement.

The negations stage follows the completion of several meetings held in New Zealand and India by a provisional Joint Study Group (JSG) established about two years ago to “look into the possibilities of an FTA.”

A trade ministry report said the study group found that there was considerable potential to develop the bilateral trade and economic relationship between the two countries.  

It said the study provided an overview of the economic profiles, trade policies and trade and investment profiles of New Zealand and India.

“The JSG described the bilateral goods and services trade, investment relationship and other areas in which the two countries have cooperated over many years and identified the existing barriers to trade and investment flows and other issues.”

Trade minister Tim Groser announced that it was time to begin formal negotiations, following his first formal meeting (in February in New Delhi) as a cabinet minister with India’s commerce minister Kamal Nath with whom he enjoys personal rapport.

“This is a very important step forward for New Zealand,” Mr Groser said.

“We have the opportunity with this FTA negotiation to redefine our economic partnership with one of the world’s emerging economic superpowers.”

A Statistics New Zealand report said that New Zealand’s exports to India were valued at $360.5 million for the year ending June 2008 and that bilateral merchandise trade between the two countries grew from $333.3 million to $645.4 million (by 94%) between June 2001 and June 2008.

Both governments believe that an FTA will develop their international linkages and maximise the benefits that flow from international trade.

They expect the pact to improve their positions in the global economy and promote the competitiveness and sustainable development of the two economies.

In undertaking the joint study, New Zealand and India recognised the value of strengthening their bilateral trade and economic relationship.

Central to the negotiations is also the recognition that the bilateral trade and economic relationship are currently below potential.

The JSG report said that a CECA and FTA would enable enhanced Rules of Origin, greater cooperation and dialogue on customs facilitation, standards, and mutual recognition between New Zealand and India.

“In addition, a framework of practical measures will also be evolved to address non-tariff barriers to ensure that sanitary and phytosanitary (SPS) measures and trade remedies are appropriate and not trade restrictive,” it said.

The study recommended that both governments should commence negotiations as soon as possible on a comprehensive CECA and FTA agreement covering substantially all trade-in goods and services, investment; trade facilitation and other areas of economic cooperation, as a ‘single undertaking.’

“That should lead to additional trade flows and economic gains,” the report said.

In preparation for the possibility of FTA negotiations proceeding, foreign affairs and trade ministry has called for submissions or comments from interested parties.

These must reach the ministry’s free trade coordinator Joanne Dow on or before May 29.

Email: joanne.dow@mfat.govt.nz

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Photo Caption:

Tim Groser