Venkat Raman –
Associate Trade Minister Tod McClay has admitted that ‘there was much work to be done’ before a Free Trade Agreement (FTA) can be signed with India but stopped short of saying that almost eight years and ten rounds of talks later, both countries remain where they were at the beginning.
Speaking to the delegates attending the ‘Business Summit’ organised by the India New Zealand Business Council (INZBC) at Crowne Plaza Hotel on March 13, he said that the Bharatiya Janata Party (BJP) government in Delhi has undertaken an internal review of ‘the FTA process.’
Translated it would mean, “We are not in a hurry, mate.”
What he mentioned in his speech was the usual rhetoric: “The advice I have from officials involved in that process is that both sides approached those negotiations professionally and respectfully.”
However, he conceded, “There is still a very significant gap which divides us. It is going to take real time and commitment to close that gap.”
A number of other points that Mr McClay made during his speech indicated the formidable roadblocks that impede progress on FTA.
“Our bottom line is that the FTA needs to be genuinely trade liberalising. That is what we are aiming for – and at this stage, we find ourselves still short on that front,” he said.
Prime Minister John Key and Trade Minister Tim Groser have, over the past year, expressed their frustration over the slow progress on the FTA front.
“We cannot force India to do an FTA with us. Our sense is that whilst India has an active economic reform agenda on its plate and is actively taking measures to reform its economy, ‘trade policy’ as an instrument of reform does not yet seem central to the Government’s thinking. For that reason, making progress is difficult,” Mr McClay said.
As we have mentioned in our earlier reports, FTA with New Zealand is not a priority issue for India, which is keen on closer economic cooperation with larger players such as America, Britain and a few others in Europe. New Delhi would consider it worthwhile to look at a trade pact with New Zealand, if Wellington shows readiness to transfer its agro-technology to foster agricultural production in India.
It is however difficult to imagine how New Zealand would accede to such a request without gaining tariff-free status for its agricultural and dairy exports to India.
Mr McClay said that New Zealand will remain a patient bidder.
“We will continue to work on this front but it may require some broader policy shifts within the India system (much broader than those simply pertaining to a NZ/India FTA) before we see the Government of India feeling comfortable entertaining the sorts of reforms/changes required by New Zealand to land this FTA,” he said.
New Zealand companies know that India represents an enormous long-term opportunity and increasing numbers of them are dedicating the resources to begin the task of successful market entry, he added.
“The truth is that it is all about India; we need to understand India’s ‘pull’ and how a New Zealand business can fit in with India. At present, our trade relationship is characterised by commodity products such as coal, logs, hides and skins, wool and dairy, but this is beginning to change, with technology and services increasing, along with higher-value food and beverage products such as lamb, chocolate and avocados,” he said.
According to Mr McClay, global agricultural production will increase by 70% in 2050 to feed nine billion people.
“Added to this is the emergence of middle classes around the world who are seeking to increase the amount of animal-based protein in their diet. While New Zealand is still a significant agricultural producer, we are emerging as a leading provider of agricultural technology solutions, including for countries that increasingly need to feed growing populations, and who are looking for solutions to maximise increases in productivity and profitability,” he said.
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Todd McClay speaking at the Business Summit