New Zealand Losing Out To Australia On India Trade

Australia's growing trade relations with India are beginning to hurt Kiwi exporters as New Zealand plays catch up, a senior foreign affairs official indicated on Thursday. 

Ministry of Foreign Affairs and Trade (Mfat) deputy secretary Vangelis Vitalis said New Zealand was at a “distinct disadvantage to Australia in the Indian market” after Australia and India signed a trade deal this year.

“The tariff on sheep meat in India is 30 per cent. We were the largest supplier of sheep meat into India, it was very modest because the tariff constrains our ability to access that," Vitalis reportedly told Parliament’s Foreign Affairs, Defence, and Trade select committee on Thursday.

"On the first of January this year, Australia became tariff-free, so they don’t pay tariff anymore and immediately they have enjoyed an increase of nearly 163 per cent.” 

He said the potential was “huge” and there was an “urgency to catching up, because we want to at the very least level the playing field with Australia in the Indian market”.

Two-way trade with India was valued at $2.93 billion in the year to June, putting the south Asian giant down at 12 in the list of the country's top trading partners. New Zealand’s two-way trade with China was valued at $37.84b.

During the select committee meeting, Trade Minister Todd McClay said he will take the blame if New Zealand fails to secure a free trade agreement (FTA) with India this term, shifting the responsibility away from Prime Minister Christopher Luxon, who made the bold commitment.  

Thee remarks came in response to questions from Labour’s trade spokesperson and former minister Damien O’Connor.

Luxon's promise to secure an FTA with India this term, made during last year’s election campaign, was seen as highly ambitious, given the absence of any formal negotiations for nearly a decade. 

Todd McClay highlighted the government’s focus on India as a “strategic priority,” pointing to multiple visits to the nation by senior officials, including himself and Foreign Affairs Minister Winston Peters, over the past year.

Luxon met Indian Prime Minister Narendra Modi in Laos in October, resulting in an invitation to visit India. Earlier this year, the Indian President also made a visit to New Zealand.

“On the trade front, we have been able to lift a number of barriers to trade, so log exports have resumed, although we need to continue to pursue that ... we are looking for other ways to trade more,” McClay reportedly said.

“As far as trade is concerned, I think the relationship is in the best place it has been for a while, yet there is still more work to do before we can start talking about any type of trade architecture.”

When asked if he believed the Prime Minister could deliver on the promise of securing a deal this term, McClay described Luxon as being "ambitious for New Zealand." 

“If he doesn’t, it’s my fault, not his, because he’s given me the job,” McClay said.

After his first bilateral meeting with Modi on the sidelines of the East Asia Summit in Laos in October, Luxon said the prospect of an FTA had been raised during discussions. He said Modi had been interested in the deal.

“We’ll pick that up again as [we] go into the visit [to India] in the new year. But we spent a lot of our conversation about where are the areas in trade that we could advance where there is common interest and where it would be mutually beneficial for both countries,” he was quoted as saying.