NEW ZEALAND ENTERS INTO FREE TRADE AGREEMENT WITH INDIA

Written by Michael Thervil

NEW ZEALAND ENTERS INTO FREE TRADE AGREEMENT WITH INDIA | PHOTOGRAPHER UNKNOWN

[New Zealand India free trade agreement] Recently both India and New Zealand announced the implementation of a new Free Trade Agreement (FTA) which will not only lessen the blow of tariffs on goods, products, and services between the two countries; but it will also allow both countries to foster stronger diplomatic and economic ties between each other. It was reported that with this new FTA, New Zealand would put itself in a better position to boost its exports markets as well as create new avenues for India to increase its Gross Domestic Product (GDP). With roughly 300,000 Indian residing in New Zealand the FTA will allow New Zealand to export NZ$1.79 billion worth of goods, products, and services to India and “doubling the value of [it’s] exports in 10 years”.

In return India gains the ability to benefit greatly from New Zealand either “sharply” reducing tariffs (70%) or applying zero tariffs on imported goods, products, and services from India. India sees this trade deal to diversify and shield itself from possible future American sanctions as it has remained committed to purchasing Russian oil. In return India gains the ability to benefit greatly from New Zealand either “sharply” reducing tariffs or applying zero tariffs on imported goods, products, and services from India. India’s broad middle class will be another beneficiary of the FTA because of what is known as “preferential access to India’s middle class” within five years. According to the New Zealand foreign affairs and trade website the following is set to occur.

• 95% of New Zealand’s current exports will be tariff free or have sharply reduced tariffs

• Tariffs will be fully eliminated immediately on day one for more than half of our exports and for over 80% once the FTA is fully phased in. The average tariff applied to our current exports will drop sharply to just 3%.

• Estimated tariff savings on day one of $43 million growing to $62 million based on current trade levels, likely to rise with the expected growth in trade resulting from the FTA.

• In services and wine, gains are future proofed with a commitment that any better outcome offered to India’s FTA partners will be automatically passed on to us; similarly, the FTA contains a consultation commitment for dairy should India offer tariff concessions to a comparable economy in future.

• Streamlined customs processes at the border, reduced transaction costs, increased transparency, and greater certainty for exporters.

• India Customs will release all goods within 48 hours, and in the case of perishable goods and express consignments, endeavor to do so within 24 hours. 

• Services exporters, particularly in key sectors like fintech, tertiary and private education, professional and environmental services will benefit from a level playing field with competitors.

• As with our other trade agreements, the FTA includes a Treaty of Waitangi exception that protects the New Zealand Government’s ability to adopt any policy it considers necessary to fulfil its obligations to Māori.

• A significant focus on cooperation and technical assistance activities that will provide opportunities to grow durable, long term, and mutually beneficial partnerships between Indian and New Zealand sectors, (including for forestry, horticulture, apiculture and honey, livestock, fisheries and aquaculture, wine, traditional knowledge, and medicine, tourism, audio visual production and sports).

With this new trade deal with New Zealand to begin within the first quarter of next year, it's expected to invest $20 billion into the Indian economy over the next 15 years. It’s predicted that although New Zealand will greatly benefit from this new free trade agreement, India stands to gain more from the trade agreement as India has declared its intentions to become a major manufacturing hub within the international community.