Key Takeaways
- New Zealand has completed negotiations on a free trade agreement with India, paving the way for tariff reductions on the vast majority of exports from New Zealand.
- The agreement is set to be signed in the first half of next year and will eliminate or reduce tariffs on 95% of New Zealand’s exports to India.
- The deal includes duty-free access on most seafood exports, industrial products, and certain agricultural products, such as kiwifruit, apples, and mānuka honey.
- New Zealand will allow India up to an average of 1667 three-year skilled work visas per year, targeting ‘priority roles’ where New Zealand has skill shortages.
- The agreement includes wide-ranging services commitments, building on India’s World Trade Organization obligations, with particular focus on financial services, digital payments, and fintech.
Introduction to the Free Trade Agreement
New Zealand has completed negotiations on a free trade agreement with India, marking a significant milestone in the country’s trade relations with the South Asian nation. The agreement, which is set to be signed in the first half of next year, will eliminate or reduce tariffs on 95% of New Zealand’s exports to India. This move is expected to boost New Zealand’s exports to India, which are currently valued at around NZ$750 million. The agreement is a key step in strengthening ties with India, following Prime Minister Christopher Luxon’s visit earlier this year and multiple ministerial exchanges.
Reaction to the Agreement
However, not everyone is pleased with the agreement. New Zealand First leader Winston Peters announced that his party will oppose the agreement, citing concerns that it is "neither free nor fair" and that it makes "excessive" concessions on immigration. Peters argued that the deal fails to deliver for exporters and gives too much away, especially on immigration, without getting enough in return for New Zealanders, including on dairy. Despite this, Prime Minister Christopher Luxon and Trade Minister Todd McClay have hailed the agreement as a "landmark moment" and a major step toward New Zealand’s long-term goal of doubling the value of exports over 10 years.
Key Outcomes of the Agreement
The agreement includes a range of key outcomes for New Zealand, including duty-free access on most seafood exports, industrial products, and certain agricultural products, such as kiwifruit, apples, and mānuka honey. The deal also includes wide-ranging services commitments, building on India’s World Trade Organization obligations, with particular focus on financial services, digital payments, and fintech. Additionally, the agreement includes an MFN-clause, or "most favoured nation" clause, to ensure New Zealand benefits from any future liberalisation India offers other trading partners. The deal also establishes Geographical Indication rules to protect iconic Kiwi product names in each other’s markets.
Immigration and Work Visas
In return for the trade concessions, New Zealand will allow India up to an average of 1667 three-year skilled work visas per year, targeting ‘priority roles’ where New Zealand has skill shortages, including healthcare, education, ICT, and engineering. The visas will be drawn from the New Zealand skills shortage ‘Green List’, with all immigration screening and qualification/experience requirements remaining unaltered. An expanded Working Holiday Scheme will also provide up to 1000 places annually to ensure tourism and rural work sectors are adequately staffed.
Economic Benefits
The agreement is expected to deliver significant economic benefits to New Zealand, with McClay estimating that it will create thousands of jobs and generate billions of dollars in additional exports. India’s economy is forecast to grow to around NZ$12 trillion by 2030, making it an increasingly important market for New Zealand exporters. The agreement will put New Zealand on equal, or better footing, with international competitors and will open the door to India’s rapidly expanding middle class.
Conclusion
In conclusion, the free trade agreement between New Zealand and India is a significant development in the country’s trade relations with the South Asian nation. While there are concerns about the agreement, particularly with regards to immigration, the deal is expected to deliver significant economic benefits to New Zealand. The agreement includes a range of key outcomes, including duty-free access on most seafood exports, industrial products, and certain agricultural products, as well as wide-ranging services commitments. As the agreement is set to be signed in the first half of next year, it is likely to have a major impact on New Zealand’s trade relations with India and the wider region.