Key Takeaways:
- The New Zealand-India free trade agreement has been finalized, but it faces criticism from Winston Peters, who opposes the deal’s dairy access and visa provisions.
- The deal provides duty-free access to 57% of New Zealand’s exports from day one, increasing to 82% when fully implemented.
- The agreement includes significant tariff reductions for various industries, including sheep meat, wool, coal, forestry, and wood exports.
- However, the deal has been criticized for not significantly increasing access to India’s dairy market, with some tariffs remaining high for certain dairy products.
- The Government has conceded greater visa access to India, offering three-year visas to certain occupations and expanding post-study work rights.
Introduction to the Trade Deal
The New Zealand-India free trade agreement has been finalized, but it has already faced criticism from Winston Peters, the leader of the New Zealand First party. Peters has expressed his opposition to the deal’s dairy access and visa provisions, stating that he will not support the agreement when it comes to Parliament. This is not the first time Peters has deployed this tactic, having previously opposed a trade deal with China during the Clark Government.
Details of the Trade Deal
The deal provides duty-free access to 57% of New Zealand’s exports from day one, increasing to 82% when fully implemented. The remaining 13% of exports will be subject to sharp tariff cuts. The agreement includes significant tariff reductions for various industries, including sheep meat, wool, coal, forestry, and wood exports. For example, tariffs on sheep meat and wool will be eliminated immediately, while tariffs on forestry and wood exports will be reduced over time. The deal also provides duty-free access to most seafood exports, including mussels and salmon, over seven years.
Dairy Access and Criticisms
However, the deal has been criticized for not significantly increasing access to India’s dairy market. India is notoriously protective of its domestic dairy sector, and the deal does not manage to significantly increase access to New Zealand dairy exports. While some higher-value dairy exports will see tariffs reduced, cheaper milk powder exports will still face high tariffs, making New Zealand milk products uncompetitive in India. The deal does include a provision that allows New Zealand to renegotiate dairy access if India concludes a deal with a comparable economy that offers better dairy access.
Visa Access and Provisions
The Government has conceded greater visa access to India, offering three-year visas to occupations on tiers one and two of the green list of skill shortages. The Government will offer 1667 visas a year, which will be non-renewable and not offer a right to remain. The Government will also expand the post-study work rights of some visas. This provision has been met with criticism from Winston Peters, who has been resistant to increasing visa access to India.
Background and Context
The trade deal with India was a key commitment of Prime Minister Christopher Luxon’s campaign in 2023. The previous National Government had begun trade talks with India, but they fell apart due to significant differences between the two countries’ economies. India is among the most protectionist economies in the world, while New Zealand’s is among the most liberal. The Labour Government had not restarted trade talks with India, believing that a trade deal that had little to offer the dairy sector was not worth pursuing.
Conclusion and Future Implications
The New Zealand-India free trade agreement has been finalized, but it faces significant criticism from Winston Peters and other stakeholders. The deal’s dairy access and visa provisions have been particularly contentious, with some arguing that they do not go far enough to benefit New Zealand exporters. The agreement will be signed next year and examined by Parliament, with implementation legislation likely to be passed after the election. As a result, the deal could become a campaign issue, with parties debating the merits and drawbacks of the agreement. Ultimately, the success of the deal will depend on its ability to deliver benefits to New Zealand exporters and the economy as a whole.