CAN INZBC BUSINESS DELEGATION DEEPEN NZ-INDIA TRADE TIES?
The latest business delegation by India New Zealand Business Council (INZBC) going to India (September 19-21) will also carry the weight of the business community seeking a deepening of trade ties between the two countries.
The bilateral trade between the two countries has remained largely stagnant, around $2 billion-plus, with the services exported to NZ (tourism and education) experiencing a downfall in the last two years of the Covid pandemic and accompanied by border closure and travel restrictions. The goods trade had been hovering below potential for the last many years anyway.
As NZ slowly reconnects with the rest of the world after the July border re-opening, the focus has been on the traditional economic partners and political allies across Tasman and North America, Europe, and East Asia.
The relationship with India, both as an economic partner or strategic player of some prominence in the region, has yet not figured in any measure in the current NZ government’s scheme of things.
NZ and India continue to look away from each other rather than towards each other with the seemingly differing interpretation of their respective national priorities, particularly trade, and the results are obvious.
While NZ remains steadfastly focused on getting “unfettered market access,” India, on the other hand, firmly believes that “strategic engagement will drive economic engagement in future.”
The recent dramatic progress in the signing of the India-Australia free trade agreement (Comprehensive Economic Cooperation Agreement) that has yielded access to more than 90 per cent of goods and services to each other’s market is an apt example of New Delhi’s preference in giving market access once there was a convergence of strategic interests and create win-win outcomes for both the countries.
There has been a quiet unease within the business community, with business interest in the Indian market, that Australia’s success in cracking a comprehensive economic partnership with India will be causing a significant trade diversion away from NZ.
Some experts are arguing that the long-term adverse economic impact of this trade diversion away from New Zealand is yet to be fully realised, as it remains the only developed country among RCEP (Regional Comprehensive Economic Partnership) members without a trade agreement or an early harvest trade deal with India.
This is why, it seems, the business delegation is promptly taking it upon itself to reinvigorate its connections with the Indian market and continue to explore new business-to-business relations and showcase what NZ businesses have to offer to the Indian market and consumers.
It is important, though, that this business delegation is going on the backdrop of the recently concluded first in-person Ministerial meeting of the Indo-Pacific Economic Framework (IPEF) in Washington, which was attended by both India’s Commerce and Industries Minister, Piyush Goyal and NZ’s Trade and Export Growth Minister, Damien O’Connor.
Indo-Pacific Economic Framework for Prosperity (IPEF) is a US-led economic initiative launched recently in May 2022 to reinvigorate trade and to strengthen economic partnership among participating countries with the objective of enhancing resilience, sustainability, inclusiveness, economic growth, fairness and competitiveness in the region.
The framework is structured around four pillars relating to trade, supply chains, clean economy, and fair economy and have 14 founding members Australia, Brunei, Fiji, India, Indonesia, Japan, Korea, Malaysia, NZ, Philippines, Singapore, Thailand, Vietnam and the US.
The presence of both NZ and India in this new initiative is generating optimism in some quarters that both countries will finally be able to transcend, the long-held status-quo of “warm-vibes” into a more meaningful and substantive bilateral relationship with tangible outcomes for both parties.
India has not yet agreed to the commitments of the trade pillar in the Indo-Pacific Economic Framework, sighting further clarity on the issue, but many suspects that this may be due to New Delhi’s preference for convergence on strategic interests before it gives market access to other countries.
In recent months NZ has itself been caught napping and experienced some new strategic challenges in its immediate neighbourhood of the Pacific, and it may be in its good interests to diversify the risk and explore strategic convergence with regional powers that have the capability and the intent to play a bigger role in the Indo-Pacific region.
Till any major bilateral visits between the top-level political leadership of the two countries, businesses are on their own to explore commercial interests in each other’s market.