Opportunities and Obstacles – The Diplomat

On the end result of his latest go to to India from March 10-13, New Zealand’s Overseas Minister Winston Peters remarked that the India-New Zealand relationship was coming into a “new part.” Because the Nineties India has moved from being a “peripheral concern” for New Zealand to a rustic with which it has tried to determine a “core commerce, financial and political partnership.” 

Lately, New Zealand has positioned appreciable significance on constructing its relationship with India. Throughout the common election in 2023, the 2 main political events – Nationwide and Labor – each pledged to deepen New Zealand’s ties with India in the event that they received the election. Even minor events, such because the ACT social gathering, promised to put particular emphasis on the India-New Zealand relationship. 

Because the new authorities took workplace in November 2023, New Zealand’s commerce and overseas ministers have already made official visits to India. New Zealand Prime Minister Christopher Luxon has acknowledged that he’ll go to India in his first 12 months in workplace. 

Even earlier than the present authorities’s outreach, New Zealand had tried to forge nearer ties with India below varied governments from throughout the political spectrum. This was first mirrored within the “Opening doorways to India” doc launched by the Ministry of Overseas Affairs and Commerce (MFAT) in 2011, which additionally launched the “NZ Inc. India” technique.

Because the doc states, the core purpose of this technique was the profitable negotiation of a free commerce settlement (FTA) with India in an effort to improve New Zealand’s items exports to the big Indian market of over 1 billion shoppers. FTA talks started in 2010. This technique was reiterated in 2015 and ten rounds of FTA negotiations have been carried out for the reason that technique was launched, with the final formal spherical going down in Delhi in 2015. 

As Mark G. Rolls of the College of Waikato famous, though this NZ Inc. India technique had different goals – similar to rising commerce in companies, attracting extra expert Indian migrants to New Zealand, and dealing with India on the United Nations – securing entry to the rising Indian marketplace for New Zealand items fashioned the crux of New Zealand’s strategy to its relationship with India. 

Nonetheless, the technique’s main goal of accelerating New Zealand items export to India to at the least NZ$2 billion by 2015 was not met – and nonetheless has not been met in the present day. Between 2017 to 2022, New Zealand’s items exports to India haven’t even exceeded NZ$1 billion. Removed from bettering commerce relations between the 2 international locations, complete commerce between New Zealand and India declined by over NZ$1 billion in the identical interval. As of December 2022, India was New Zealand sixteenth largest buying and selling companion, accounting for a bit of over 1 p.c of New Zealand’s complete commerce. 

The FTA negotiations themselves have stalled for the reason that final spherical of negotiations passed off in 2015. In impact, regardless of the NZ Inc. India technique stating that commerce would type the premise of its strategy to India, the coverage has failed to enhance New Zealand’s items exports and commerce relations with India. 

Because the Rolls identified, FTA negotiations and New Zealand’s emphasis on prioritizing commerce over different elements of the connection have emerged as a “stumbling block.”

As a small buying and selling nation that’s reliant on items exports, it’s not shocking that New Zealand policymakers adopted an strategy whereby market entry and commerce fashioned the premise of its India coverage. As New Zealand diplomat Rosemary Banks argued, owing to its geographic location and the small home market, New Zealand has lengthy considered itself as being “geostrategically safe however economically insecure.” In consequence, looking for market entry in an effort to diversify buying and selling relations has been New Zealand’s principal methodology to deal with this notion of financial vulnerability. 

Nonetheless, there are two explanation why this strategy with India has not labored up to now. The primary facet pertains to the prevailing home political financial system buildings in each New Zealand and India. New Zealand has a comparative benefit in main sector exports, notably milk and dairy. Alternatively, India has a big home dairy business, successfully making it one of many largest dairy producers and a internet agricultural exporter. 

India’s common tariff on agricultural items is over 34 p.c and New Zealand’s strategy has been to primarily search a reducing of this tariff for its main sector exporters. Nonetheless, there are home political imperatives and political prices, given the importance of the home dairy business, which make clear India’s reluctance to decrease tariffs on this sector. 

That is additional indicated in the truth that even in India’s latest commerce offers with Australia and the European Free Commerce Affiliation (EFTA), dairy and the agricultural sector had been excluded from these agreements. In impact, this divergence within the current political economies of each international locations creates an impediment for New Zealand’s strategy to securing an FTA. 

The second drawback is that there may be an “asymmetry” within the India-New Zealand relationship on account of the variations in measurement, energy, and capabilities of the 2 international locations. As scholar Tom Lengthy defined, this asymmetry creates differing perceptions of dangers and alternatives for each international locations, with the smaller state putting a better premium on the connection than the bigger state. 

To be clear, because the smaller state New Zealand would profit extra from an FTA than India. Extra crucially, India’s consciousness of this current asymmetry within the relationship mixed with the divergence of home political economies explains why an FTA has emerged as an impediment within the relationship. 

Regardless of the stasis plaguing the connection on account of the dormant FTA negotiations, there are alternatives for New Zealand to forge nearer relations with India. One such space highlighted by Winston Peters in his latest go to was protection and maritime cooperation. It’s important to notice that through the go to, Peters met India’s nationwide safety advisor. Protection and regional safety points within the Indo-Pacific, similar to freedom of navigation, have additionally been emphasised in official statements launched by the New Zealand authorities concerning the overseas minister’s go to. 

There may be some congruence between New Zealand and India’s perceptions of the prevailing geopolitical surroundings within the Indo-Pacific, totally on account of a extra assertive China. Protection cooperation between the 2 international locations has been restricted up to now and has concerned actions similar to port visits by naval vessels, visits by naval commanders, and navy personnel from each international locations serving in United Nations peacekeeping missions. Additional cooperation within the defense-security sphere presents a possibility for New Zealand to reinforce its relationship with India. 

New Zealand and India may discover frequent floor within the South Pacific and work along with Pacific Island international locations. New Zealand is a key stakeholder on this area, and lately, India has ramped up its engagement with the Pacific Island states and in addition elevated its help to the Pacific. This presents one other alternative to reinforce the bilateral relationship as there may be some convergence between New Zealand and India’s pursuits within the South Pacific.   

To be clear, this isn’t the primary time that different areas of cooperation have been recognized. Even the NZ Inc. India technique talked about elements past commerce similar to people-to-people ties and cultural elements like cricket, which may grow to be essential linchpins of the New Zealand-India relationship. As late as 2022, MFAT publicly emphasised that New Zealand ought to put money into these different areas of cooperation to enhance the India-New Zealand relationship. 

Nonetheless, Peters’ go to was a vital indication that New Zealand had certainly turned a web page in its interactions with India. It signaled that whereas commerce can nonetheless be a vital factor of this bilateral relationship, different elements of the connection shall be accorded a higher diploma of significance than earlier than, and these points is not going to be positioned in a separate, decrease orbit. 

In impact, this signified a broadening of the connection with concrete areas of cooperation which have been recognized to reinforce the bilateral relationship. In doing so, the present New Zealand authorities has indicated that it’s prepared to undertake an strategy much like that of neighboring Australia, the place the Australia-India relationship is multifaceted and covers a number of essential elements, together with however not restricted to commerce and economics.

For New Zealand, though the FTA continues to stay an impediment, the bilateral relationship nonetheless has alternatives to develop in different areas. The overseas minister’s go to and the noticeable shift in New Zealand’s strategy to India does certainly point out {that a} “new part” of the connection could also be on the horizon.