Mr O’Connor’s visit was intended to ‘‘inject real momentum’’ into this country’s relationship with India, the world’s fifth-largest economy, and one which was growing at a faster rate than any other G20 economy.
His National Party successor, Todd McClay, and Mr McClay’s Indian counterpart yesterday signed a free-trade agreement between New Zealand and India — something which would have seemed highly ambitious when Mr O’Connor made his aforementioned visit almost three years ago.
Rather, what it does demonstrate is that Labour’s decision last week to give National and Act New Zealand the necessary votes to pass the required legislation through Parliament to enact the FTA should not have come as a surprise to anyone.
Labour had hoped to get to this point eventually under its own steam. Its tactics were less urgent than those employed by National — which made securing this trade deal an election promise — but it had its eye on the same prize.
While, obviously, it would have deeply wanted to hoist the chalice aloft itself, Labour is to be commended for not bowing to short-term political expediency and embarrassing National by scuppering a deal it recognises as being, overall, in New Zealand’s best interests.
It may not be the agreement Labour would have negotiated, and it may not have been negotiated in the manner in which it would have done, but it is a deal nonetheless.
As Labour well knows, it is in the nature of such pacts that the parties regularly reconvene and review that the agreement is working for each and reopen talks on aspects of it which do not. It will hope that the electoral wheel brings them back to the forefront when that happens.
This is not a perfect trade deal for New Zealand. No trade deal is. But it is what could be negotiated at this juncture, and a small country such as New Zealand would be the envy of many larger nations for having got into a room with India at all, let alone be signing documents.
All who have contemplated the agreement, both critics and supporters, would have wanted greater access for New Zealand’s biggest export commodity, dairy products. That may eventually come, but given dairy goods had been the sticking point on injecting real momentum into talks in the past, parking them for now was the expedient thing to do.
In the meantime, tariffs will be eliminated or reduced on 95% of New Zealand’s exports to India, opening up the sub continental economic powerhouse as a viable market for many local businesses, particularly in the meat, wool, forestry, horticulture and wine sectors.
Its ultimate value to NZ Inc will depend on the acumen and skill of our entrepreneurs, but the government hopes to double the value of Kiwi exports to India — currently about $2 billion annually — within 10 years. If that was achieved, India would move from being New Zealand’s 11th-largest export market to somewhere around fourth or fifth.
In agreeing to the deal Labour did highlight several concerns, most notably that investment in India by New Zealand firms was expected to grow to $33b within 15 years.
Mr McLay dismissed that figure as aspirational, but Labour feels it is unachievable and opens New Zealand firms up to clawbacks. It urges businesses to have their eyes wide open as they contemplate doing business with India.
National’s coalition partner New Zealand First remains an implacable opponent of the deal — hence the criticality for National of getting Labour’s backing.
As noted, there are reasons why the FTA could attract opposition: perhaps if New Zealand had negotiated more robustly a better dairy deal could have been done; maybe the investment targets Labour has questioned could have been made more achievable.
However those entirely reasonable objections have been swept away in the tsunami sparked by Shane Jones’ unfortunate and dubious comments about the visa provisions in the agreement.
The deal will pass, and a good thing too. In a time of global economic uncertainty, it is some rare good news for New Zealand businesses.
