New Zealand and India have signed a Free Trade Agreement in New Delhi, formalising a deal aimed at reducing tariffs on the majority of New Zealand exports to India and expanding access for services and investment.
The agreement, hailed as "once in a generation" by the Government, was signed on Monday night by Trade and Investment Minister Todd McClay and India’s Minister for Commerce and Industry Piyush Goyal, with Prime Minister Christopher Luxon present.
According to the Government, the deal will eliminate or reduce tariffs on 95% of New Zealand exports to India once fully implemented. Almost 57% of exports will become duty free immediately, rising to 82 % over time. The remaining exports will face reduced tariffs.
Two-way trade between New Zealand and India is currently valued at about NZ$3.95 billion.
"The benefits of this FTA are widespread, and our business community is excited to see the doors of opportunity open to 1.4 billion people whose economy is set to become the third largest in the world," Luxon said.
"One in four jobs are tied to trade. In signing this FTA, we are setting businesses up to succeed, boosting Kiwi jobs and enabling economic growth – and that means more money in Kiwis' pockets."
Key export sectors set to benefit include sheep meat, wool, forestry, seafood, horticulture, wine, mānuka honey and some dairy products, although several goods will be subject to quotas or phased tariff reductions rather than immediate free access.
McClay said the agreement would support New Zealand's goal of doubling export value over the next 10 years.
"This deal will deliver thousands of jobs and billions of dollars in additional exports. Creating opportunities for our businesses to diversify and create strong trading relationships provides economic security for New Zealanders – and that is crucial in these times of global unrest."
Detail released by the Government shows that duty free access will apply immediately to products including lamb, wool, coal, leather, and most forestry and industrial goods. Duty free access for seafood products such as mussels and salmon will be phased in over seven years, while some industrial products will transition over up to 10 years.
Horticultural products including apples and kiwifruit will gain expanded quota access and tariff reductions. Tariffs on wine are scheduled to fall from rates as high as 150% to between 25 and 50% over 10 years, while tariffs on mānuka honey will be reduced from 66% to 16.5% over five years.
Some dairy products, including ingredients for re-export and bulk infant formula, will receive duty free access immediately or over time, subject to quotas.
The agreement also includes a "most favoured nation" clause, which would allow New Zealand exporters to benefit from any improved access India grants to the European Union in areas such as wine and services, if New Zealand's agreement enters into force first.
"That clause will be worth tens of millions of dollars in extra exports for the New Zealand economy," Luxon said.
The deal was concluded in December, but today's signing triggers the start of the domestic ratification process. The Free Trade Agreement text and a National Interest Analysis were expected to be tabled in Parliament on Tuesday and referred to the Foreign Affairs, Defence and Trade Committee for public and parliamentary scrutiny.
Once the select committee process is completed, enabling legislation will be introduced and must pass through Parliament before the agreement can take effect.
The agreement is set to be signed in the first half of next year. (Source: 1News)
Labour backs legislation despite concerns, giving Government the numbers
The agreement cleared a key domestic political hurdle last week, with Labour confirming it will support the legislation required to ratify the deal, despite holding reservations.
With coalition partner New Zealand First opposed to the agreement, Labour’s backing gives National and ACT the numbers needed to pass the enabling legislation once the deal completes select committee scrutiny.
Labour leader Chris Hipkins said his party supported the tariff cuts and improved market access for exporters but remained concerned about a provision requiring New Zealand to promote about NZ$33 billion in private‑sector investment into India over 15 years.
He warned missing that target could result in trade benefits being clawed back.
"This is not the deal Labour would have negotiated, but we value our relationship with India and the positive contributions of our Indian communities."
ACT leader David Seymour welcomed Labour’s decision, saying supporting the agreement put economic growth ahead of politics.
New Zealand First leader Winston Peters reiterated his opposition, describing the deal as a “disgraceful sellout” and raising concerns about investment and immigration settings.
"Labour themselves have said this FTA is 'high risk' because if we don’t meet that threshold to India’s satisfaction India will CLAW BACK whatever gains New Zealand thinks it has achieved.
"Most people would call that a disgraceful sellout of our country's future. This is an utter unmitigated disaster of an agreement for New Zealand’s future."
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