Coalition Govt split over Indian FTA

This follows coalition partner New Zealand First opposing the deal announced on Tuesday night by Prime Minister Christopher Luxon in Wellington.

The FTA, which has been approved by the Indian Cabinet, has been roundly welcomed by farmer groups.

The FTA will deliver immediate tariff elimination on NZ sheep meat, wool, coal and over 95% of forestry and wood exports to India.

It will also deliver 50% tariff cut for large quota of apples – nearly double recent average exports and duty-free access for kiwifruit within a quota almost four times our recent average exports, and tariff halved for exports outside of quota. 

Duty-free access for cherries, avocados, persimmons and blueberries, over 10 years have also been secured.

But in a statement New Zealand First leader Winston Peters says they regrettably oppose the FTA.

“We consider the India-New Zealand Free Trade Agreement to be neither free nor fair,” Peters says. “Regrettably, this is a bad deal for New Zealand. It gives too much away, especially on immigration, and does not get enough in return for New Zealanders, including on dairy.

“New Zealand First urged its coalition partner not to rush into concluding a low-quality deal with India, and to use all three years of this Parliamentary cycle in order to get the best possible deal. We also indicated we felt it would be unwise for National to sign up to a deal with India when a Parliamentary majority for that deal was uncertain.

“Unfortunately, these pleas went unheeded. National preferred doing a quick, low-quality deal over doing the hard work necessary to get a fair deal that delivers for both New Zealanders and Indians.”

He also revealed that when NZ Cabinet approval for the India deal was sought last week, New Zealand First exercised the agree to disagree provision of its coalition arrangements.

Peters says his party made it clear that it would vote against enabling legislation if and when it is introduced to Parliament.

Provided National secures the support of its other coalition partner ACT, it will still need one of the opposition parties - Labour, Greens or the Maori Party votes - to pass legislation in Parliament ratifying the deal.

Peters is unhappy with access secured for NZ dairy products.

“While New Zealand is completely opening its market to Indian products under this deal, India is not reducing the significant tariff barriers currently facing our major dairy products,” Peters says.

“This is not a good deal for New Zealand farmers and is impossible to defend to our rural communities.”

India, the world’s largest milk producer, opposes dairy imports that could undercut the country's 70 million dairy farmers.

Under the FTA, duty-free access for dairy and other food ingredients for re-export from day one has been secured. 

The deal also includes duty-free access for bulk infant formula and other high value dairy preparations over seven years and 50% tariff cut for high value milk albumins within a NZ-specific quota equal to current export volumes.

The Indian FTA hasn’t gone down well with NZ milk processors.

The Dairy Companies Association of New Zealand (DCANZ) says it is disappointed negotiations with India have been unable to secure a bigger step towards dairy trade liberalisation, and it is calling for a fresh strategy to address the trade challenges faced by New Zealand’s biggest export sector.

The Agreements' dairy outcomes are limited to some protein products, and products exported to India for re-export, meaning that this agreement joins the EU-New Zealand FTA and CPTPP as agreements with significant unfinished business to remove tariffs for the dairy sector.

DCANZ chairman Guy Roper says that DCANZ is disappointed that India has been unwilling to deliver more than small changes, but does acknowledge that New Zealand trade officials and Trade Minister Todd McClay have worked tirelessly to conclude this agreement in a tight timeframe, and the deal will benefit a range of other New Zealand export sectors.

“Looking forward, and with tariffs now being largely resolved for other sectors, it's time to ramp up focused efforts and creative approaches to bring down trade barriers for dairy.”