India FTA timed right for NZ, says trade analyst
Leading trade analyst Stephen Jacobi has rubbished claims that New Zealand could have got a better free trade deal with India if it had prolonged the negotiations.
As such, anything that impacts the free movement of goods, services and people, or increases the cost, is important to growers and wineries.
We know 2025 was a tumultuous year for trade. For the first time in years, wineries faced an increase in tariffs in a market rather than a decrease. Our exports to the United States now pay a 15% tariff (on top of the previous tariff). That’s costing someone (whether it be wineries, importers and/or consumers) over $100 million per year, based on current export values. After decades of tariffs being lowered through various multilateral and bilateral agreements, the imposition of higher tariffs was a real shock to wine exporters.
On the other hand, at the end of the year the New Zealand government agreed a free trade agreement with India, a market the world’s wine industry is looking at with increasing expectations, given the rapid rise of its urban middle class. The India FTA is very much a first step rather the complete deal, as there will still be significant tariffs in place even when the agreement comes into effect, but it is an important signal that this market is a future opportunity for our exporters.
So, as we move into 2026, how secure is New Zealand wines’ access into our key international markets? On that front there is plenty of good news as successive New Zealand governments have worked hard over many years to guarantee secure market access for goods exported from Aotearoa through the many FTAs we have in place. Starting with Australia through ANZERTA, and then later agreements, including with China, the European Union, the United Kingdom, and many Asia Pacific countries through CPTTP, we estimate that over 60% of our wine exports (by both volume and value) are to countries with whom New Zealand has an FTA.
This in fact underestimates the level of FTA market coverage, because the vast majority of exports outside of an FTA are to the US, which takes 33% of total export volume and 35% of value. So, in reality, we have excellent FTA coverage for current export markets, with the exception of the US.
Securing an FTA with the US has long been a goal for New Zealand governments, given it is one of this country’s major trading partners. However, even those countries with a US FTA in place were hit by the 2025 tariff changes, so ultimately the lack of a pre-existing FTA has not impacted exporters.
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Looking to the future, the current FTAs will protect and provide certainty for exporters, so long as the partners to the agreements adhere to the rules which they have mutually agreed. Where there are issues with market access under an FTA, the agreements provide avenues to address exporters’ concerns. This has happened many times over the years with the Ministry for Foreign Affairs and Trade, Ministry for Primary Industries, Customs, and Ministry of Business, Innovation & Employment all assisting when and where FTA implementation issues arise. With strong rules, FTAs provide a sound basis on which growers and wineries can plan and invest for the future.
However, with US trade policy undergoing major changes, there is little certainty about the future level of US tariffs. The core rationale in April last year was to address the US trade deficit. New Zealand got hit with 15% tariffs because we had a goods trade surplus, although for some goods the tariffs were subsequently removed. Now, in order to secure control of Greenland, the President is threatening tariffs on some European countries. All this change is creating massive uncertainty around exporting to the world’s largest economy. For wineries who want to do business in the US, this all adds up to more risk. What happens with tariffs into the US in 2026 is anyone’s guess at this stage.
From a trade perspective then, 2026 brings certainty for exporters to FTA partner countries. But for exporters to the US, 2026 looks set to match 2025, with uncertainty the dominating issue.
Trade and history
This year marks two 250th anniversaries important to trade. First is publication of the landmark economics text, ‘The Wealth of Nations’, by Scottish economist Adam Smith. According to Wikipedia, Adam Smith’s book ‘ … evolved and gained widespread recognition, shaping economic philosophies, government policies, and the intellectual discourse on trade, taxation, and economic growth in the coming centuries.’
Second is the 250th anniversary of the Declaration of Independence by the United States of America, when the 13 colonies freed themselves from British colonial rule. The US of course has been the dominant global economic force in the post WW2 era and shaped the international institutions that have governed international relations, including trade, in that period.
With the established rules around trade under stress, I wonder if history has any lessons to teach us.
Good luck for vintage.
