Wednesday, April 24, 2024

Long road ahead as NZ eyes an Indian FTA

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New Zealand’s former top envoy to the subcontinent assesses the task.
Reading Time: 4 minutes

By Nick Bridge, New Zealand’s high commissioner to India from 1993 to 1997

Our new government has set itself a daunting challenge: a determination, publicly and unequivocally stated, to deepen and widen New Zealand’s relations with India with the aim of concluding a free trade agreement with what is the world’s fastest growing large economy. 

The objective is admirable. But it won’t be easy. 

India’s protectionist trade instincts are deeply embedded – especially as regards agricultural products. They stretch back to the country’s independence in 1947 when, almost overnight, an exhausted Britain left it and the newborn Pakistan – born by caesarian – to their own devices.  

Surprisingly soon, these devices created a stable and unified nation out of a set of provinces that had long,  proud and very different histories, cultures and languages. Independent India’s first prime minister, Jawaharlal Nehru, once said that India was “a bundle of contradictions held together by strong but invisible threads”.  

On the economic front he was a committed socialist and for decades India’s economy was run out of New Delhi – and run badly at that. What was called the License Raj all but strangled entrepreneurship and business initiative. The state developed and ran the industrial sector. And it established high trade barriers against the outside world.  

I had the good fortune to be New Zealand’s high commissioner to India for almost five years in the 1990s , at a time when the Congress Government at long last began to take the state’s shackles off the entrepreneurial instincts and talents of the Indian business sectors. 

The results over the past 30 years have been impressive – similar to the economic vitality that Deng Xiaoping unleashed in China in the 1980s and beyond, but which is now back under the political controls of a CCP fearful about the freedoms of a vibrant private sector infecting society as a whole.  

Despite Nehru, now airbrushed aside as a colonial collaborator by the ultra- nationalist BJP Government, the average Indian is instinctively a trader and an entrepreneur. Witness the energy and talents that the Indian diaspora has brought into many Western economies.  

Agriculture is the one sector that the BJP government is apprehensive about opening up to the trading world. The livelihoods of tens of millions of families in village India are based on the outputs of their fields and of their cows. And each family has votes in the world’s most vibrant democracy.   

It was on this account that,  despite some imaginative and always enjoyable efforts, my time in India produced no satisfactory commercial outcomes for the government. 

My riding instructions had been short and to the point: nothing airy fairy about human rights or values in common or Kashmir or an aid programme. The objective was quite simply to help NZ companies in their efforts to do more business with India. And especially to ease the restrictions on our agri-exports.

So, we strengthened the two NZ/ India Business Councils. NZ’s was chaired by the CEO of the ANZ Bank, which in those days, partnered with Grindlays, had many branches in India. Leading companies came on board. As did the producer boards. In India, one of its most prominent entrepreneurs, CT Chidambaram, became head of the outfit.  

An early visit by the head of the Dairy Board, Sir Dryden Spring, went especially well. Or so it seemed to me.  In the 1960s, under our aid programme, NZ had set up India’s celebrated co-operative dairy industry, so we had no difficulty in scheduling a courtesy call on the prime minister. Next, the minister of agriculture received us most warmly.

“Sir Spring,” he said at the outset, “I know you are a dairy farmer. May I ask how many cows do you have?”

“Well, I have two herds so that is about 240.”

“I am a dairy farmer too.”

“ Oh … and how many do you have?”

“I am having three.”

Well-travelled and experienced, Dryden did not bat an eye. He knew that three was two more than the average Indian dairy farmer owned. They fell to talking about their herds and some of the issues that dairy farmers faced. It made me proud to be a New Zealander.  

But it did not butter any parsnips. Nor did visits from the Apple and Pear Board or from the Forestry Corporation, which, in a previous avatar,  had set up the Indian Forestry Service. 

Ditto a long visit from the CEO of Fletcher Construction, to whom I’d promised there were extensive opportunities in post-harvest handling equipment and infrastructures. We ran into piles of bureaucratic obduracy both on and behind desks. 

That was 30 years ago. And India today has a booming economy. And Australia has a free trade agreement. 

But that took years of intense and sustained bilateral political and trade diplomacy and a significant deployment of financial and human resources. This was centered on an expanding set of Australian government offices in India and also on a constant flow of ministerial pol/ec delegations.  

Today the India relationship is one of Australia’s most important and mutually productive – politically, strategically and economically. It’s taken some 25 years. 

When I served there, the Indians disdained what they saw as Australia’s middle power pretensions and its subservient relationship with Washington. The relationship was pretty thin. That was then; how times have changed. 

To achieve an FTA with India will require some years of agreeable foreplay not immediately directed at the ultimate objective. The relationship has to be deepened and widened. This will need sustained effort and the deployment of considerable resources. 

Some will say that a small economy such as ours simply can’t afford the effort required. That China surely offers us more than sufficient trade opportunities. They might cite a wise Ministry of Foreign Affairs and Trade mantra that was drummed into us as cadets: “Small country, hard choices”.

Sometimes in the business of representing NZ abroad it is all too easy to forget how small and distant we are. I remember once at a small dinner party in Delhi the Indian foreign secretary – a good friend – saying that NZ often punched above its weight. “Well,” said my quintessential Aussie counterpart, “it would be bloody hard for them to punch below it.”  

So, NZ representatives abroad have to get up especially early every morning. No one knows this better than our veteran foreign minister. Nothing ventured, nothing gained. If we fail to achieve an FTA with India, it should not be for want of trying.

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