Editorial: Australia leaves NZ in its dust building trade with emerging economic powerhouse India

New Zealand’s trade with India has declined since 2015. Photo / Mike Scott

EDITORIAL

Not only are we reportedly losing some of our best and brightest to Australia, a new report clobbering the weakness of our relationship with emerging powerhouse India suggests our Tasman neighbour is set to snaffle some of our trade with the world’s fastest growing large economy.

This is apparently due to the Aussies having the foresight to invest, years ago, in building a relationship with India, predicted to be the third-biggest global economy within five years.

The friendship has led to more than US$25 billion in annual bilateral trade, and more recently, a free trade agreement between the two.

Conversely, according to the report’s author, the India-New Zealand Business Council, New Zealand’s trade with India has declined since 2015 – export value was just $430 million last year. Fifteen years of trade agreement negotiations have yielded “nothing”. There have been only four prime ministerial visits to India in 40 years and diplomatic engagement has been neglected with our representation and outposts on the sub-continent under-funded and thinly spread.

The result of the neglect, says the council, is that New Zealand is not visibly contributing to meeting the vast needs of a region that supports 20 per cent of the world’s population and still faces significant development challenges.

Its report, chock full of economic reasons why government, business, cultural and sports leaders need to “get serious” about India, makes constructive suggestions for remedial action. Meanwhile, council chair Earl Rattray frets that with Australia’s win of a specifically-tailored FTA on top of years of carefully cultivated bilateral trade, India could now decide to get some of the (limited) products it imports from us from Australia instead.

Contrary to claims out of Wellington, apparently India is not “difficult” to deal with, nor is the failure to agree over dairy trade entirely responsible for the FTA roadblock.

The real problem, says the council, is that our diplomatic policy commitment to the concept of high quality, comprehensive FTAs “with everything on the table and all or nothing” is an ill-fit for a hugely-diverse country with 28 states and eight union territories. And with which New Zealand has not first build the foundations of friendship.

The report’s message is that India is different, so needs a different approach. India is not China.

Business with India is the outcome of friendship, it says. Build the relationship first and trade follows.

The council’s advice is that in getting serious about India, population 1.4 billion, with GDP growth forecast to outstrip China’s, New Zealand shouldn’t be just thinking about what India can do for Kiwi businesses, but equally what they can do for India.

A collaborative trade relationship is called for. The report notes most of India’s 20 main trading partners, including its top two US and China, do not have FTAs.

The report isn’t a comforting testament to New Zealand’s strategic economic thinking. But it’s a constructive wake-up call that deserves to do more than gather dust on a Beehive shelf.