Dairy and sheep meat exports combined from NZ to India last year were less than $6m.
Average agricultural tariffs of 34% have not helped.
Those tariffs have been a target for NZ negotiators in bilateral talks that begun in 2010 and two years later came under the aegis of the Regional Comprehensive Economic Partnership (RCEP) trade talks involving NZ and 15 other Asian countries, including India and China.
India walked away from RCEP before an interim deal was announced at the end of last year although NZ was hopeful it could be enticed back to the table before the deal was formally signed later this year.
Trade Minister David Parker recently returned from India where he was given the message loud and clear that the country was no longer interested in RCEP membership.
“The Indian positioning has become firmer that they are not intending to join RCEP at this stage.
“And given that RCEP is expected to close this year we have to accept their strongly expressed word that they are exercising their sovereign right not to continue with the RCEP negotiation.”
More positively, Parker said he had been assured that India’s withdrawal from RCEP shouldn’t stand in the way of NZ and India increasing trade between themselves.
“We are going to get on and do that,” he said.
Whether that meant resuming bilateral trade talks, which last took place in early 2015, remained to be seen.
While India was concerned about the potential for dairy imports from NZ and Australia undermining the viability of its own farmers it is understood its larger concern was local manufacturers being swamped by cheap Chinese imports if it had forged ahead with RCEP.
The latter threat was seen as becoming even more elevated as the trade war with the United States ramped up last year and Chinese manufacturers sought alternative markets.
Parker said India was facing potentially chronic shortages of protein in years to come as its growing population outstripped the capacity of its farmers to produce enough to meet demand.
“So because of that there may be a way through these sensitive issues that deals with their concerns but also gives them the benefit of protein sources from NZ they may well need.”
Virus impact on trade subsidies unclear
Trade Minister David Parker is refusing to give up hope on the chances of a global trade deal to help counter the economic impact from the spread of coronavirus.
The head of the World Trade Organisation last week warned of a “substantial hit” to the global economy, which he predicted would begin to show up in trade data in coming weeks.
Trade ministers from the WTO’s 164 member countries meet every two years to advance negotiations to free up world trade.
The next meeting is in June and Parker said he was hopeful a long-awaited deal to tackle subsidies causing overfishing could be done despite opposition from the European Union and Japan.
“The leaders of the world agreed on that through the sustainable development goals by 2020 we would be protecting the fish stocks; so it aligns with what leaders have agreed for countries of the world and you would think they could see it through.”
Parker said a deal to rein in agricultural subsidies was less likely but still possible.
“Some of the big players are wanting to phase out industrial subsidies and we and other countries including Brazil and big agricultural producers like them are trying to broaden that discussion to subsidies more generally that are trade- distorting.”
Asked if the virus could help or hinder efforts at the June meeting of WTO ministers to limit subsidies, Parker said it was unclear.
Governments were likely to come under pressure to support industries hit by the economic impact of the virus with new or increased subsidies.
At the same time tax revenues were also likely to take a hit as economic growth slowed or even contracted, which could provide impetus for some to cut payments.
“You never know what the triggers are going to be either way.
“We just have to stay at the table and be out there promoting NZ’s interests,” Parker said.
The Dairy Companies Association last month said left unchecked, global agricultural subsidies could reach US$2 trillion by 2030.
