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FTA with New Zealand will complement Indian reforms

A free trade agreement (FTA) between New Zealand and India would complement the Indian government's domestic economic reform programme by opening up Indian businesses to limited competition, New Zealand Trade Minister Tim Groser said.

While New Zealand wanted to end tariff barriers on its agricultural produce entering the Indian market, Indian technology companies were keen to use New Zealand as a stepping stone to the Asia-Pacific region, by taking advantage of New Zealand's network of 'high-quality, comprehensive FTAs' in the region, Xinhua quoted Groser as saying.

"India already has FTAs with ASEAN (Association of Southeast Asian Nations), Japan and (South) Korea, but an FTA with New Zealand would provide India a linkage to some significant additional groupings," Groser said in a published speech to the ANZ India Viewpoint Launch and Business Forum in Auckland.

"We are part of a wider set of negotiations - the Trans Pacific Partnership - that spans the Pacific rim. In addition, we have an FTA with China, which India does not," he said.

"I suggest that Indian policy-makers, including Prime Minister (Manmohan) Singh, with his finance portfolio - may also want to consider making use of the FTA with New Zealand as an opportunity to complement their own domestic economic reform program," he said.

He cited New Zealand's Closer Economic Relations (CER) accord signed with Australia in 1983 as an example.

"A key part of the political calculus at the time was that New Zealand had an inefficient sector (manufacturing) that needed to be exposed to external competition in order to start the process of reform, but in a manageable way. CER allowed that," said Groser.

"Similarly, I would argue that New Zealand offers India an opportunity to open up its agriculture sector to a limited, manageable level of competition from a relatively small New Zealand industry. Such trade with New Zealand also provides inputs into key sectors of growing economic importance such as hotels and restaurants."

New Zealand companies had found that investment tended to follow trade, so that once a secure trading relationship was established through a comprehensive, high quality FTA, the New Zealand industry was more likely to invest, share technology, and contribute to ensuring India's food security in future.

The New Zealand government saw India as 'a core trade, economic and political partner' by 2015, and aimed to increase merchandise exports to two billion NZ dollars by 2015, to grow services trade, including education and tourism, by 20 percent a year, to improve bilateral investment, and to engage more deeply with India on regional and global issues.

The FTA negotiations, begun in 2009 with the goal of an agreement this year, were an important component of the strategy.

The last round of negotiations in New Delhi last month saw 'useful progress in some areas and agreement to an intense series of so called inter-sessional contacts on specific topics', he said.

"We continue to wait to be able to complete the exchange of revised goods offers with India that was initially scheduled for March. That will be necessary to enable the overall process to advance," he stated.