Summarised by Centrist
New Zealand and India are publicly describing a central investment provision in their new free trade agreement in different terms.
Indian Prime Minister Narendra Modi told an Auckland business event that New Zealand had “committed to invest US$20 billion in India over the next 15 years”.
Prime Minister Christopher Luxon and Trade Minister Todd McClay say the provision does not require the
New Zealand government to make that investment.
McClay said it “doesn’t require us to invest in India. It requires us to promote investment”, while Luxon described it as “a commitment to promote”.
The official National Interest Analysis says New Zealand has undertaken to promote private investment into India, with the aim of increasing it by US$20 billion over 15 years.
If consultations fail and India decides New Zealand has not met the provision, it may temporarily restore some tariffs on New Zealand exports through “rebalancing” measures.
MFAT acknowledges those measures could “undermine the benefits of the FTA to New Zealand”.
Labour leader Chris Hipkins said the two governments appeared to hold different interpretations of the clause and warned exporters to keep their “eyes wide open”.
He said businesses should consider the possibility that India could restrict market access if New Zealand failed to meet the investment objective.
Official modelling estimates the agreement will lift New Zealand’s annual GDP by about $401 million, or 0.07%, above the no-agreement baseline by 2037.
That is projected to rise to $657.7 million, or 0.1%, by 2050.
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