NZ‑India free trade deal: were early fears about immigration and investment justified?
by Rahul Sen, Senior Lecturer, Department of Economics and Finance, Auckland University of Technology Depending on which side of the argument you listen to, the recently signed New Zealand-India free trade agreement represents either a huge economic opportunity for New Zealand or a risk to its economic sovereignty. In an election year, we can expect political positioning over something as significant as this deal, given the broader context. India is a huge market of 1.4 billion people, migration is a burning issue globally and economic growth has been elusive during a period of inflation, war and fuel price hikes. Broadly, the agreement reduces barriers to trade in goods, services, capital and skilled labour. It’s not surprising exporters are excited about the opportunities. India is projected to grow at 6.5% this year and the next – faster than New Zealand’s other existing trade partners. The Ministry of Foreign Affairs and Trade’s national interest analysis estimates trade, output and real wages will increase due to the market access for New Zealand goods in the deal. The economic benefits projected by 2050 may even be conservative estimates, given higher-than-modelled gains were seen once the New Zealand-China free trade agreement was in place. But the India deal goes beyond trade in goods and encompasses services and investment liberalisation, which was where the most political opposition was faced. First, it was feared New Zealand could be penalised for not investing enough in India. Second, according to NZ First’s Shane Jones, the agreement opens a door to “unfettered immigration”, displacing local jobs. The hyperbole notwithstanding, then, what does the text of the agreement tell us about the likely economic impact of the deal on New Zealand? Can NZ be penalised for not investing enough? The major sticking point for the Labour Party – whose support for the deal was needed because government coalition partner NZ First opposed it […]

