Reframing the India-New Zealand relationship: Suzannah Jessep suggests that it is time to think big to bring the two countries closer together.

AuthorJessep, Suzannah

'Happiness is when what you think, what you say, and what you do are in harmony' (Mahatma Gandhi)

In 1980, Prime Minister Sir Robert Muldoon famously observed that New Zealand's foreign policy is trade policy. (1) While Sir Robert may have had his shortcomings, on this point it is hard to fault him. Trade has been at the core of New Zealand's foreign policy for the past several decades and as international trade has grown--aided considerably by New Zealand's free trade agreement with China--it has become the central prism through which many other aspects of New Zealand foreign policy are valued and assessed.

It is no surprise that a remote island nation with a relatively small population like New Zealand places trade at the heart of its foreign policy. Trade has unquestionably made New Zealand more prosperous and provided access to goods, services and investment that it might not otherwise have had. It has created jobs, fostered greater specialisation and, because of that, delivered higher incomes. It has provided the government with the financial means to deliver on other foreign policy priorities and has shaped New Zealand's reputation as a respected multilateralist. But there is one stand-out exception where putting trade at the heart of New Zealand's approach has not and most likely will not work and this is India.

With significant differences in population size, geography, culture and religion, one might believe that New Zealand and India share little in common. In reality, there are many shared values and practices that draw the two countries together, which include their use of English, commitment to democracy, membership of the Commonwealth, administrative norms of governance and, yes, even cricket. There are also many shared interests, as have been articulated in the two countries' vision for the so-called Indo-Pacific and pursuit of a stable, peaceful, open and secure region. (2) The purpose of this article is to reflect on whether New Zealand's foreign policy approach to India--that is, its tradecentred approach--is working and whether it provides the optimum conditions for New Zealand to advance its strategic interests in and with India both now and in the future.

Reframing India

There is no doubt that India will be consequential for New Zealand, with or without a trade deal. India's global role and influence, as well as its ambition, are only set to grow. Since the election of Prime Minister Narendra Modi in 2016, the world has begun to see a new India emerge; one that has been described as globally ambitious and regionally engaged, and that brings with it a uniquely Indian school of thought. (3) Even if New Zealand's trade and economic interests are put aside, India is going to matter to New Zealand. It is also true that the relationship is set to become more complicated. As India grows, it is going to want to shape the rules and systems that govern it, which may or may not align with the Western liberal rules-based order that New Zealand champions.

New Zealand's framing of India as an 'untapped market' is not the product of any grand strategy, or even necessarily a conscious decision. It is the natural reflex of a country whose trade-oriented foreign policy has delivered it real successes in other important Asian markets, including with Japan, South Korea and the so-called dynamic tiger economies of Singapore, Taiwan and Hong Kong.

In the case of India, however, this outlook poses two key risks. Firstly, it risks disappointment in the short term and disillusionment in the longer term. Already in the New Zealand public sector there is evidence of both. Successive rounds of unsuccessful trade negotiations, including most recently with the Regional Comprehensive Economic Partnership, and the experience of engaging with India in multilateral trade forums such as the World Trade Organisation, have bred a feeling of fatigue among officials. India has become synonymous with hard work.

Secondly, if trade continues to be treated as the primary lens through which all other activities are judged and valued, then New Zealand risks missing other important opportunities that are of consequence to New Zealand's longer-term security and prosperity--particularly in the context of intensifying US-China rivalry, the climate crisis and Covid-19 pandemic. But there are also other opportunities to deepen New Zealand's knowledge of India and people-to-people connections that would help to foster greater levels of trust, understanding and mutual respect and that --ironically--might ultimately prove to be the necessary ingredients to forge a deeper, closer trade relationship in the fullness of time.

Trade impasse

The Republic of India is a country of 1.3 billion people, with a rising and upwardly-mobile middle class and entrepreneurial youth culture. It is a country well-known not only for its trade potential but also for its trade protectionism. Many observers have despaired at India's unwillingness to open its market and sign on to new free trade agreements such as the RCEP. (4) Those observers argue that India is perpetuating its lack of competitiveness and hindering its own development by remaining closed to the outside world. Rather than becoming a vibrant modern market, India's trade policy only ensures that it is left further behind.

This is not the way the government of India sees it. India contends that it has signed plenty of free trade agreements, but that they (and the rules governing them) have not served India's interests. It argues that it needs more time to strengthen its domestic manufacturing sector so that it can trade on an equal footing with much larger economies, including China. It also maintains that its domestic agricultural sector needs protection, because of the many millions of rural poor who depend on it and who would never be...

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