(Text/Observer Network, Liu Bai)
New Zealand Foreign Minister Peters once again publicly criticized the free trade agreement between New Zealand and India, stating that there is still disagreement over the terms involving $20 billion in investments. Even after Indian Prime Minister Narendra Modi’s visit to New Zealand, this key issue has not been resolved. He said that this situation is “incredible” and is simply “a disgrace”.
According to the New Zealand Herald reported on July 12, Peters was interviewed after concluding a one-week visit to Singapore and Japan, during which he made the above statement. It is worth noting that this schedule allowed him to ‘perfectly avoid’ meeting with Indian Prime Minister Narendra Modi, who visited New Zealand last week. There is widespread belief that this reflects divisions within New Zealand’s ruling coalition regarding issues such as the free trade agreement with India.
July 11th, Auckland, New Zealand – Prime Minister Modi (left) of India and Prime Minister Lacsen of New Zealand shared the stage at a community welcome event held at Spark Arena. IC Photo
The controversial part of the agreement is an investment clause. According to the agreement, New Zealand will encourage its companies to invest $20 billion in India over a period of 15 years. India believes this represents a “robust commitment” from New Zealand. However, the New Zealand government insists that the agreement only requires the government to “promote” investments by domestic companies in India, and does not imply a commitment to achieve the target investment amount of $20 billion.
According to reports, the text of Chapter 9 of the agreement published by New Zealand’s Ministry of Foreign Affairs and Trade uses the phrase “promoting investment” instead of the binding term “commitment to invest”. In the explanation provided by the New Zealand government, this figure seems more like a development goal set by both parties, rather than an obligation that the government must fulfill.
However, during his visit to Auckland last week, Modi openly stated three times that this $20 billion was a “firm commitment” by New Zealand. This statement quickly attracted attention in New Zealand and also revealed that there are significant differences in how the two sides interpret the same clause.
Regarding this situation, Peters did not hide his dissatisfaction.
He said that it is incredible that after both parties have completed negotiations and officially signed the agreement, even after the Indian Prime Minister has ended his visit and left New Zealand, the two countries still have not reached a consensus on the terms of the agreement.
"It's already 2026. He has been here and left, but we still don't know what really happened."
"This is too embarrassing." Peter said.
Reports say that Peters has been one of the most vocal critics of this investment clause for a long time. He believes that the wording, which can lead to different interpretations, is a flaw in the agreement's design. Therefore, he has always held reservations about this agreement.
In fact, this free trade agreement has always been a major trade achievement pursued by the New Zealand government. New Zealand Prime Minister Rudd has hoped to further open up the market for India, one of the fastest-growing large economies in the world, thereby reducing reliance on traditional export markets.
According to information previously released by the New Zealand government, India will gradually remove tariffs on over 99% of New Zealand exports, covering industries such as dairy products, meat, horticultural products, and timber. In return, New Zealand will eliminate tariffs on all of India’s imports and further expand cooperation between the two countries in areas such as trade in services, education, and the digital economy.
The New Zealand government expects that after the agreement is fully implemented, it will save New Zealand exporters hundreds of millions of New Zealand dollars in customs duties costs each year, and create more trade and investment opportunities. During his visit, Modi also described the agreement as an important milestone in bilateral relations, stating that it would push bilateral economic and trade cooperation to a new level.
However, as there were public disagreements between the two parties regarding the 20 billion dollar investment terms, this just-signatured agreement also faced doubts.
In the view of opponents, if there are differing interpretations even regarding the core content of the agreement, new disputes may arise during its implementation in the future. Supporters, however, believe that the investment objectives themselves have a guiding nature, and the value of the entire agreement should not be negated because of this.
The New Zealand Herald pointed out that Peters’ public challenge also reflects the fact that there is disagreement within the New Zealand ruling coalition regarding this agreement. Although the government generally regards it as one of the most important trade breakthroughs in recent years, debates over investment commitments, the wording of the agreement, and how it will be implemented in the future are likely to continue in the short term.
