India and the PICs - FPRC (Foreign Policy Research Centre)

Transcription

2015(3)
ISSN 2277 – 2464
FPRC Journal
____________________________________
(a Quarterly research journal devoted to studies on Indian Foreign Policy )
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Focus
:
India–New Zealand Relations
____________________________________________________
Foreign Policy Research Centre
NEW DELHI (INDIA)
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Contributors
RESPONSES
1. Dr. John Stephen Hoadley
Associate Professor of Politics and International Relations
University of Auckland
2. Paul Sinclair
Regional Security Fellow at the Centre for Strategic Studies
at Victoria University ,Wellington,
served New Zealand Ministry of Defence for more than 43 years
3. Dr. Robert Ayson
Professor of Strategic Studies ,at Victoria University of Wellington
2
4. Dr. Mark G. Rolls
Director, International Relations & Security Studies Programme,
University of Waikato,
and Senior Fellow, Centre for Strategic Studies, New Zealand
5. Professor Robert Patman
HOD of Politics at the University of Otago
6. Conor Cronin
Research associate with the Sumitro Chair for Southeast Asia Studies
at the Center for Strategic and International Studies, Washington
3
ARTICLES
2. Dr.Tim Beal
Now retired, but formerly Foundation Director,
Centre for Asia/Pacific Law and Business (CAPLAB)
Victoria University of Wellington
&
Dr.Kala S. Retna
Senior Lecturer at the School of Management
Victoria University of Wellington (New Zealand)
3. Dr. Manas Chakrabarty
Professor of Political Science
University of North Bengal, Darjeeling. W.B. INDIA
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4. Balaji Chandramohan
Visiting Fellow with Future Directions International
5.Dr. Sayeeda Bano
Department of Economics,Waikato Management School
The University of Waikato,Hamilton,New Zealand
& Co-author
Dr. Frank Scrimgeour
Department of Economics,Waikato Management School
The University of Waikato,Hamilton,New Zealand
5
6. Dr. Nathan(Eswaranathan Ehambaranathan)
Lecturer (International Relations & Business),IPU, New Zealand,
currently, the co-chair for NZIIA (Palmerston North Branch), New Zealand
&
Dr.Supaporn Chalapati
Assistant Professor ,Department of International Business Administration
at I-Shou University in Taiwan
&
Ms. ShagesheelaMurugasu
Lecturer (Business) IPU, New Zealand
6
7. Dr Pushpa Bhardwaj-Wood
Director of Westpac Massey Fin-Ed Centre in New Zealand,
Founding memberof the Wellington Interfaith Council,
Current Chair of the GOPIO Wellington Chapter
8. David Scott
Analyst-Consultant
9. Cleo Paskal
Associate Fellow, Chatham House, London;
Visiting Trudeau Fellow, at the Université de Montreal’s Center for International Studies,
Canada; Adjunct Faculty, Manipal University, India.
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Preface
India-New Zealand relationship has often been characterised as comfortable and warm but
at least not particularly deep. But that would have been a reasonable description until
recently. It is generally believed New Zealand would certainly like to see a closer
relationship that reflects India’s growing importance in the Indo-Pacific. Major progress on
a NZ-India Free Trade Agreement would help.
It is heartening to note that a wide galaxy of writers have focused on important themes
and other related issues in their writings for this issue of FPRC Journal on India-New
Zealand Relations.
We take this opportunity to express our heart-felt thanks to our contributors who have
shared our sentiments and accepted our invitation to enrich the contents of the Journal.
Dr.Mahendra Gaur
Dr.Indira Gaur
Director
Mg. Director
Foreign Policy Research Centre
New Delhi
(www.fprc.in)
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Balaji Chandramohan
Guest Editor
As there is a great saying there are two kinds of people in this world, one who had seen Taj Mahal in
India and the other who wishes to. I would add another two in the list one who had been to New Zealand
and the other who wishes to.
It’s a great pleasure for me to contribute four papers to this volume of Foreign Policy Research Centre in
which the Indo-New Zealand relations are discussed in details. I would take this opportunity to thank
Dr.Mahendra Gaur for providing me the opportunity to write from the Editor’s desk for this volume and so
for all contributors who had given their time and thoughts to make this volume possible.
To start with, New Zealand despite situated in the far off corner of the world has contributed in many
ways to the international politics. In depth analysis will show that Indo-New Zealand shared a common
colonial heritage and more than that it was India which in a way provided the fulcrum of the British reach
to both Australia and New Zealand both geographically and in terms of manpower.
The highpoint of Indo-New Zealand co-operations in the colonial times was the way in which both the
British Indian Army and the New Zealand army collaborated in the European theatre in the World War I
and in the North African, South-East Asian and the European Theatre in the World War II.
Independent India’s predominately nationalistic predisposition and the prevailing Cold War scenario mean
that India had to navigate a Non-alignment path despite being in the Commonwealth Group of Nations.
With the end of the Cold War, India decided to have a free path towards having a strategic autonomy or
towards much slanted the path paved by the United States. With the United States deciding to have a
pivot towards China in the maritime dimension of the so called Indo-Pacific, both India and New Zealand
have to take some tough decisions especially with respect to their strategic posturing towards China
despite having a favourably disposed trade relations. These aspects have been discussed by some of the
eminent authors had contributed to this volume and whose work I can say of course that I’m familiar
with.
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On the other hand, to be sure and in contrast with it’s Asian rival China, India’s connection with New
Zealand is predominately multi-faceted and that could be seen by the rich and varying contributions
made in this volume.
I suppose this volume a one such initiate will make both the academicians and policy-makers from both
India and New Zealand to re-think a lot about strengthening their existing relations.
Finally, once again I thank Dr.Mahendra Gaur and so the contributors to make this volume a rich
endeavour. Thanks.
Balaji Chandramohan
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INDEX
RESPONSES
(pp. 12-27)
1. Dr. John Stephen Hoadley
2. Paul Sinclair
3. Dr. Robert Ayson
6. Conor Cronin
ARTICLES
1. Building a Partnership:
The Current State of Play in India-New Zealand Relations
Dr. Mark G. Rolls (pp. 28-37)
2. Twin Peaks: India and China on New Zealand’s Asian horizon
Dr.Tim Beal
Dr.Kala S. Retna (pp. 38-72)
3. INDIA – NEW ZEALAND RELATIONS- AN INSIGHT VIEW
Dr. Manas Chakrabarty (pp. 73-85)
4. Role of Great Powers in South Pacific Islands
Balaji Chandramohan (pp. 86-95)
5.Indo-New Zealand evolving strategic co-operation
6. Bilateral Trade between New Zealand and India: Patterns and Prospects
Dr. SayeedaBano
& Co-author
Dr. Frank Scrimgeour (pp. 101-118)
7. New Zealand Immigration Policies – The Case of Indian Migrants
Dr. Nathan(Eswaranathan Ehambaranathan)
Dr.SupapornChalapati
Ms. ShagesheelaMurugasu (pp. 119-123)
8. Multiculturalism and Indian Diaspora in New Zealand
Dr Pushpa Bhardwaj-Wood (pp. 124-131)
9.The Role of New Zealand in Regional Integration
Dr. SayeedaBano (pp. 132-154)
10. India and the South Pacific: Fiji, PIF, IPIC and the China connection
David Scott (pp. 155-167)
11. India and the PICs
Cleo Paskal (pp. 168-171)
12. New Zealand’s role in regional cooperation
13. Countries of South Pacific-their foreign policy outlook
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1.Dr. John Stephen Hoadley
Associate Professor of Politics and International Relations
University of Auckland
Email : [email protected]
+Coordinator of degree of Master of Professional Studies in International Relations and Human Rights.
+Series Editor of reference handbooks on International Human Rights for Springer Science+Business
Media Publishers.
+Biographical details at: http://www.arts.auckland.ac.nz/people/profile/shoadleyOR http://www.arts.auckland.ac.nz/en/about/news/2015/06/four-decades-of-internationalaffairs.html
Research | Current
Foreign and security policies of New Zealand, Australia, Asia, the United States, Europe and the
Middle East; politics of trade; international human rights institutions.
Within the broad field of International Relations, Stephen Hoadley works primarily in the sub-discipline
of Foreign Policy Analysis. He finds most satisfying intellectually, and most feasible for student research,
the exploration of why particular governments pursue particular foreign policies, including not only the
international but also the domestic institutions and influences shaping those policies. He treats foreign
policies as encompassing diplomacy, security, trade, aid, cultural exchange, and human rights,
environmental and arms control advocacy.
Teaching | Current
Stephen's current teaching includes foreign and security policies of New Zealand, the United States, and
European powers and the EU; security and economic issues in Pacific Asia and the Middle East; the
politics of trade; and international human rights institutions and policies.
Distinctions/Honours
Honorary Professor of the New Zealand Defence Force Command and Staff College
Honorary Captain in the Royal New Zealand Navy
Areas of expertise
Foreign Policy Analysis; Politics of Trade Agreements; Security Analysis; Assessment of International
Human Rights Treaties, Institutions, and Policies.
FPRC Journal-23-India-New Zealand Relations
Response to Questionnaire
Part 1
1.Do you agree with the statement that greatest challenge facing New Zealand foreign policy is
to ― find our way in a transformed world‖?
This is very general but true. As a small country, as a price taker rather than a price maker, NZ must adapt to
survive, especially in the economic sector of policy.
2. How crucial is New Zealand‘s role in regional cooperation?
NZ is an enthusiastic supporter of, and participant in, regional cooperation organisations such as the Pacific
Islands Forum and the Asia Pacific Economic Cooperation Group, not to mention the Trans Pacific Partnership
Agreement.
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3.Has New Zealand‘s security dilemma increased with the emergence of China as an eminent
power in the Asia-Pacific?
Journalists and academics like to portray NZ facing a dilemma if the US (our security partner) and China (our
economic partner) have a conflict. in reality, NZ is friends with both and has not experienced any
difficulty…..so far…..
4. Is it correct to say that New Zealand is caught up between America and China and finds
difficulty pursuing its national interests bilaterally with the competing major powers?
This is not correct inasmuch as NZ has stood up to the US on nuclear ship visits and stood up to China with
regard to human rights but remains on good diplomatic, military, and economic terms with both giant
governments. NZ on the UN Security Council has taken several independent stances.
5. While the Ninth Review Conference of the Nuclear Non-Proliferation Treaty (NPT), from April
27 to May 22,2015 was a step backward from the 2010 Review Conference in nuclear-armed
states‘ commitment to disarmament as it overwhelmingly reflected the views and interests of
the nuclear-armed states and some of their nuclear-dependent allies, it was also a move
forward as non-nuclear states steered ahead for disarmament with the signing of the
Humanitarian Pledge put forward by Austria. As of July 14, 113 states had signed the
Pledge.NGOs, however, question why New Zealand has not endorsed the Humanitarian Pledge?
The failure to endorse the pledge is particularly puzzling given that the rest of the New Agenda
Coalition has endorsed it, and that New Zealand has played such a leading role in the
humanitarian consequences initiative.
New Zealand has just voted in favour of the UNGA First Committee draft resolution which welcomes the
Pledge, and replicates much of its core language. New Zealand offered an explanation of vote:
„Whilst New Zealand has not itself endorsed this Pledge, we have no doubt that those who have done so are
deeply concerned about the humanitarian consequences of nuclear weapons and motivated by the need to
prohibit and eliminate nuclear weapons. Whilst supporters of the Pledge have not made clear the particular
course they intend to pursue in doing this, New Zealand welcomes all efforts intended to advance
implementation of Article VI of the NPT and make progress on legally effective measures towards nuclear
disarmament. We would not wish by our vote on this resolution to suggest otherwise.‟
This clearly gives little indication of the reasons why New Zealand does not endorse the pledge, so I will
elaborate. At a public event in Wellington immediately preceding the 2015 NPT Review Conference (RevCon),
New Zealand Ambassador for Disarmament Dell Higgie gave three main reasons why New Zealand had not
endorsed the pledge.
First, the NWS argue that any nuclear disarmament initiatives outside the NPT undermine the Treaty. While
New Zealand strongly disagrees with that position, Amb. Higgie said that New Zealand did not want to give
the NWS any excuse to not cooperate with strengthening disarmament commitments at the upcoming
RevCon. Given that the disarmament language in the draft RevCon outcome document (which was not
adopted) was extremely weak due to resistance from the nuclear weapon states to any substantive progress
on disarmament, and given the failure of the conference as a result of US/UK/Canadian disagreement with
Egypt over the rights of (non-NPT member) Israel, this concern would appear to have lapsed.
Second, Amb. Higgie emphasised that the pledge was named (at the time) the Austrian Pledge precisely
because it was a unilateral Austrian initiative. Austria announced at the 2015 RevCon that the pledge had been
renamed the Humanitarian Pledge precisely to reflect the fact that it can no longer be considered a unilateral
initiative, as 107-odd states (I can‟t remember the exact number at the time, but it‟s now 121) had officially
endorsed it. Again, it appears this is no longer a relevant issue.
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Third, the ambassador noted that only a few Western states had supported it: San Marino, Lichtenstein, and
Ireland. (See here.) As you point out, I would have thought a more appropriate benchmark for NZ policy was
the NAC countries – all of which, apart from New Zealand, have signed the pledge.
My read of the situation is that New Zealand is hesitant to support the Humanitarian Pledge because it is
strongly associated with the concept of a „ban treaty‟ to prohibit nuclear weapons, of the form promoted by
ICAN. When the Pledge was first produced, for example, ICAN explicitly made this connection. For its part,
New Zealand points out in its EOV (attached) that “supporters of the Pledge have not made clear the
particular course they intend to pursue”.
New Zealand‟s consistent position in recent years--as per the NPT working paper it introduced on behalf of
the NAC at the RevCon this year--has been that it supports development of a legal mechanism to prohibit and
eliminate nuclear weapons. However, before the international community embarks on one particular path
towards such a mechanism, we need further detailed discussion of the legal and political implications of the
various options – for example, by having further hi-level discussions of the type had in the 2013 Open Ended
Working Group. New Zealand has sponsored side-events at the First Committee for at least the last two years
precisely to advance such discussions.
In this regard, the UNGA First Committee has also just passed a draft resolution, introduced by NAC-member
Mexico, calling for the re-convening of the OEWG this year. The nuclear weapon states and the western
„nuclear umbrella‟ states strongly opposed this idea and continue to do so, unless the group operates by
consensus – which would give them the ability to veto any outcome or suggestion from the working group.
New Zealand voted in favour of the draft resolution.
Finally, New Zealand‟s position on the pledge does not mean it does not support the prohibition of nuclear
weapons. For example, New Zealand‟s EOV regarding NAC-member South Africa‟s draft resolution, Ethical
Imperatives for a Nuclear-Weapon-Free World, also just passed by the UNGA First Committee, states: “New
Zealand will continue to call for full implementation of the legal obligation in Article VI of the NPT and the
need to advance the rules of International Humanitarian Law by moving to explicitly prohibit the one
remaining weapon of mass destruction not yet the subject of a comprehensive treaty prohibition.”
(with inputs from Lyndon Burford, a PhD candidate in International Relations at the University of Auckland, New
Zealand. His research examines the drivers for nuclear disarmament advocacy by Canada and New Zealand.)
Part 2
1.Do you share the view that India-New Zealand bilateral relationship can be characterised as
comfortable and warm but at least not particularly deep?
Yes. NZ interests focus on Pacific Rim States and the EU. With minimal trade and military cooperation the
relationship with India remains more one of potential than actuality at present.
What steps do you suggest for a closer relationship?
NZ is seeking a Free Trade Agreement with INDIA. When India is ready to start negotiations, the NZ-INDIA
relationship will become closer, and the NZ government and media will devote more attention to India. also,
India could take more initiatives in the South Pacific, and I am sure NZ would welcome them.
2. Do you agree with the viewpoint that India‘s shift towards a maritime strategy coincides with
New Zealand‘s growing strategic interest in the Indian Ocean?
I‟m not aware that NZ has taken much interest in indian ocean strategy except following australia‟s lead and
keeping with other government‟s aims and initiatives.
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3. Could aiding the United States‘ increased forward presence in the Indo-Pacific region –
which has curtailing China‘s increased assertiveness as a subtext –provide a basis for India
and New Zealand to deepen their strategic co-operation?
I am doubtful because NZ is reluctant to define „SIDES‟ much less „TAKE SIDES‟ in great power rivalries.
5. What are the biggest concerns of New Zealand businessmen in India? How these challenges
can be overcome?
I am an academic but I suspect businessmen are concerned with Indian taxes and bureaucratic obstructions
and legal and political uncertainties. These are issues that a free trade negotiation could resolve, or at least
manage. Also, NZ exporting is at capacity with traditional and emerging markets, so there is no urgency to
cultivate the Indian market at this time, Although in future, given changed circumstances, the India market
could become more attractive.
*****
2. Paul Sinclair
Regional Security Fellow at the Centre for Strategic Studies
at Victoria University ,Wellington,
served New Zealand Ministry of Defence for more than 43 years.
(Prior to taking up the position of Regional Security Fellow at the Centre for Strategic Studies at Victoria
University in Wellington in early 2013, I filled a range of appointments in the New Zealand Ministry of
Defence for more than 43 years, the most recent being Head of International Defence Relations for almost
13 years. In that capacity my role was to develop bilateral defence relationships with, in particular, Asian
countries and to strengthen our contribution to multilateral forums that make up the regional security
architecture, such as the defence dialogue component of the ARF process and the recently established
ASEAN Defence Ministers plus forum.
In my current position I manage the CSCAP process for New Zealand, and was a co-chair of the CSCAP
Maritime security study group. I work closely with the Asia New Zealand Foundation and am currently
also acting as Track Two Adviser for the Foundation. I have taken part in a number of track two dialogues
as part of Asia NZ Foundation delegations including the ASEAN/Australia/ New Zealand trilateral, and
with Myanmar, Japan, India, Taiwan and the ROK, speaking on a range of geo-political issues including
maritime security. I have written a number of articles on current regional security issues for the Asia NZ
Foundation, the Malaysia-based ASEAN Newsletter, the Strategist (India‘s journal of diplomacy and
strategic studies), and the New Zealand Institute of International Affairs Review.)
______
Email Interview with FOREIGN POLICY RESEARCH CENTRE, NEW DELHI
FPRC Journal-23-India-New Zealand Relations (November 2015)
PART ONE
1. Do you agree with the statement that the greatest challenge facing New Zealand foreign
policy is to ―find our way in a transformed world‖?
Response:
I agree but would add that New Zealand is not alone in this respect. Many countries are facing the
same challenge. The rate of globalisation, international integration, and technology change does pose
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challenges for a small country like New Zealand. We face a situation today where competition to
attract and retain skills and access investment capital is intensifying. We need to offer an attractive
business environment and work opportunities. As economies become increasingly integrated,
emerging economic problems and their solutions increasingly involve coordination across
international borders and greater international rule-making. New Zealand‟s growth potential will be
determined at least in part by how quickly our companies adapt and adopt new technology that is
generated offshore.
But I would add that the transformation of global security settings also presents a significant
challenge as the international system comes to grips with growing non-traditional security threats,
especially terrorism, trans-national crime and cyber-security.
Response :
For a country of our size contributing to regional cooperation is very important. Given the rapidly
changing security environment such cooperation becomes even more important. New Zealand is a
foundation member of the United Nations, is a member of APEC, a foundation member of the ASEAN
Regional Forum, and of the ASEAN Defence Ministers plus forum(ADMM+) and has co-chaired two of
the latter forum‟s working groups (on peacekeeping operations and maritime security). This year we
th
are celebrating the 40 anniversary of our relationship with ASEAN. Closer to home we helped launch
the South Pacific forum and play a very active role in it. New Zealand is also very active in the track
two Council for Security Cooperation in the Asia Pacific and has co-chaired various study groups. New
Zealand is also active in a range of regional defence forums such as the Western Pacific Naval
Symposium. New Zealand cannot make its way in the world alone. We benefit from our involvement
in regional organisations and like to think that we can add value to them.
3. Has New Zealand‘s security dilemma increased with the emergence of China as an
eminent power in the Asia-Pacific?
Response:
No. We welcome China‟s rapid evolution to major power status and like many countries have
benefitted from it. We acknowledge that China‟s transformation has resulted in significant change to
the geo-political landscape and that such changes inevitably result in friction as the political tectonic
plates shift. The key to avoiding a security dilemma is a relationship between China and the United
States that is characterised by cooperation where there are common interests and regular dialogue
where interests diverge. A rapid deterioration in that relationship, however, would imperil the
stability, security and continued prosperity of the wider Asia Pacific region.
4. Is it correct to say that New Zealand is caught up between America and China and finds
difficulty pursuing its national interests bilaterally with the competing major powers?
Response :
New Zealand has very good relations with both China and the United States. We were the first OECD
country to secure a free trade agreement with China, the first Western country to conclude a bilateral
agreement on China‟s accession to the World Trade Organisation, the first western country to
recognise China as a market economy, and the first western country to apply to become a foundation
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member of the Asian Infrastructure Investment Bank. We have a comprehensive strategic partnership
with China.
Similarly we have a very close whole-of-government relationship with the United States with strong
and longstanding security and defence links which are very important to us. We have worked
together for more than a decade in Afghanistan and are currently supporting United States training
programmes for the Iraqi Army.
New Zealand has also encouraged China and the United States to work together including in defence
matters and has hosted more than one exercise in which elements of both the Chinese and United
States military have taken part.
5. While the Ninth Review Conference of the Nuclear Non-Proliferation Treaty from April 27
to May 22 2015 was a step backward from the 2010 Review Conference, in nucleararmed states‘ commitment to disarmament as it overwhelmingly reflected the views and
interests of the nuclear-armed states and some of their nuclear-dependent allies, it was
also a move forward as non-nuclear states steered ahead for disarmament with the
signing of the Humanitarian Pledge put forward by Austria. As of July 14, 113 states
had signed the Pledge. NCO‘s however, question why New Zealand has not endorsed the
Humanitarian Pledge? The failure to endorse the Pledge is particularly puzzling given
that the rest of the New Agenda Coalition has endorsed it, and that New Zealand has
played such a leading role in the humanitarian consequences initiative.
Response :
New Zealand has not formally endorsed the Pledge because it is not yet entirely clear to us the
particular cause of action it espouses. Some have taken it to mean pledging to continue working
towards the elimination of nuclear weapons – a goal to which New Zealand has been committed for a
long time. Others, however, have interpreted it as a pre-commitment to join negotiations on an
immediate nuclear weapons ban treaty, which is not aposition New Zealand has committed to. New
Zealand remains very strongly committed to finding legally effective measures that will advance
nuclear disarmament, in accordance with Article VI of the NPT. And as this question notes, New
Zealand has also been a very strong supporter of the Humanitarian Initiative and has significantly
helped to expand its support base to 159 countries.
PART TWO
1. Do you share the view that the India-New Zealand bilateral relationship can be
characterised as comfortable and warm but at least not particularly deep?
Response:
I think that would have been a reasonable description until recently. We would certainly like to see a
closer relationship that reflects India‟s growing importance in the indo-Pacific. That is why India is
now a priority relationship for New Zealand. Our goal is to work towards India being a core trade,
economic, and political partner for New Zealand. India is well-placed to further strengthen its
relations in the region and to take a more active role in regional forums that seek to build habits of
cooperation. That would provide opportunities for India and New Zealand to work together. There
are opportunities for closer cooperation on defence and security issues. I would like, for instance, to
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see Indian officers attend the New Zealand Defence Force Joint Staff College. On the economic front a
free trade agreement would be a very significant step forward in building a closer relationship.
Another vehicle for growing the relationship would be more frequent visits by Cabinet Ministers to
strengthen the political links.On that score, it was disappointing that PM Modi‟s visit to the South
Pacific bypassed New Zealand. Given the large and rapidly growing Indian diaspora in New Zealand it
seemed odd that we were omitted from his itinerary.
On a positive note India now provides the second highest number of international students studying
in New Zealand. Indian student numbers grew 67% in 2014 and this growth has continued into 2015.
This is a very welcome development as it bodes well for the development of personal relationships
that will contribute to the overall relationship once these students return home. The relationship also
benefits from students who choose to make their careers in New Zealand rather than return home, as
they will retain their connections to India and help to promote bilateral relations.
Another welcome development is the growth of Indian tourists to New Zealand. This, too aids in
promoting the relationship and to exposing to Indians with the means to travel what New Zealand has
to offer.
2. Do you agree with the viewpoint that India‘s shift towards a maritime strategy coincides
with New Zealand‘s growing strategic interest in the Indian Ocean?
Response :
Yes. Historically our defence links with India have largely
been forged between the two Navies. There are opportunities to expand this cooperation. New
Zealand has been active in contributing to counter-piracy patrols in the vicinity of the Gulf of Aden
and to counter-terrorism patrols in the northern Indian Ocean. Perhaps this could lead to New
Zealand playing a more active role in the Indian Ocean Naval Symposium.
3. Could aiding the United States increased forward presence in the Indo-Pacific region –
which has curtailing China‘s increased assertiveness as a subtext – provide a basis for
India and New Zealand to deepen their strategic engagement?
Response
As mentioned above I see opportunities for deepening our strategic engagement with India, but not
for the purpose of countering China. As also noted above New Zealand has a very good relationship
with China. We view the rapid growth of China‟s maritime capabilities as a natural consequence of its
move towards super-power status. Our preference is to work with China through bilateral and
multilateral defence engagement in such forums as the Western Pacific Naval Symposium. Where I
see opportunities for greater strategic engagement with India is in responding to the non-traditional
security threats that are unfortunately a disturbing feature of the contemporary security
environment. In particular I am referring to terrorism and trans-national crime.
4. What are the biggest concerns of New Zealand businessmen in India? How can these
challenges be overcome?
Response
18
th
th
India is our 15 largest trading partner and our 12 largest export destination. These figures reflect a
dramatic increase over the last five years. But they do not yet reflect the size of the Indian economy.
We export more to Thailand and the Philippines than we do to India. The biggest concern is the
absence of a free trade agreement. Such an agreement would improve our access to India‟s vast
market for consumer and industrial products as the high tariffs on agricultural and value-added items
make our products less competitive. The benefits of an FTA are not all one-way as it would phase out
tariffs on Indian textiles, clothing and footwear. There is also significant potential for growth in the
services sector. A recently-announced code-sharing agreement between Air New Zealand and Air
India will boost both trade and other links. Ideally the next step would be for direct flights.
*****
3. Dr. Robert Ayson
Professor of Strategic Studies
at Victoria University of Wellington
(Robert Ayson is Professor of Strategic Studies at Victoria University of Wellington where he works closely with the
Centre for Strategic Studies. He has also held academic positions with the Australian National University, Massey
University and the University of Waikato, and official positions with the New Zealand government as an intelligence
analyst and select committee advisor. He is an Honorary Professor with the New Zealand Defence Force Command and
Staff College and an Adjunct Professor with the ANU’s Strategic and Defence Studies Centre. Ayson gained his PhD in War
Studies as a Commonwealth Scholar at King’s College London and his MA as a Freyberg Scholar to the ANU. His recent
writings include Asia’s Security (Palgrave Macmillan).
Questionnaire
Part 1
1.Do you agree with the statement that greatest challenge facing New Zealand foreign
policy is to ― find our way in a transformed world‖?
I think the world is always experiencing changes so this statement really does not say a great deal. I would be
more specific: the big challenge for New Zealand foreign policy is to promote New Zealand's interests and
values when the global distribution of power is changing as China rises and America responses, when some of
the old assumptions about the dominance of western ideas and norms are no longer so solid, and when many
countries are straining to ensure that they can have functioning states and moderate politics.
Partly because New Zealand is a small state (by comparison to much larger Asia-Pacific countries but not by
comparison to our South Pacific neighbours), and because we do not have substantial military resources,
economic power or major diplomatic leverage of our own, a strong emphasis is placed in New Zealand policy
on regional cooperation. We are great joiners. I don't think New Zealand plays an especially crucial role in
regional cooperation when it comes to most of the Asia-Pacific groupings we are part of. A significant role at
times, but not crucial. We're not indispensible.
3.Has New Zealand‘s security dilemma increased with the emergence of China as an eminent
power in the Asia-Pacific?
This question assumes New Zealand already had a security dilemma. New Zealand is playing a balancing act in
its policy as it looks at the rise of China and sees how regional countries are responding and sees how the US is
responding. But that does not mean we feel especially strained by this development. I would say New Zealand
is among the list of Asia-Pacific countries that has probably been reasonably comfortable with China's rise.
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4. Is it correct to say that New Zealand is caught up between America and China and
finds difficulty pursuing its national interests bilaterally with the competing major powers?
No. That's not correct. New Zealand realises that this is challenging, but I do not think New Zealand finds this
as difficult as some do. It is more difficult for countries closer to the action in Asia.
5. While the Ninth Review Conference of the Nuclear Non-Proliferation Treaty (NPT), from April
27 to May 22,2015 was a step backward from the 2010 Review Conference in nuclear-armed
states‘ commitment to disarmament as it overwhelmingly reflected the views and interests of
the nuclear-armed states and some of their nuclear-dependent allies, it was also a move
forward as non-nuclear states steered ahead for disarmament with the signing of the
Humanitarian Pledge put forward by Austria. As of July 14, 113 states had signed the
Pledge.NGOs, however, question why New Zealand has not endorsed the Humanitarian Pledge?
The failure to endorse the pledge is particularly puzzling given that the rest of the New Agenda
Coalition has endorsed it, and that New Zealand has played such a leading role in the
humanitarian consequences initiative.
This is not something I have looked at closely in recent times. But I do know New Zealand has in recent times
been keen to use the humanitarian argument to try to kick-start nuclear disarmament.
Part 2
1.Do you share the view that India-New Zealand bilateral relationship can be characterised as
comfortable and warm but at least not particularly deep?
That is probably not a bad description. But if it is not as deep as you want it to be, (and I think it should be
closer) why would you be comfortable about it?
India would get more firmly onto New Zealand's radar on an ongoing basis if it took a more active role in East
Asia's and the Asia-Pacific's regional economic integration. Major progress on a NZ-India Free Trade
Agreement would help.
2. Do you agree with the viewpoint that India‘s shift towards a maritime strategy coincides with
New Zealand‘s growing strategic interest in the Indian Ocean?
I don't know if New Zealand has a growing strategic interest in the Indian Ocean. Unlike Australia, we lack an
Indian Ocean coastline. Our regional focus is more Asia-Pacific and South Pacific.
3. Could aiding the United States‘ increased forward presence in the Indo-Pacific region –
which has curtailing China‘s increased assertiveness as a subtext –provide a basis for India
and New Zealand to deepen their strategic co-operation?
No. Again because 'Indo-Pacific' does not translate well in New Zealand. But also because New Zealand is
anxious not to be seen as part of a containment of China effort.
4.What are the biggest concerns of New Zealand businessmen in India? How these challenges
can be overcome?
That's not something I can speak of with any knowledge.
*****
20
4.Dr. Mark G. Rolls
Director International Relations & Security Studies Programme, University of Waikato and Senior Fellow,
Centre for Strategic Studies: New Zealand
(Dr. Mark G. Rollsis Director of the International Relations and Security Studies Programme and Senior Lecturer at the
University of Waikato, New Zealand. He has an MA in Defence and Security Analysis from Lancaster University and a PhD
in South-East Asian Studies from the University of Hull. He has held posts at the Institute of Southeast Asian Studies in
Singapore and in the Department of International Politics, University of Wales, Aberystwyth, where he was the Swan
Hunter International Fellow in South-East Asian Studies. Dr Rolls is the co-editor of Post-Cold War Security Issues in the
Asia-Pacific Region (Frank Cass, 1994, 2000) and the author of The Arms Dynamic in South East Asia during the Second Cold
War (Ashgate, 2002).His research interests include ASEAN, the emerging East Asian regional security architecture, arms
procurement, non-traditional security issues and New Zealand - Asia relations. Dr Rolls is a regular participant for New
Zealand in the Track II process of political, economic and security dialogue in the Asia-Pacific region. He is a Fellow of the
New Zealand India Research Institute; Senior Fellow of the Centre for Strategic Studies: New Zealand; and a member of
the International Institute for Strategic Studies (IISS).
______
Part 1
Response to Questionnaire
1.Do you agree with the statement that greatest challenge facing New Zealand foreign policy is to “ find our
way in a transformed world”?
A.
If memory serves me correctly, this statement comes from the title of an article written by a distinguished
former New Zealand diplomat-Terence O'Brien. Whilst I would not want to disagree with such a figure, and his
overview of the changes in the international system and how they affect New Zealand is one with which I can concur, I
think it is really too broad. The greatest challenge facing New Zealand foreign policy, and this point has been well
made by others before, is to find suitable ways of responding to the growing importance and spreading influence of
China.
2. How crucial is New Zealand‟s role in regional cooperation?
A.
I think the honest answer has to be that it is not crucial at all. Rather, participating in the regional economic,
political and security architecture is crucial for New Zealand. This is not to say, however, that New Zealand doesn't
play an effective role in regional cooperative endeavours, or that its participation and counsel is not valued by other
regional states. New Zealand's status as a principled, independent-minded and law abiding state, along with the fact
that it has useful, practical military expertise in certain areas, gives it a role greater than its hard power attributes
would suggest it would have.
3.Has New Zealand‟s security dilemma increased with the emergence of China as an eminent power in the
Asia-Pacific?
A.
In the strict sense of the term - where a state’s military preparations create uncertainty in the minds of another
as to whether these are for defensive or offensive purposes and can therefore lead to a counter response - New
Zealand does not face a security dilemma with China (or anyone else for that matter). What China's rise is doing,
though, especially its growth in military power projection capabilities and its behaviour in the East and South China
seas is generating security dilemmas in Asia and East Asia especially. This is leading to greater strategic uncertainty
and thus makes New Zealand's security thinking and planning more complicated.
21
4. Is it correct to say that New Zealand is caught up between America and China and finds difficulty pursuing
its national interests bilaterally with the competing major powers?
A.
No, I don't think it is. Like many other states, New Zealand does not want to have to choose between the two
nor does it see this as something which is necessary. Again, like others, it wants to pursue good bilateral relations with
both China and the United States. Although it has often been said that New Zealand has hitherto benefited from the
parallel tracks of an economic relationship with China and a political/military one with the United States, and that it
will face difficulties should they begin to converge, there is no reason why New Zealand cannot have multifaceted
relationships with both of them. Indeed, it is often overlooked that New Zealand has had a good defence relationship
with China for some time now. Indeed, this is likely to develop further following the Defence Minister, Gerry
Brownlee’s, recent visit to Beijing. During his visit Mr Brownlee referred to China and New Zealand as "true strategic
partners" and announced a Five Year Engagement Plan with the People's Liberation Army. In the economic realm,
New Zealand has signed up to the Trans-Pacific Partnership, but it is also involved in discussions about the
establishment of a Regional Comprehensive Economic Partnership which China will be a major player in.
5. While the Ninth Review Conference of the Nuclear Non-Proliferation Treaty (NPT), from April 27 to May
22,2015 was a step backward from the 2010 Review Conference in nuclear-armed states‟ commitment to
disarmament as it overwhelmingly reflected the views and interests of the nuclear-armed states and some of
their nuclear-dependent allies, it was also a move forward as non-nuclear states steered ahead for
disarmament with the signing of the Humanitarian Pledge put forward by Austria. As of July 14, 113 states
had signed the Pledge.NGOs, however, question why New Zealand has not endorsed the Humanitarian
Pledge? The failure to endorse the pledge is particularly puzzling given that the rest of the New Agenda
Coalition has endorsed it, and that New Zealand has played such a leading role in the humanitarian
consequences initiative.
A.
I agree, it does seem puzzling and I know representations had been made to the Foreign Minister by individuals
and groups urging New Zealand to follow the example of the New Agenda Coalition states which have signed it. I
have no knowledge, however, of why New Zealand has failed to do so yet.
*****
HOD of Politics at the University of Otago
(Professor Robert G Patman is HOD of Politics at the University of Otago. He previously served as the
Founding Director of the multidisciplinary Master of International Studies programme (2000 and 2013);
directed or co-directed the annual University of Otago Foreign Policy School on seven occasions since 1997;
and served as an editor for the scholarly journal International Studies Perspectives (2010 - 14). His research
interests encompass US foreign policy, international relations, global security, great powers and the Horn of
Africa. Robert is the author or editor of 11 books. Recent publications include a volume called Strategic
Shortfall: The 'Somalia Syndrome' and the March to 9/11 (Praeger, 2010) and three co-edited books titled The
Bush Leadership, the Power of Ideas, and the War on Terror (Ashgate, 2012): China and the International
System: Becoming a World Power (Routledge, 2013); and Science Diplomacy: New Day or False Dawn? (World
Scientific Publishers, 2014). He is a Fulbright Senior Scholar, an Honorary Professor of the NZ Defence
Command and Staff College, Trentham, and provides regular contributions to the national and international
media on global issues and events.
His Youtube channel is http://www.youtube.com/user/RobertPatman/feed and he is on Twitter at
twitter.com/#!/Robert_Patman
____
22
Part 1
Do you agree with the statement that the greatest challenge facing New Zealand foreign policy is to “ find our
The process of globalisation has profoundly affected New Zealand foreign policy. Globalisation can be understood as
the intensification of technologically driven links between societies, institutions, cultures, and individuals on a
worldwide basis.In the era of globalisation, New Zealand - a sparsely populated and geographically isolated society has experienced profound changes in terms of national identity and its role in the world.These changes include a nonnuclear and regionally focused security policy, sweeping deregulation of the economy, recognition of the special
constitutional and cultural position of Maori people, new trade and diplomatic links with Asia-Pacific and closer ties
with the superpowers, China and the United States. At the same time, New Zealand has experienced a sharp rise in
income inequality, increased costs in the provision of housing and education, mounting concerns about
environmental decline, and growing fears the country's sovereignty is being eroded by New Zealand's participation in
multilateral trade deals and multinational intelligence-sharing arrangements. The challenge of making sure the
positive aspects of globalisation prevail over its downsides is a massive one for New Zealand and other countries in
the 21st century.
How crucial is New Zealand‟s role in regional cooperation?
As a relatively small state, New Zealand, in recent decades,has become increasingly dependent onregional
cooperation to meet its national economic and security interests. In return, New Zealand seeks to contribute tothe
peace and stability of the wider Asia-Pacific region. New Zealand’s connections with states in the Asia-Pacific region
have continued to strengthen and grow over time. New Zealand plays a potentially significant regional role by
funding renewable energy initiatives, contributing to disaster relief efforts and providing vital humanitarian support in
the Pacific in particular. New Zealand has also made bilateral and multilateral arrangements a priority. In 2008, New
Zealand became the first developed country to sign a Free Trade Agreement (FTA) with China. More recently,
Wellington was one of 12 countries that signed the Trans-Pacific Partnership Agreement (TPPA). Regional
engagement has been, and will continue to be, a major element of New Zealand’s foreign policy.
Has New Zealand‟s security dilemma increased with the emergence of China as an eminent power in the AsiaPacific?
To say that New Zealand’s security dilemma has increased with the emergence of China, would suggest that New
Zealand has sought to enhance its military capabilities as a response to China’s enhanced power. This would be a
largely futile effort, and there is little evidence ofthis occurring. New Zealand has consistently stated that it welcomes
the rise of a prosperous and peaceful China on the world stage. New Zealand is a country heavily dependent on
exports, and China is one of New Zealand’s largest trading partners. New Zealand is therefore much more likely to
pursue a policy of engagement with China, than seeking to balance against it.
Is it correct to say that New Zealand is caught up between America and China and finds difficulty pursuing its
national interests bilaterally with the competing major powers?
New Zealand has to carefully manage its relationship with America and China. It is possible thatNew Zealand may find
its loyalties tested if competition and rivalry were to increase between America and China. New Zealand membership
of the Five Eyes alliance might potentially become an issue in such circumstances. Indications that New Zealand spied
23
on friendly nations, including China, on behalf of the US-led alliance has upset neighbouring states, and might have
future repercussions for New Zealand. However, this does not necessarily mean that New Zealand is unable to pursue
its national interests, which are not always identical to those of either Washington or Beijing.In the past, New Zealand
has taken an independent stance on issues even if it conflicted with external power interests. That was evident during
New Zealand’s embrace of a non-nuclear security policy in the mid - 1980s, and also Wellington’s refusal to back the
US-led invasion of Iraq in 2003. There is nothing to suggest that New Zealand won’t continue this policy in the future,
especially now that it holds a non-permanent seat on the United Nations Security Council (UNSC). New Zealand,
backed by the majority in the UN General Assembly, is pushing for a reduction in the veto powers of the five
permanent members of the UNSC.
While the Ninth Review Conference of the Nuclear Non-Proliferation Treaty (NPT), from April 27 to May 22,
2015 was a step backward from the 2010 Review Conference in nuclear-armed states‟ commitment to
disarmament, as it overwhelmingly reflected the views and interests of the nuclear-armed states and some of
had signed the Pledge. NGOs, however, question why New Zealand has not endorsed the Humanitarian
It is not exactly clear why the John Key government has so far refrained from signing the Humanitarian Pledge. Many
suspect that this may be the result of pressure from the United States government. However, New Zealand’s current
position may not be sustainable. The National Party has come under intense pressure to endorse the pledge.
According to the Labour and Green Party Disarmament Spokespersons – the two largest opposition parties in New
Zealand – their parties now support New Zealand taking a leading role in negotiations for a global ban treaty. As Phil
Goff MP, the disarmament spokesperson for New Zealand’s opposition Labour party, recently stated, New Zealand
“can and should” be a “trailblazer on this issue, rather than waiting for others”.The New Zealand public has also
brought the John Key government to account for its inaction on the Pledge. It may therefore be more a matter of
when New Zealand endorses the pledge, rather than if.
Part 2
Do you share the view that the India-New Zealand bilateral relationship can be characterised as comfortable
and warm but at least not particularly deep?
It is probably more accurate to characterise the New Zealand-India bilateral relationship as warm, but somewhat
under-developed. Historically, trade levels between the two states have been very low, and as recently as the 1990s
there were few ministerial visits in either direction. The bilateral relationship has grown in importance recently as India
has emerged as a key international and regional player. We can expect New Zealand to continue to develop this
relationship further through a number of initiatives. These include increased ministerial visits to develop political
contacts and to enhance dialogue, an expanded trade and economic relationship with the possibility of an FTA under
discussion, joint education ventures and cooperation through tourism. These are all excellent avenues to forge a
closer relationship. And people-to-people contacts between the two countries are growing.
Do you agree with the viewpoint that India‟s shift towards a maritime strategy coincides with New Zealand‟s
growing strategic interest in the Indian Ocean?
24
Whilst it does appear that India’s shift towards a maritime strategy has coincided with New Zealand’s growing
regional interests, it is likely that the reasons behind this shift differ. India is hoping to promote greater regional
influence and to expand the country’s defence capabilities, whereas New Zealand has increasingly sought to expand
its regional engagement through diplomatic ties and the negotiation of bilateral and multilateral trade negotiations.
However, there is a clear convergence of interests in the Indian Ocean. Both India and New Zealand believe in keeping
the Indian Ocean secure. In this respect, they believe in the need to deploy naval forces in the Indian Ocean to
prevent passage at sea by terrorists and to counter piracy. India and New Zealand both participate in this mission, and
this is an area where we can expect to see future cooperation.
Could aiding the United States‟ increased forward presence in the Indo-Pacific region – which has curtailed
China‟s increased assertiveness as a subtext –provide a basis for India and New Zealand to deepen their
strategic co-operation?
Whilst India and New Zealand will want to work alongside the United States in the Indo-Pacific region, it is unlikely
they will want to provide overt aid to help the United States counter China’s apparent regional assertiveness. Neither
India nor New Zealand would want to be seen to be aligning with the US against China. Indeed, India has explicitly
stated that it does not want to form an alliance against China, and wants to prevent the region being dominated by
any one power. However, India and New Zealand might seek out joint initiatives to enhance regional stability and
maintain access to vital trade routes, which in turn will deepen strategic cooperation.We can expect these initiatives to
be multilateral in nature, and in accordance with the international rule of law.
What are the biggest concerns of New Zealand businessmen in India? How can these challenges be overcome?
New Zealand business people are generally concerned with the ease of business transactions, understanding local
sensitivities, dealing with the local infrastructure, overcoming barriers to direct foreign investment, and building
business relations that are transparent and not susceptible to issues of corruption. There are a number of laws that
have hampered business interactions in India. These include labour and employment laws, land acquisition laws and
intellectual property laws. These are perhaps best overcome by educating New Zealand business people on the local
business scene, appointing experienced consultants who understand local laws, building personal relationships with
local partners, and working with the Indian government wherever possible to reach mutual agreements and, if
necessary,removing obstacles to the smooth running of business relations.
*****
6. Conor Cronin
Research associate with the Sumitro Chair for Southeast Asia Studies
at the Center for Strategic and International Studies, Washington
(Conor Cronin is a research associate with the Sumitro Chair for Southeast Asia Studies at the Center for
Strategic and International Studies. A recent graduate of Johns Hopkins’ School of Advanced International
Studies, his research focuses on US foreign policy and international security in Southeast Asia, especially
maritime sovereignty disputes in the South China Sea. Conor’s experience in Southeast Asia includes working
at the US embassy in Manila and as a Peace Corps volunteer in Cambodia.)
RESPONSE
Part 1
1.Do you agree with the statement that greatest challenge facing New Zealand foreign policy is to “ find our
Yes, with the qualification that it might be more accurate to say “transforming” rather than “transformed”. New
Zealand faces a challenge shared by many nations across the Asia-Pacific region, which is to deftly adjust their foreign
25
policy to a rapidly growing region. To call the world simply “transformed” only highlights a part of the problem, which
is to continually recalibrate policy in light of shifting events and circumstances. Two facets of New Zealand foreign
policy which underscore this challenge are relations with China and the threat of climate change on the Pacific region.
The calculus for these policy issues was immensely different 20 years ago and will likely be nigh-unrecognizable 20
years from now.
2. How crucial is New Zealand‟s role in regional cooperation?
Regional cooperation is of critical importance to many nations in the Pacific, because of their dependence on trade
and development assistance. New Zealand’s place as a benefactor, sending more than half of its foreign aid to Pacific
Island nations, is indicative of its relationship and importance to many of those smaller nations. As a Commonwealth
nation with strong U.S. ties, New Zealand also has a place as an intermediary between the west and the Pacific islands.
Its central place in the negotiations for the Trans-Pacific Partnership, as a negotiator from the very beginning, is
indicative of the country’s status as a Pacific “partner”.
3. Has New Zealand‟s security dilemma increased with the emergence of China as an eminent power in the
Asia-Pacific?
It seems the dilemma has only increased as far as the stability of abundant trade throughout the region is concerned.
China has no designs on New Zealand territory and New Zealand has no interests in any of the areas which China
claims in the South and East China seas. New Zealand’s security, then, is more a matter of its economic security.
Whether that security is threatened by Chinese actions in the region is subject for a much longer debate, but as a
rules-based modern nation, New Zealand’s interests lie in all parties behaving responsibly according to international
norms and laws.
4. Is it correct to say that New Zealand is caught up between America and China and finds difficulty pursuing
its national interests bilaterally with the competing major powers?
As mentioned in the first response, adjusting to the rising power of China has certainly caused difficulty for New
Zealand, and one of these areas is in balancing bilateral interests. In 2013, thanks to the FTA signed between China
and New Zealand five years earlier, China became New Zealand’s largest trading partner over both Australia and the
United States. New Zealand also became the first developed country to work with China on a development project in
a third country: the Rarotonga Water Reticulation project, in the Cook Islands. Wellington has hosted a number of
visits from Politburo members. On the other hand, New Zealand negotiated and successfully signed the TPP with a
group of other nations, including the US but not China. Many, especially from the Chinese side, have claimed that the
TPP is an anti-China trade pact, a part of a plan to contain Chinese economic growth. New Zealand also sees a great
degree of security cooperation with the United States, including participation at the 2014 RIMPAC exercises in Hawaii
and membership in the “Five Eyes” intelligence sharing cadre. While it may be correct to say New Zealand finds
“difficulty” in balancing the two, that should not imply that they have been unable to manage it thus far.
5. While the Ninth Review Conference of the Nuclear Non-Proliferation Treaty (NPT), from April 27 to May
22,2015 was a step backward from the 2010 Review Conference in nuclear-armed states‟ commitment to
disarmament as it overwhelmingly reflected the views and interests of the nuclear-armed states and some of
had signed the Pledge. NGOs, however, question why New Zealand has not endorsed the Humanitarian
My apologies, but our chair’s research does not extend to nuclear issues and our colleagues in that department were
unable to provide me an answer by the deadline.
Part 2
26
1.Do you share the view that India-New Zealand bilateral relationship can be characterised as comfortable and
warm but at least not particularly deep?
That characterization is about as accurate as any that we could come up with. The most important aspect of the
bilateral relationship seems to be trade. New Zealand access to India’s market is much lower than its size and
potential warrant, and the development of the free trade agreement under negotiation is one of the first solutions
that comes to mind.
2. Do you agree with the viewpoint that India‟s shift towards a maritime strategy coincides with New
Zealand‟s growing strategic interest in the Indian Ocean?
As India continues to stretch beyond the subcontinent and off its shores, they will likely find a willing partner in
maritime cooperation in New Zealand. The Indian maritime strategy naturally requires security cooperation with other
nations interested in trade across the Indian Ocean, and New Zealand is a member of the 25-nation maritime coalition
that monitors and intercepts suspicious vessels off of the Horn of Africa and in the Indian Ocean. Defense Minister
Brownlee has repeatedly emphasized the need for New Zealand, as a geographically isolated but trade-dependent
nation, to participate in the maintenance of freedom of navigation and to encourage responsible stakeholders to
share in that stewardship. Accordingly, if New Zealand sees a responsible Indian maritime strategy, they are bound to
encourage and support its development.
3. Could aiding the United States‟ increased forward presence in the Indo-Pacific region – which has curtailing
China‟s increased assertiveness as a subtext –provide a basis for India and New Zealand to deepen their
strategic co-operation?
The subtext of constraining China would make such an arrangement a difficult sell for New Zealand, at least. While
Chinese maritime security interests have been butting up against India’s more and more of late, especially with the
continuing Chinese development of the port at Gwadar, New Zealand has less to gain (or at least preserve) and more
to lose by becoming confrontational with China. At the same time, however, New Zealand’s need for open sea trade is
paramount and if the Key government determines that support of US forward presence is necessary to keep sea lanes
open, such cooperation might potentially be on the table.
5. What are the biggest concerns of New Zealand businessmen in India? How these challenges can be
overcome?
Businessmen used to the open trade environment of New Zealand might encounter serious frustrations operating in
India due to protectionist measures in place. New Zealand’s MFAT has targeted improved trade relations as a priority
in their 2015 “Opening Doors to India” strategy for NZ Inc., but they acknowledge issues with factors such as tariffs
and investment restrictions that require local partners.
*****
27
1.
Building a Partnership:
The Current State of Play in India-New Zealand Relations*
Dr. Mark G. Rolls
Director
International Relations & Security Studies Programme, University of Waikato
& Senior Fellow, Centre for Strategic Studies: New Zealand
(Dr. Mark G. Rollsis Director of the International Relations and Security Studies Programme and Senior Lecturer at the
University of Waikato, New Zealand. He has an MA in Defence and Security Analysis from Lancaster University and a PhD
in South-East Asian Studies from the University of Hull. He has held posts at the Institute of Southeast Asian Studies in
Singapore and in the Department of International Politics, University of Wales, Aberystwyth, where he was the Swan
Hunter International Fellow in South-East Asian Studies. Dr Rolls is the co-editor of Post-Cold War Security Issues in the
Asia-Pacific Region (Frank Cass, 1994, 2000) and the author of The Arms Dynamic in South East Asia during the Second Cold
War (Ashgate, 2002).His research interests include ASEAN, the emerging East Asian regional security architecture, arms
procurement, non-traditional security issues and New Zealand - Asia relations. Dr Rolls is a regular participant for New
Zealand in the Track II process of political, economic and security dialogue in the Asia-Pacific region. He is a Fellow of the
New Zealand India Research Institute; Senior Fellow of the Centre for Strategic Studies: New Zealand; and a member of
the International Institute for Strategic Studies (IISS).
_______
This article argues that although India and New Zealand are situated at opposite ends of the
Indo-Pacific region, they have sufficient common concerns and interests that the bilateral
relationship could, and should, be better than it currently is. Following a brief examination of
the concept of the Indo-Pacific and what it means for both states, the article then looks at the
importance of India to New Zealand and how the bilateral relationship is perceived in
Wellington. The efforts which New Zealand has made to inject renewed vigour into, and give
more substance to it are then considered. An assessment of how successful, or otherwise,
these efforts have been follows in which it is contended that far from being the hoped for
platform from which the relationship can move to a higher level, the proposed India-New
Zealand Free Trade Agreement (FTA) now seems to have become a stumbling block. Substantial
progress has been made instead in the area of people-to-people links, at the United Nations,
and in terms of defence co-operation (especially in the area of maritime security).
As has been remarked upon, the term ‗Indo-Pacific‘ has increasingly been in fashion over the
past few years. Political ―leaders and senior policy figures from such countries as Australia,
India, Indonesia, Japan and the US‖ have emphasised it, ―or [used] similar language‖, more
frequently ―in their public speeches and official statements.‖1 Although there are evidently
different ways in which the Indo-Pacific is conceptualised by various analysts, as the author of
the first chapter in Asia-Pacific Regional Security Assessment 2015. Key developments and
28
trends notes, they suggest that a useful way of thinking about the term is provided by an
amalgam of two of the main ones. Thus, ―the idea of an Indo-Pacific region involves recognising
that the growing economic, geopolitical and security connections between the Western Pacific
and the Indian Ocean regions are creating a single ‗strategic system‘, understood as a set of
geopolitical power relationships among nations where changes in one part of the system affect
what happens in the others.‖2 In effect, therefore, the Indo-Pacific can be seen as ―a maritime
‗super-region‘ with its geographical centre in South-East Asia.‖3 It is this maritime dimension
which provides a very important link between India and New Zealand and effectively ties the
opposite ends of the Indo-Pacific region together.4
India‘s use of the term Indo-Pacific, it has been noted, came to prominence under the then
prime minister, Manmohan Singh, who emphasised it in 2012 and 2013 as ―a way of defining
his country‘s relations with Australia and Japan.‖ Similar language has also been employed by
Narendra Modi, Singh‘s successor, to describe ―his vision for relations with Australia.‖ 5
One of the reasons for India starting to use Indo-Pacific, rather than Asia-Pacific, was linked to
the sense that the Indian Ocean itself was becoming of greater importance amidst ongoing
strategic changes. Noting the traditional, central importance of the Indian Ocean to India, one
Indian observer has stated that: ―At the same time, it is also a region of growing global strategic
attention. India continues to make efforts [to ensure] that the Indian Ocean emerges as an
uncontested region, able to cope with piracy or instability whether on its own or in partnership
with the littoral states.‖6Another reason was that the term is increasingly linked to India‘s longstanding, and now more active, Look East policy. ―An Indo-Pacific definition of Asia lends
further legitimacy to India‘s growing role as a strategic actor in East Asia, including the South
China Sea and Western Pacific.‖7
Unlike its trans-Tasman neighbour, Australia, with whom New Zealand has its closest bilateral
relationship, the term ‗Indo-Pacific‘ has (yet) to be included in the official New Zealand lexicon. 8
This is not to say, however, that the idea and importance of the Indo-Pacific region has not
been recognised. In last year‘s Defence Assessment, the section on South Asia noted how the
world‘s busiest trade route passes through the Middle East, Indian Ocean and South-East
Asia. Thus, ―New Zealand too has an interest in the maintenance of a stable trade route
through the region.‖9 That India and New Zealand are effectively part of the same wider region,
whatever label is attached to it, is made explicit in the country information paper produced by
the Ministry of Foreign Affairs and Trade (MFAT) in Wellington. This information paper states
that: ―We have a common stake in the prosperity and stability of our [italics added] region‖.10
Although the Indo-Pacific region connection is a significant one, it is not the link between the
two countries which tends to feature in official statements on the nature of the bilateral
relationship. Instead, it is the shared historical ties, traditions and values. These include
membership of the Commonwealth, language, democracy, legal systems and, of course,
sporting links – especially cricket.11 That these aspects can sometimes lead to a degree of
complacency in the relationship should not be ignored, but they also give it a firm foundation.
As was noted at the first India-New Zealand Track II dialogue in 2009, it is very easy for
Indians and New Zealanders to begin talking to one another because they have things in
common and, therefore, do not have to spend time getting to know one another and feeling
comfortable.12 There is, in other words, warmth to the relationship; particularly at the peopleto people level.
29
The idea of warmth is certainly evidentin the MFAT information paper on India; the first
sentence of which states: ―India and New Zealand have a longstanding and warm relationship.‖
This overview section also says that ―India is a priority relationship for New Zealand [italics
added] and our most developed relationship in South Asia.‖ 13 That India has been accorded
greater significance in New Zealand‘s foreign policy in recent years is without doubt. It has
been acknowledged, however, that New Zealand was slower than others to recognise India‘s
increased importance and that it was much quicker off the mark as far as China was
concerned.14
That the time was ripe for an improved bilateral relationship was a feeling held in New Delhi
too. In 2009, a member of the Institute for Defence Studies and Analyses referred to it as being
‗spring time‘ in the bilateral relationship and that it was now better placed than for some
time.15 Another added that there was an ―emerging convergence‖ of interests between India
and New Zealand16 and that the stage was now set for a ‗quantum leap‘ in the bilateral
relationship.17 New Zealand‘s renewed interest in India was occurring, fortuitously, at just the
same time as India‘s foreign policy was becoming more diversified: a policy into which New
Zealand could fit well.
The importance of India to New Zealand was clearly signalled in MFAT‘s 2011 Statement of
Intent, as well as the strategy that would be pursued to further the relationship. India was
specifically identified (along with Japan and the Republic of Korea) as a key regional economic
and political power with whom New Zealand wanted to build a relationship. 18 Noting that the
Ministry has ―participated in in-depth environment scans‖ of four countries in 2010-11,
including India, ―whole-of-government NZ Inc engagement strategies for these countries‖ were
subsequently initiated.19 These strategies were scheduled to be completed by July 2011. 20
The India strategy, entitled Opening Doors to India. New Zealand‟s 2015 Vision, was eventually
released in October 2011 and became the first NZ Inc strategy to appear.Recognising the
importance of India as an emerging ―Asian superpower‖, the vision for New Zealand was that it
should ―become a core trade, economic and political partner‖ by 2015. 21 At the heart of this
strategy, or as the document itself says ‗pivotal‘ to it, was the attainment of an FTA. This,
Prime Minister John Key hoped at the time the NZ Inc strategy was released, would be finished
as early as 2012. The completion of an FTA was deemed essential in order to achieve the first of
the of the strategy‘s goals; an increase in New Zealand‘s merchandise exports to India to at
least NZ$2 billion by 2015. 22 The signing of an FTA was widely regarded as being the ‗big ticket‘
item necessary to push the relationship to a new level and to keep it there; parallels being
drawn with the China-New Zealand FTA which was signed in 2008.
The hope that the FTA would be finished by 2012 was not, of course, realised. Even the
negotiations over the FTA were effectively stalled from July 2013, when the ninth round was
held in Wellington, until May this year when the latest round was held in New Delhi: the
resumption of talks coming after the New Zealand Primary Industries Minister Nathan Guy‘s
visit in November 2014. This visit saw the Indian Agriculture Minister, Radha Mohan Singh,
commit to scheduling a tenth round.23
That an FTA had not been signed by the original target date of 2012, and still has not, is
perhaps not surprising. There is considerable opposition in India to the liberalization of trade
in general and, in the case of trade with New Zealand, to granting dairy access in particular.
Indeed, this is the main sticking point in the negotiations it seems. 24 It has also been noted
30
that Indian officials have drawn attention to India‘s previous, unhappy, experience with FTAs
and have disliked them focussing only on trade in commodities. 25
The failure to sign an FTA has undoubtedly affected the NZ Inc strategy for India and has
meant that the first goal will not be attained in 2015 as planned. At the end of December
2014, New Zealand merchandise exports had only reached NZ$618 million. This figure is also
accounted for by the fact that New Zealand coal exports to India have steadily decreased over
the past few years. In the absence of an FTA, the Bilateral Investment Framework has not
been improved either (the third goal of the strategy). 26
That the FTA has not been concluded has created the impression that rather than being a
stepping stone to an improved bilateral relationship, it has become a stumbling block instead.
It may be reading too much into it, but it is hard to avoid the sense of a loss of momentum in
New Zealand's India policy in MFAT‘s 2014-2018 Statement of Intent when it is compared with
the previous one. There is no mention at all of India in the Minister‘s foreword this time and
under the Ministry‘s nine strategic priorities, India does not specifically feature. 27
Although efforts to conclude an FTA will continue - sensibly there is no longer a target date the previous emphasis on it should be reduced and it should no longer be regarded as ‗pivotal'
to the attainment of a wider, stronger India-New Zealand partnership. The other goals of the
NZ Inc India strategy have, in contrast, seen substantial progress and it is enhanced cooperation in these and other areas through which such a partnership will best be achieved.
People-to-people links have always been an important part of the bilateral relationship,
providing it with solid foundations. These links were certainly identified in Opening Doors to
India as an area in which significant progress could be made. The services trade (goal two) has
undoubtedly grown, with India now being the second largest source of international students
after China and significant increases in tourist arrivals from India has occurred. 28 The number
of Indian tourists rose from 29,856 in 2012 to almost 41,000 in 2014. 29 The growth in visitors
from India has happened despite the continuing absence of direct air links between the two
countries which had been identified in the NZ Inc strategy as a ―constraint on tourism,
business people and international students.‖30 Despite an air services agreement being signed
in 2006, and updated in 2008, under which direct flights between Auckland and Mumbai were
now allowed, neither Air India nor Air New Zealand have taken up the offer as they have not
regarded the route as commercially viable. The recent signing of a codeshare agreement
between the two airlines will make things much easier, however, for tourists and business
travellers alike.31
The desire to attract more migrants from India is another area in which significant progress
has been achieved. From being one of the largest sources of permanent arrivals in 2011 when
the NZ Inc strategy was released, India is now the number one source of skilled migrants
coming to New Zealand and thus goal four has largely been realised. 32
Lastly, in terms of people- to- people links, and a very significant component of the strategy‘s
sixth goal, the Cricket World Cup held in Australia and New Zealand earlier this year was an
undoubted success. It would be hard to think of another country‘s foreign policy which makes
such a play of sport as a tool of diplomacy as does New Zealand's. ‗Sporting diplomacy‘ in
general, and cricket links and diplomacy in particular, was definitely identified as such a tool
in Opening Doors to India. ―Cricket has the ability to provide an important profile for New
31
Zealand in India – a profile which is out of all proportion with New Zealand‘s size and global
influence.‖ 33
One senior official when discussing the progress made with the NZ Inc strategy observed how
cricket links and diplomacy had been a notable success. The Cricket World Cup was very
important in this respect both in terms of New Zealand as a co-host and the Black Caps
reaching the final (though sadly not winning the trophy). The World Cup saw an increase in
the number of Indian visitors coming to New Zealand outside of their traditional low season
preference and amongst them were a number of important businesspeople which led to several
commercial deals being reached.34
In view of the fact that a very important element of Prime Minister Modi‘s more active foreign
policy is the people-to-people dimension (and of India's relations with New Zealand overall), the
above developments bode well for New Zealand. So too does the significant increase in the
number of people of Indian origin in New Zealand as Prime Minister Modi promotes a greater
interest in the Indian diaspora.35
In addition to the progress which has been made in terms of the goals encompassing people-topeople ties, progress has also occurred in the area of goal five; engaging more deeply with India
on regional and global issues. Some of this has resulted from New Zealand and India working
together in various components of the Indo-Pacific (and Asia-Pacific) regional security
architecture, but it has also been linked to the issue of United Nations Security Council reform
and, especially, New Zealand's election to a non-permanent seat on the Council for the period
2015-16.
Although it has been argued that previously there was no vocal support from New Zealand for
India to become a permanent member of an expanded Security Council, 36 this changed with
John Key‘s 2011 visit. During his visit Key stated that: ―We would support India's membership
in a reformed Security Council, including in any expansion of permanent membership‖. 37
Key‘s comments were reinforced later the same year by New Zealand's Ambassador and
Permanent Representative to the United Nations. After drawing attention to the fact that it was
more than two years since New Zealand had expressed a view on Security Council reform in
any UN forum, he said ―a reformed Council must include a longer-term role for major powers
like India [italics added] and Japan‖.38
Amidst the ongoing inter-governmental negotiation process at the UN on Security Council
reform, it has been evident that India wants its partners to be supportive of that process. New
Zealand has certainly been so thus far.39 New Zealand wants to see a reform of the right to veto
for the existing Permanent Members, reiterated by Prime Minister Key in his address to the
70th United Nations General Assembly in October, 40 and views the current composition of the
Security Council as inadequate. If the process initiated in the General Assembly to negotiate a
text on reforms to, and expansion of, the Security Council should secure a two thirds vote in
favour and then reach the Security Council whilst New Zealand still has a seat on it, then New
Zealand would vote in favour of reform and an expanded permanent membership. 41
Another dimension to New Zealand-India co-operation at the UN has been in the area of
peacekeeping operations (PKO). India has a particular interest in PKO and, like New Zealand,
considerable expertise in it. New Zealand's membership of the Security Council has seen the
two countries engage in discussions on PKO and this is a potential area for further UN
32
cooperation in the future.42 Coincidentally, peacekeeping is also an area in which engagement
occurs between the New Zealand and Indian armies.
Bilateral defence co-operation has historically always been described as ‗limited‘. Although that
adjective is still applied to bilateral engagement between the two militaries,43 it has been noted
that in recent years defence ties have been growing closer. 44 Defence co-operation was one area
that was not specifically mentioned in Opening Doors to India: however, it has clearly been part
of the New Zealand government's overall strategy to improve the relationship. Indeed, during
Prime Minister Key's visit in June 2011 the decision to appoint a Defence Adviser to India was
announced in the joint statement issued by the two prime ministers. 45 New Zealand's defence
representation to India has subsequently been upgraded over the last 18 months. The Defence
Adviser accredited to India now holds a One Star rank and is based in Canberra. 46
An increased tempo to the defence relationship has also been evident in the less headline
grabbing, but nonetheless still significant, area of defence education links. November 2014 saw
what has been described as a "productive visit" by members of the New Zealand Defence Force
Command and Staff College course to India on their international study tour.47 An Officer in
the Indian Armed Forces has also successfully finished the Advanced Command and Staff
Course in New Zealand and, in another first, a New Zealand Army officer is attending the 12month staff course at the National Defence College in India in 2015.48
Such areas are important, but it is the defence interaction which occurs in the relevant
regional multilateral level institutions which has been valued most highly by New Zealand in
recent years. This is especially so in the ASEAN Defence Ministers‘ Meeting-Plus (ADMM+ )
where New Zealand has participated regularly in the Experts‘ Working Group (EWG) on
Humanitarian Mine Action which India has been co-chairing with Vietnam.49 India and New
Zealand also work together in the ADMM+ EWG on Maritime Security. Should India become a
full member of the Western Pacific Naval Symposium (it is currently an observer) then that
would provide another useful forum for naval engagement.
It has often been remarked that India and New Zealand are both maritime nations.
Concomitantly, therefore, it is enhanced naval engagement, driven by the centrality of a
sharing of security interests in the Indian Ocean, through which future cooperation can most
successfully be pursued. As was noted by the Chief of the Royal New Zealand Navy, Rear
Admiral Jack Steer, when he visited Kochi in June 2015, the Indian Ocean is also important to
New Zealand as "98 to 99 per cent of our imports and exports happen by sea- a lot of it
through the Indian Ocean".50 New Zealand and India can, and already do, work together to
keep vital sea lanes of communication open by countering the threat posed by pirates.51
Hitherto, naval engagement between New Zealand and India has largely occurred through port
visits by ships of both navies on an ad hoc basis. In the case of the Royal New Zealand Navy
(RNZN) this is usually when vessels are transiting through the Indian Ocean en route to, or
returning from, participating in counter-piracy operations with the Combined Maritime Force
in the Persian Gulf. Indeed, the visit by the Chief of the RNZN was timed to fit in with the port
call by HNNZS TeKaha to Kochi on its way back to New Zealand.52 New Zealand is now
considering plans for a more routinisedprogramme of naval engagement which would see it
move from such ad hoc port calls to a regular schedule of visits. 53
33
Having attended the 2014 Indian Ocean Naval Symposium as an observer, it would be useful if
the RNZN considered becoming a permanent observer. New Zealand could also consider
joining the Indian Ocean Rim Association which has begun to consider maritime security
issues and which Australia is already a member of. After all, as was noted in the Indian Navy's
coverage of TeKaha‟s visit to Kochi, India and New Zealand share "common interests as Indian
Ocean Littoral states."54 They also have common interests in constructing and maintaining a
stable, rules-based order in the Indo-Pacific.
A common interest in an Indo-Pacific ‗super region‘ means that, perhaps for the first time in
their history as independent states, New Zealand and India share a strategic objective; even an
imperative. Moreover, from New Delhi‘s perspective, ―having a partner in New Zealand provides
an effective way to further its expanding strategic interests … [which] very much coincides with
Wellington‘s growing interest in the Indo-Pacific region.‖55
Although it would be overstating the case to contend that India has become a ―core trade,
economic and political partner‖ for New Zealand by 2015, especially in the absence of an FTA,
substantial progress has been made towards several of the NZ Inc strategy‘s other, individual
goals. Those relating to people-to-people links have been a notable success as has wider
engagement, notably co-operation at the UN. To these can be added defence co-operation
(particularly naval engagement) and a growing sense of being partners in the Indo-Pacific.
To ensure that the partnership continues to grow, it is essential that momentum is sustained.
Too often in the past this has been lost and inertia has set in. This has not always been
Wellington‘s fault. Not only are India and New Zealand at opposites ends of the Indo-Pacific
region, they are also opposites in terms of power attributes and status. This has meant that
New Zealand has sometimes seemed insignificant to India with the corollary that New Zealand
has had to work harder at the relationship to try to make itself more important in the eyes of
New Delhi. In this regard, there has been a certain imbalance in the number and seniority of
high level visits. It would be helpful, therefore, if the number of high level visits from India to
New Zealand increased.56 As one Indian analyst argued back in 2012, a ―Prime Ministerial visit
from India to New Zealand is much overdue.‖ 57 The fact that Prime Minster Modi did not
include Wellington on his itinerary during his recent trip to Australia and Fiji was a lost
opportunity.58 If momentum can be maintained by both New Zealand and India then that old
cliché that the bilateral relationship is ‗warm, but not deep‘ can be hit out of the ground.
*An earlier, shorter version of this article was presented at the International Seminar on
Towards an Indo-Pacific Partnership: Reconnecting India and New Zealand, Observer
Research Foundation, New Delhi, 5-6 November, 2015.
Notes
1.
―Chapter 1 Redefining The Region‖, in International Institute for Strategic Studies,
Asia-Pacific Regional Security Assessment 2015. Key developments and trends (London:
IISS, 2015), p.7.
2. Ibid., p.9.
3. Ibid.
4. India, of course, has had long-standing interests in the South Pacific through what has
been described as its ‗emotional attachment‘ to Fiji. This description was used by an
34
Indian participant at the Second India-New Zealand Track II Dialogue, 13-14,
September 2010, Wellington, New Zealand.
5. Redefining The Region, p.13.
6. Avtar Singh Bhasin, India‟s Foreign Relations – 2012 Documents (New Delhi: Geekita
Publishers, 2013), p.xii. Modi signalled the importance of the Indian Ocean littoral
during his visit to the Seychelles and Mauritius in March this year. See C. Raja Mohan,
―Revealed: India's Master Plan for the Indian Ocean‖, The National Interest, June 26,
2015, http://nationalinterest.org/blog/the-buzz/revealed-indias-master-plan-theindian-ocean-13198 (accessed October 6, 2015).
7. Redefining The Region, p.15.
8. It has been noted that in its 2013 defence white paper, Australia recognised the IndoPacific formally as being its ―zone of strategic interest‖. Redefining The Region, p.10. It
was also notable that during the visit of the then Australian Defence Minister, Kevin
Andrews, to India in August, the joint statement issued after talks with his Indian
counterpart,―underscored their ongoing interest in fostering and maintaining peace and
stability in the Indo-Pacific region.‖ Cited ―India – Australia Defence Ministers‘ Meeting‖,
Foreign Affairs, September 3, 2015, http://foreignaffairs.co.nz/2015/09/03/indiaaustralia-defence-ministers-meeting/ (accessed September 9, 2015).
9.
Ministry of Defence, Defence Assessment 2014 (May, 2015). It will be interesting to
see whether or not the term Indo-Pacific appears in the 2015 defence white paper as
was suggested by the author at a Track 1.5 meeting prior to the start of the public
consultation process.
10. Countries – Asia South and Southeast – India Information Paper – New Zealand Ministry
of Foreign Affairs and Trade, http://www.mfat.govt.nz/Countries/Asia-South-andSoutheast/India.php (accessed September 9, 2015).
11. Ibid. The equivalent document produced by India‘s Ministry of External Affairs (MEA) is
very similar in this regard. It begins by stating that: ―India and New Zealand share a
common historical connection with the British Empire and have cordial and friendly
relations rooted in the linkages of Commonwealth, parliamentary democracy and the
English language‖; and then goes on to note that the two have been ―fellow travellers‖
over a number of international issues including disarmament and global peace, as well
as human rights and countering international terrorism. Ministry of External Affairs,
Government of India, India-New Zealand Relations,
http://www.mea.gov.in/Portal/ForeignRelation/NewZealand_2015_07_02.pdf (accessed
October 13, 2015). Interestingly, while the version produced in Wellington at least
makes reference to wider regional links (though it uses the term ‗Asia-Pacific‘), the
Indian one fails to mention these.
12. Inaugural India-NZ Track II Dialogue, New Delhi, December 7-8, 2009.
13. Countries – Asia South and Southeast – India Information Paper. A sceptic might argue
that the latter point is not saying all that much since the relationship with, for example,
Pakistan is a ―warm but modest‖ one, and that with Bangladesh is ―friendly, although
interaction is limited‖. See Countries – Asia South and Southeast – Pakistan Information Paper – New Zealand Ministry of Foreign Affairs and Trade,
http://www.mfat.govt.nz/Countries/Asia-South-and-Southeast/Pakistan.php(accessed
October 13, 2015), and Countries – Asia South and Southeast – Bangladesh - Information
Paper – New Zealand Ministry of Foreign Affairs and Trade,
http://www.mfat.govt.nz/Countries/Asia-South-and-Southeast/Bangladesh.php
(accessed October 13, 2015).
14. Comments made by New Zealand diplomats at the Inaugural and Second India-NZ
Track II Dialogues.
16. PankajJha, ―Reconfiguring India-New Zealand Relations‖, in Rajaram Panda
&PankajJha (eds.), India and New Zealand. Emerging Challenges (New Delhi: Institute
for Defence Studies and Analyses, 2010, p.161.
35
18. Ministry of Foreign Affairs and Trade Statement of Intent 2011-2014, p.21.
19. Ibid., p.30.
20. Ibid., p.33.
21. Prime Minister‘s Foreword, Opening Doors to India. New Zealand‟s 2015 Vision (October,
2011), p.1.
22. Opening Doors to India, p.13. The other goals, in order, were: to increase trade in
services by 20% per annum (p.16); to improve the bilateral investment framework and
enable growth in the investment relationship (p.18); to attract and retain skilled Indian
migrants (p.19); to engage more deeply with India on regional and global issues (p.20);
and, to raise the profile of New Zealand‘s value proposition in India (p.21).
23. ―India free trade talks back on after agriculture ministers meet‖, nzherald.co.nz,
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11354713
(accessed October 20, 2015). Guy was quoted as saying it had been ―too long‖ since the
previous round. In addition to giving impetus to the FTA talks, Guy‘s visit saw a
Memorandum of Understanding signed between the India-New Zealand Business
Council and the Confederation of Indian Industry. Ibid.
24. Ibid.
25. SekharBandyopadhyay, New Zealand-India Relations: Challenges and Prospects. Paper
presented at University of Waikato, March 26, 2015. Although Bandyopadhyay made
the observation that after coming to power the BJP-led government under
NarendraModi decided to review all FTAs then under consideration, he noted that the
India-Australia negotiations had since been resumed. This resumption seems to tie in
with the belief that because Modi is looking for international partners, he is now more
favourably inclined towards FTAs. Phone conversation with a senior official in MFAT,
October 16, 2015.
26. Phone conversation with a senior official in MFAT, October 16, 2015.
27. Ministry of Foreign Affairs and Trade Statement of Intent 2014-2018, pp. 2 and 9.
Implementing the NZ Inc India strategy does appear, however, under Outcome 1: ―New
Zealand‘s ability to influence key relationships and safeguard our interests enhanced‖.
Ibid., p.12.
29. Ibid. and Countries – Asia South and Southeast – India Information Paper. This is a
pleasing increase, though there is certainly scope for many more tourists to come to
New Zealand. As Reuben Abraham has noted, in 2014 some 500,000 Indians visited
Switzerland; a country comparable in size to New Zealand. See ―Dr Reuben Abraham
discusses India-New Zealand economic relations‖, Bulletin, August 26, 2015,
http://asianz.org.nz/bulletin/dr-reuben-abraham-discusses-india-nz-economicrelations (accessed October 25, 2015).
30. Opening Doors to India, p.17
31. ―Air New Zealand and Air India announce codeshare agreement‖, June 9, 2015,
http://www.airnewzealand.co.nz/press-release-2015-air-new-zealand-and-air-indiaannounce-codeshare-agreement (accessed October 25, 2015).
32. Opening Doors to India, p 19 and phone conversation with a senior official in MFAT,
October 16, 2015.
33. Opening Doors to India, p.21.
35. Ibid.
36. BalajiChandramohan, ―New Delhi Looks (South)-East: India-New Zealand Relationship
Evolving into Indo-Pacific Strategic Partnership, Future Directions international Strategic
Analysis Paper, 11 October 2012, p.4,
http://www.futuredirections.org.au/publications/indian-ocean/734-new-delhi-lookssouth-east-india-new-zealand-relationship-evolving-into-indo-pacific-strategicpartnership.html (accessed October 29, 2015).
37. Cited Ibid.
38. Ministry of Foreign Affairs and Trade, Ministry Statements and Speeches 2011, Security
36
Council Reform. Statement by Jim McLay New Zealand Ambassador and Permanent
Representative, 9 November 2011, http://www.mfat.govt.nz/Media-andpublications/Media/MFAT-speeches/2011/0-9-November-2011.php (accessed October
29, 2015).
40. In his speech, Key said that: ―It is still our view that the veto is a constraint on the
effectiveness of the Council and realising the aspirations of the United Nations‘
members.‖ PM's address to 70th UN General Assembly, 2 October, 2015,
https://www.beehive.govt.nz/speech/pm%E2%80%99s-address-70th-un-generalassembly (accessed October 29, 2015).
41. Phone conversation with a senior official in MFAT, October 16, 2015.For India's
response to the General Assembly agreement, see ―UN agrees to adopt negotiating text
for Security Council reforms, boosting India's hopes for permanent seat‖, Channel News
Asia, 16 September, 2015, http://www.channelnewsasia.com/news/asiapacific/unagrees-to-adopt/2129526.html (accessed September 16, 2015).
43. Email communication from Ministry of Defence, October 23, 2015.
44. See,for example, Man MohiniKaul, ―India in New Zealand‘s Asia Policy‖, in Man
MohiniKaul&VibhanshuShekhar (eds.), India and New Zealand in a Rising Asia. Issues
and Prospects (New Delhi: Pentagon Press, 2012), p.12-13; and SekharBandyopadhyay,
―India-New Zealand Relations in the New Century: A Historical Narrative of Changing
Perceptions and Shifting Priorities‖, India Quarterly, 69, 4 (2013), p.326.
45. Ministry of Defence/Headquarters New Zealand Defence Force and Ministry of Foreign
Affairs and Trade, Note for the Foreign Affairs, Defence and Trade Committee
Accreditation of a New Zealand Defence Adviser to India, 10 August 2011. This note
explains the thinking behind the decision to appoint a Defence Adviser and the
rationale for determining that the Defence Adviser was to be accredited to New Delhi
from Wellington.
47. Ibid. This visit received favourable coverage in the Indian national press. See "New
Zealand defence team in India for deepening ties", The Hindu, November 4, 2014,
http://www.thehindu.com/news/national/new-zealand-defence-team-in-india-fordeepening-ties/article6564306.ece (accessed October 29, 2015).
48. Email communication from Ministry of Defence, October 23, 2015 and New Zealand
defence team in India.
50. "India, New Zealand to keen [sic] on stepping up naval ties", The Hindu, June 21, 2015,
http://www.thehindu.com/news/national/tamil-nadu/india-new-zealand-to-keen-onstepping-up-naval-ties/article7338084.ece (accessed October 29, 2015).
51. Ibid. and email communication from Ministry of Defence, October 23, 2015.
52. "New Zealand Navy Chief on a visit to Kochi", Indian Navy,
http://indiannavy.nic.in/news-events/new-zealand-navy-chief-visit-kochi (accessed
October 29, 2015).
54. New Zealand Navy Chief on a visit to Kochi.
55. Chandramohan, op. cit., p.5.
56. Opening Doors to India recognised quite clearly that for its part New Zealand had to
ensure ―greater Ministerial and political involvement in the relationship‖ (p.21) if it was
to increase its profile. The most recent visit by a New Zealand Minister was that by Amy
Adams, the Communications Minster, in September 2015.
57. Rupakjyoti Borah, ―India‘s Engagement with New Zealand: What Ails the Relationship?‖,
in Kaul&Shekhar, op. cit., p.60.
58. Abraham uses stronger language and goes as far as to say it was ―unacceptable‖.
Abraham, op. cit..
*****
37
2.
Twin Peaks: India and China on New Zealand’s Asian horizon
Dr.Tim Beal
Now retired, but formerly Foundation Director,
Centre for Asia/Pacific Law and Business (CAPLAB)
Victoria University of Wellington
Dr.Kala S. Retna
Senior Lecturer at the School of Management
Victoria University of Wellington (New Zealand)
Tim Beal
After completing an MA(Hons) in modern Chinese studies at the University of Edinburgh, Tim Beal
continued at Edinburgh to do a Diploma in Business Administration followed by a PhD on China's terms
of trade. He has taught on subjects ranging from Chinese politics to international marketing at
universities in Britain, Japan, China, South Korea, Indonesia, and New Zealand. He was a senior lecturer
in the School of Marketing and International Business, Victoria University of Wellington and was
foundation director of the university‘s Centre for Asia/Pacific Law and Business (CAPLAB), 1992-98. He
retired in 2009 but continues to research and write on international marketing and business, and
geopolitics. Recent business research included participation in a team project on New Zealand services
companies operating in China and India entitled Service Success in Asia, funded by the New Zealand
Foundation for Research, Science, and Technology. He maintains the website Asian Geopolitics.
His publications on India include:
Beal, Tim. "India and China – Recognising the differences." EMERICS - Information for Emerging Countries,
19 October
2010.http://eng.emerics.org/dportal.do?module=posts&action=list&code_value=0&service_id=2&
topic_id=1244868&open_approval=N&user_list_count=0&start=0&user_sort=0&user_class1=&use
r_class2=&user_class3=&user_class4=&user_class5=&oldSearch_keyword=&search_target=-1
———. "India and Pakistan: The Economics of Co-operation and Confrontation." In Nuclear Developments
in South Asia and the Future of Global Arms Control: International, Regional and New Zealand
Perspectives, edited by Rouben Azizian. 91-104 and 309-31 (appendix). Wellington: Centre for
Strategic Studies, 2001.
———. "Liberalization of Indian foreign trade: following China through an open door into global
markets?". In Managing Economic Liberalization in South Asia: Directions for the 21st Century,
edited by C Jayachandran, N Balasubramanian and S.M Dastagir. New Delhi: Macmillan, 1998.
———. "New Zealand and globalising India: the challenge of developing economic engagement." In India in
New Zealand: Local identities, global relations, edited by Sekhar Bandyopadhyay. Dunedin: Otago
University Press, 2010.
———. "Using India to Keep China at Bay." Foreign Policy in Focus, 12 December 2006.
Beal, Tim, and Jinyi Shao. "The Emerging Asian Titans: China and India and the Transformation of the
International Business Environment." Paper presented at the Annual conference of the Australia
and New Zealand International Business Academy, Wellington, November 2006.
Ellis, Nick, Michel Rod, Tim Beal, and Val Lindsay. "Constructing identities in Indian networks:
Discourses of marketing management in inter-organizational relationships." Industrial Marketing
Management 41, no. 3 (April 2012): 402–12.
Lindsay, Val, Fergus McLean, Tim Beal, Michel Rod, and Peter Zettinig. Next Stop India: A Guide for New
Zealand Business. Wellington: Asia NZ Foundation, 2006.
Lindsay, Val, Vivienne Shaw, Tim Beal, Malcolm Cone, Fergus McLean, Michel Rod, and Nick Ashill.
Service Success in Asia. Wellington: Victoria University of Wellington, 2011.
38
Rod, Michel R. M. , Sarena E. Saunders, and Tim Beal. "Knowledge Management in a Business-toBusiness Context: An Indian Exemplar?". Journal of Information & Knowledge Management 8, no.
3 (2009).
His personal website is at http://www.timbeal.net.nz/
Dr Kala S Retna
She is a senior lecturer at the School of Management at Victoria University of Wellington (New Zealand).
Her main areas of teaching, research and consultancy include cross cultural management and
organisational behaviour and development. She is the author/reviewer of several journal articles and
conference papers including "Valuing Multiculturalism: Business Engagement with the Challenge of
Multiculturalism." In Asians and the New Multiculturalism in Aotearoa New Zealand, edited by Jacqui
Leckie and Gautam Ghosh. 265-84. Dunedin: University of Otago Press, 2015 (with Valerie Lindsay and
Tim Beal).
She is also an Editorial Board Member of other journals.
______
Whenever the relationship with India is discussed in New Zealand, China invariably enters the
conversation. There is certain inevitability to this, and is of course not unique to New Zealand.
As the two most populous countries in the world, and twin historical centres of culture and
civilization they are naturally compared and contrasted. They are the ‗Asian Titans‘ whose
political and military power, and economic growth, potential, and difficulties impinge on the
rest of the world and cannot be ignored. 1Not a day passes without frequent articles not only on
each of them separately but also in conjunction. For instance both are excluded from the
recently signed (but not at the time of writing ratified) Trans Pacific Partnership (TPP) and are
expected to play a leading role in forging the rival Regional Comprehensive Economic
Partnership (RCEP).2Similarly, articles on India‘s relationship with Africa inevitably make the
comparison with China rather than the United States, presumably because America‘s interest
is primarily strategic whereas India and China seek economic opportunities. 3
New Zealand, along with other countries in its region, has an added incentive for paying
attention to India and China. They, unlike Britain, the rest of Europe and the United States are
‗in the neighbourhood‘ and roughly equidistant from New Zealand. China in particular has
overtaken Britain and the United States in economic importance to New Zealand, and India is
following suit. The same goes for immigration. Since the mid-1980s when the Fourth Labour
Government changed migration policy from its reliance on ‗traditional source countries‘ (mainly
the British Isles‘ and established race-neutral criteria immigration from the Chinese world (i.e.
including Taiwan, Hong Kong and ethnic Chinese in Southeast Asia) and from the Indian world
(i.e. including ethnic Indian from Fiji) has burgeoned. New Zealand has moved from being a
little Britain in the South Pacific, where the few Asians allowed in (mainly Chinese) were
appallingly treated to a nation under transformation, often contested and difficult. 4 However
New Zealand also has interesting long-standing historical links to both countries mediated
largely through empire, initially the British and then increasingly the American.
Modern New Zealand was a product of the European expansion, and principally (but not
exclusively) the British Empire and since India and China were so important to that process it
should be no surprise that New Zealand also had numerous connections, direct and indirect.
The plethora of Indian place names in New Zealand, from the Bombay Hills to the south of
Auckland to the numerous streets in the Wellington suburb of Khandallah named after Indian
cities and hill stations attests to the onward movement of British soldiers from India to New
39
Zealand.5 New Zealand has been embroiled in imperial wars in Asia from the ‗Indian Mutiny‘ of
the 1850s to the Korean War a century later (against China) and the military engagement
continues in Afghanistan.
New Zealand‘s history has not merely been moulded by imperial politics but also, of special
salience in this context, by Britain‘s development of a bifurcated relationship with India and
China, where interaction with one affected that with the other and had consequences for New
Zealand.
For instance, one of the pressing arguments for British acquisition of New Zealand was trade
with China. Seals from the coasts of New Zealand found a ready market in China in the later
18th century but because the East India Company had a monopoly on British trade the seal
trade was primarily conducted by Americans. This caused the British to be concerned about
possible American possession and so the Treaty of Waitangi, which formalised British
sovereignty, was a sort of pre-emptive strike.
However, it is perhaps tea which illustrates this interplay of forces most elegantly. The British
developed an appetite for Chinese tea in the 18th century and this taste was carried over into
the colonies, including New Zealand where it became the drink of choice amongst both Pākehā
and Maori during the 19th century. It was coincidentally much advocated by the temperance
movement because it invigorated without intoxicating.6 However the Chinese showed no
reciprocal desire for British products, an attitude exemplified by the Qianlong Emperor‘s
rejection of the Macartney mission in 1793 as expressed in his letter to George III: ‗there is
nothing we lack, as your principal envoy and others have themselves observed. We have never
set much store on strange or ingenious objects, nor do we need any more of your country‘s
manufactures‘.7 The solution to this problem was found in British India in the form of opium
and cotton. However the British East India Company was no longer context to import tea from
peasant producers in southern China but transplanted tea to British possessions in South Asia
where quality control on plantations produced a superior product. This was before the days of
TPP and Intellectual Property Rights were not considered sacrosanct. As a result, ‗by 1906,
less than one per cent of tea imported into New Zealand was of Chinese origin, and from then
on, nearly all tea came from the British colonies in India and Sri Lanka (then known as
Ceylon)‘.8
Modern New Zealand has been linked in myriad ways with India and China, singly and in
conjunction, and this interaction will continue and deepen. Faced with such a broad subject
this essay will focus on two aspects: firstly a brief overview of the statistics of (merchandise)
trade from the New Zealand perspective and secondly a survey of people involved in the
business relationship between New Zealand and both India and China. It is a skeleton and
flesh approach, with the statistics providing the framework of the economic relationship and
the survey giving a glimpse into its business operationalisation.
The statistical overview
Trade statistics are extremely complex and there are all sorts of uncertainties and fishhooks.
For instance, trade with ‗China‘ usually excludes Hong Kong, though the former British colony,
now a Special Autonomous Region SAR) of the People‘s Republic of China has always been a
major entrepȏt for trade in and out of the Mainland.9 For reasons of time and space that
statistics presented here are from one side only, that of New Zealand. Statistics from the
trading partner not merely provide another perspective but most important they allow a
calculation of the importance of the trade under review to that country. Thus New Zealand
40
statistics of trade with India show the importance of that trade with New Zealand (and how that
changes over time) but say nothing about its importance to India. The statistics used here refer
only to merchandise trade (goods) rather than the trade in services. This is an unfortunate, if
necessary omission since services, especially those based on Information and Communications
Technology (ICT) are widely seen as an aspect of India‘s comparative advantage in general and
competitive advantage against China in particular. 10 However, over-reliance on ICT exports and
relative neglect of unemployment-absorbing manufacturing and infrastructure may well prove
to be a false avenue for India. 11 Services are a fast-growing part of international trade, but the
statistics are still under-developed and do not have the historical reach of those covering
merchandise.
There are basically two forms of presenting statistics – tables and graphs – both have their uses
and limitation, and both are used here. Tables are unwieldy but give detail, and allow the
reader to make further use of the data. Graphs can illustrate what the writer thinks are the
salient points. However they present technical problems; for instance New Zealand‘s exports to
China rose from $122million in 1982 to $11.8 billion, close on a hundred-fold increase.12 This
is difficult to represent graphically.
Research tends to raise more questions than it lays to rest and a statistical overview of this sort
might indicate questions but does not by its nature answer them. However there are occasions
– the ‗Tiananmen effect‘ discussed below where an identification of an issue readily leads to a
plausible explanation.
New Zealand Exports to India and China
There are tabulated in Table A1 in the Statistical Appendix. That gives total New Zealand
exports for the period 1982 to 2014, and exports to India and China. The Infoshare online
database of Statistics New Zealand gives data for total exports back to 1952 but only starts in
1982 for India and China. In one of the quirks that official statistics are prone to, the
periodisation for import data is different. That starts in 1960 for total imports, and 1983 for
India and China.
Table A1 gives value data (on a fob basis13) for total exports, and those to the two countries.
There are three sets of calculations. Country share of total expressed a percentage; this has the
advantage of circumventing the twin problem of value growth and inflation. New Zealand
exports to India grew from $61million in 1982 to $632million in 2014. This seems huge growth,
but is it really? For one thing, New Zealand exports in nominal terms – that is affected by
inflation – grew from $6.9 billion in 1982 to $51.2 billion in 2014. Calculating the change in
share brings things into perspective. India‘s share of New Zealand‘s exports grew from 0.9% to
1.2%. An increase of one third, which is considerable especially as it means that the shares of
some other countries must have fallen. Not China though. China‘s share of New Zealand‘s
exports surged from 1.8% in 1982 to 22.6% in 2014, an increase of over a hundred-fold. It is
also useful to compare the growth of exports from a common base and this is provided by
calculating index numbers. Since data for imports only starts from 1983 this year is used for
both exports and imports. Finally, the ratio of exports to China compared to those to India is
calculated. These calculations are replicated for imports (Table A2) and total trade (Table A3)
Fig 1 plots the shares of India and China in New Zealand exports from the June year of 1982
(i.e.1 July 1981 to 30 June 1982) to 2014. At the time of writing the statistics for 2015 are still
provisional. Moreover, while imports figures show a continuing increase the export data
41
indicate a substantial decrease across the board; that is in total exports as well as exports to
India and China. This is a subject for further research so we stop at 2014.
Clearly China has been a more important export market for New Zealand than India, and the
difference has increased markedly in recent years. Two events are highlighted on this graph
(and subsequent ones). Firstly we see what at first sight appears to the effect of the Tiananmen
massacre of June 1989. Exports plummeted from $540m in (June year) 1989 to $157 in 1990,
slowly recovering the next year but not surpassing the 1989 figures until 1995 (Table A1).In
fact, although the US applied sanctions, mainly on military sales, the effect was quite minor
and had no impact on New Zealand exports.14 In fact the drop in New Zealand exports was
caused by a slump in Chinese imports of wool, which was a consequence of what has been
termed the ‗wool war‘ in the domestic Chinese wool market in the late 1980s. 15
25
Fig 1: Share
exports,
1982-2014
Fig
Shareof
ofNew
NewZealand
Zealand
exports,
1982-2014
% share of total NZ merchandise exports
20
15
China-NZ FTA 2008
China
India
10
5
China Wool war
slump
-
June years
Source: Statistical Appendix Table A1
The second event, of more relevance to India, was the signing of the China New Zealand Free
Trade Agreement in April 2008.16 New Zealand exports to China climbed rapidly. In the June
year 2008 exports were $2.1 billion; in 2014, six years later, they had surged to $11.6 billion
(Table A1). Imports showed far less exuberant growth, as we shall see. Although governments,
naturally, take credit the statistics do not in themselves prove causality.17 Academics are still
working on an assessment.18 Bilateral FTAs are also trade distorting so it is possible that in
some sectors India-New Zealand trade has been adversely affected by the China FTA. FTAs
often work in strange ways that extend beyond mechanical matters such as tariff reductions.
The South Korea-Chile FTA, for instance, saw a great growth in Chilean wine exports to Korea,
but this was probably not due so much to the lowering of the tariff in wine, but on market
factors.19 FTAs cannot be examined in isolation but require an analysis of contextual factors,
42
especially their stimulus to other FTAs. An FTA may produce a temporary effect which is
dissipated when other FTAs are signed. New Zealand‘s FTA with China may lose much of its
efficacy with the entry of the Australia-China FTA.20
60
Fig 2:
the
China-NZ
FTAFTA
Fig
2: Exports
Exportsafter
after
the
China-NZ
50
China
$million
40
30
Exports to other markets
20
10
2008
2009
2010
2011
2012
2013
2014
June years
Nevertheless, the growth of New Zealand‘s exports to China after 2008 was dramatic as Fig 2
illustrates. Without China New Zealand‘s exports over the 2008-14 period were relatively static.
There is a prima facie case, therefore, for asking whether an India- New Zealand FTA would
show similar effects.21 At the time of writing progress seems to have stalled; the last round of
negotiations, which had been taking place at roughly six monthly intervals, was two years ago,
in July 2013.22 This bilateral FTA is clearly a subject of ongoing research interest which is
complicated by the wider issue of regional FTAs, notably the TPP and the RCEP. These are
widely seen as contesting projects for Asia/Pacific economic architecture, the TPP being US-led,
with China (and India) excluded, and the RCEP being China-led in response.23 The RECP, of
which China, India, and New Zealand are all members, may offer a framework for expansion of
India-New Zealand trade though it would be unlikely to be as stimulating as a bilateral FTA. 24
Fig 3 plots the ratio of China exports to India exports over the period. Exports to China were
twice those to India at the beginning of the period, but 18 times larger at the end. But the
growth was far from linear.Again we see the effect of the post-wool war slump driving down
exports to China, and the great growth after the China FTA.
43
20
Fig 3: New Zealand's exports compared with those to India, 1982-2014
Fig 3: New Zealand’s exports to China compared with those to India, 1982-2014
18
16
2008: NZ-China FTA
Exports to China times those to India
14
12
10
China wool war slump
8
6
4
2
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
June years
Fig 4 takes the same data from a rather different perspective, and in doing so reveals
something very interesting. Exports to India and China are calculated from a common base
year, 1983, to preserve comparability with imports. We see, as before, the fall in exports to
China after the wool war and the surge after 2008. The general picture is, as expected, that
ultimately exports to China outpace those to India but that only happens after 2000; in that
year exports to both countries are both about four times what they were in 1983. From then on
exports to both markets grow strongly, with China only taking a clear lead after 2009. However,
what is not apparent from the previous graphs is that exports to India fall quite substantially
from 2012. As Table A1 documents, exports to India peak in 2012 at $906 million falling to
$724 million the following year and then further to $632 million in 2014. In that last year
exports to India are 14 times what they were in the early 1980s, but China‘s are 65 times
greater. Leaving aside the comparison with China there is still the question why exports to
India have dropped so substantially. Is it a temporary fall, occasioned by something like
China‘s wool war, or is it something more?
The first port of call is the New Zealand Ministry of Foreign Affairs website on the India trade,
‗NZ Inc India strategy: Opening doors to India‘.25 Here we find something both intriguing and
disconcerting. There appears to be no recognition on the site that exports to India have fallen.
Moreover, we are told that the first of the six strategic goals for India is to:
1. Grow merchandise exports to at least $2 billion by 201526
It is unclear whether the years are calendar years, or June ones; it makes little difference since
the shortfall is so great. In the June year 2015 confirmed exports were merely $632 (as noted
above) and provisional figures for the June year 2015 stood at only $575million. 27 This is just
over a quarter of the target. On inspection, it is revealed that the webpage was last updated on
44
2 February 2012. There may well be good reasons why exports have not only fallen far short of
the target but have been actually decreasing rapidly. But it surely behoves the Ministry to note
the facts, offer explanations (even if woven by spin doctors) and offer suggestions to New
Zealand exporters how they might do better. It seems that someone is out to lunch, and a very
long lunch at that. Again a subject for further research.
Fig 4 : New Zealand exports to India and China, 1982-2014-index numbers
7,000
Fig 4: New Zealand exports to India and China, 1982-2014 - index numbers
2008: NZ-China FTA
6,000
5,000
1983=100
4,000
China
3,000
India
2,000
1,000
China wool
war slump
Slump in exports to India
-
June years
New Zealand Imports from India and China
Our discussion of exports has covered many of the salient points, so this section is shorter.
Firstly as before, we look at share of New Zealand trade, in this case imports (Fig 5). The
message is clear. China has been a more important source of imports to New Zealand than
India over the period and the gap has widened.
45
18
Fig
Share
of New
Zealand
imports,
1983-2014
Fig5:5:
Share
of New
Zealand
Imports,
1983-2014
16
% share of total New Zealand merchandise imports
14
12
10
China
8
India
6
4
2
-
June years
Fig 6 plots index numbers, slightly altering the sequence in the previous section. Again it
seems there is nothing to note except that China has been a more important source of imports.
Fig 18,000
6: New
imports
fromfrom
China
and
India,
– index
numbers
FigZealand
7: New Zealand
imports
China
and
India,1983-2014
1983-2014 - index
numbers
16,000
14,000
1983=100
12,000
10,000
China
8,000
India
6,000
4,000
2,000
-
June years
46
The third graph alerts us to something interesting.
Fig
25 7 plots New Zealand‘s imports from China compared with those from India.
Fig 7: New Zealand's imports from China compared with those from India,
Fig 7: New Zealand’s imports from China
compared with those from India, 1983-2014
1983-2014
Imports from China times those from India
20
2008: NZ-China FTA
15
10
5
1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
June years
Imports from China outstrip those from India in a fairly linear fashion until 2007 when
turbulence sets in. The ratio drops, rises, then steadies. However, on closer examination it is
clear that what is important here is not the relationship between New Zealand trade with China
and India, but that between New Zealand and China, and specifically the balance of trade.
Fig 8 brings this out very clearly. The data is documented in Table A4. India trade with New
Zealand was pretty much in balance until about 2006 when it starts moving, with some
fluctuation, quite distinctly in New Zealand‘s favour, that is New Zealand‘s exports to India are
greater than exports. The pattern with China is different, and more dramatic. In the early
years there is a slight balance in New Zealand‘s favour but from the early 1990s onwards the
trend is distinctly in the other direction. From roughly 2000 through to 2012 the trade is firmly
in China‘s favour. In 2008 the New Zealand deficit with China hits $3.4 billion. Then the tide
turns and by 2014 there is a surplus of $3.5 billion.
FTAs are sold to the general public, to the elite, and to business interests on the grounds that
they are of ‗mutual benefit‘. In an agreement signed between New Zealand and China in 2004,
in the process of negotiating the Free Trade Agreement, we get the sentence:
47
Recalling the commitment by Prime Minister Helen Clark and President Hu Jintao to
formulate a Trade and Economic Cooperation Framework on the basis of the principles
of equality, mutual benefit and respect, complementarity and cooperation [Emphasis
added].28
New Zealand Trade Minister Tim Groser waxed poetic when, on the defensive during the TPP
negotiations, he attempted to assuage public concerns by arguing that despite ‗ugly
compromises‘ on specific issues there would be mutual benefit in general:
"It's got the smell of a situation we occasionally see which is that on the hardest core
issues, there are some ugly compromises out there.
"And when we say ugly, we mean ugly from each perspective - it doesn't mean 'I've got
to swallow a dead rat and you're swallowing foie gras.' It means both of us are
swallowing dead rats on three or four issues to get this deal across the line." 29
That may well be so for trade negotiations on the whole but it appears that in case of the NZChina FTA so far New Zealand exporters have been eating foie gras and their Chinese
counterparts have been left with the dead rats. This may be temporary, but the change in the
balance of trade since the signing of the FTA is pronounced. Was this anticipated? We do not
know, but the suspicion is that the Chinese side was not much concerned and was prepared to
err of the side of generosity.
New Zealand had already achieved three ‗firsts‘ with China, as the People‟s Daily put it during
the negotiations:
New Zealand has accomplished "three firsts" in its relations with China in recent years:
it is the first developed country to conclude a bilateral market access agreement with
China for its entry to the World Trade Organization; the first to recognize China's status
as a market economy and the first country to enter FTA negotiations with China. 30
4,000
Fig8:8:New
NewZealand's
Zealand’sBalance
BalanceofofTrade
Tradewith
withChina
Chinaand
andIndia,
India,1983-2014
1983-2014
Fig
3,000
2,000
New Zealand surplus
NZ$ millions
1,000
China
India
-1,000
-2,000
New Zealand deficit
2008: NZ-China FTA
-3,000
-4,000
June years
48
With the signing of the FTA New Zealand scored a fourth ‗First‘. 31
From the Chinese perspective New Zealand was very attractive as the first developed FTA
partner. It had political status as a developed market economy, but its economy was so small
that concessions would not hurt very much, especially in the context of the (then) fast-growing
Chinese economy.
However, with India the political and economic calculations are likely to be rather different. It
may be that the reasons that the India-New Zealand FTA negotiations have stalled is that the
Indian negotiators have seen what happened in respect of China and are driving a much
harder bargain.
Composition of New Zealand’s trade with China and India
Whilst the value of trade is important the composition is in many ways much more informative
because it sheds light on the economies of the two partners, although not as clearly as it once
did. In the past trade tended to have a distinctive colonial complexion. The imperial metropole
would send manufactures to subordinate countries, formal colonies or otherwise, and it return
would import raw materials for its industry and foodstuffs for its workers. The situation today
is much more complex. First many developing countries have now surpassed the metropoles in
certain sectors at least of advanced industry. The Chinese now tender for high speed railways
(HSR) and nuclear power stations in Britain, and both China and India are ahead of Britain in
space exploration.32 At the same time there has been a globalisation of production whereby the
metropole‘s products, over which it still has IPR and brand rights, are often manufactured
either in the target country (thereby dropping out of trade statistics) or in a third country,
thereby obfuscating those statistics. The situation is further complicated in the case of New
Zealand, which grew up in a colonial trade relationship with Britain, exporting wool, dairy
products and sheep meat, and that pattern still continues to a large degree today, with 70% of
exports being primary products. 33
This section has two summary tables in text, with six more detailed tables in the Statistical
Appendix. Firstly, in Table 1, we look at New Zealand‘s five main exports to China and to India
in the June year 2014. This is supplemented in the Statistical Appendix by tables A5 and A6
which document the twenty top exports to China and India respectively, over three years 20124 and by Table A9 which presents the top 20 exports to both countries, side by side, in order of
Harmonised System code; that enables the composition of exports to both countries to be
compared, and reveals which products are exported to both.
Table 1: New Zealand’s top five exports to China and India, 2014
China
India
Code
Description
NZ$m
%
Code
Description
0402
Milk powder
5,309
45.9
4403
Logs
4403
Logs
1,849
16.0
9809
Confidential items
0204
Sheep meat
810
7.0
5101
Wool not carded or combed
0405
Butter and dairy
419
3.6
9019
Mechano-therapy and massage
spreads
appliances
5101
Wool not carded
386
3.3
7204
Ferrous waste and scrap
or combed
Source: Statistical Abstract Tables A5 and A6
49
NZ$m
212.3
186.3
43.7
23.0
%
33.6
29.5
6.9
3.6
21.3
3.4
As Table 1 shows, New Zealand exports to both countries can be roughly divided into three.
There are products which are basically industrial inputs, which will be used for further
processing. Logs and wool to both countries top this list, along with ferrous waste and scrap to
India. Then there are products which are aimed at the urban middle class, mainly here in
China – milk powder and butter and dairy spreads. The two products which fit into this
category for India‘s top twenty (Table A 6) are perhaps ‗Apples, pears, and quinces‘ and ‗Fruit
nec‘ [not elsewhere classified]. With dairy products being so much more a part of the traditional
Indian diet than that of the Chinese, who historically regarded milk as a food fit only for babies
and barbarians (i.e. the pastoralists of the steppes) it is no surprise that their import has been
resisted to protect Indian producers. Finally there is the intriguing category of ‗confidential
items‘, that is products which for reasons of ‗commercial confidentiality‘ are not described; see
the glossary at the end of the Statistical Appendix for the official definition. What this covers,
and why it is so prominent for India is a mystery. Another subject for further research. Table
A9 shows that there are five items which are among the top twenty exports to both countries:
0801:
4102:
4403:
4705:
5101:
9809:
Fruit nec
Raw sheep or lamb skins
Logs
Combined chemical and mechanical wood pulp
Confidential items
Apart from ‗confidential items‘ these are all industrial inputs which are what one might expect
economies such as China and India to import. Whether New Zealand should be exporting raw
materials such as logs without transforming them into value-added products is another matter
which demands much more research.34
Table 2, examining the top five imports is more revealing. There are the traditional developing
country exports of labour-intensive textiles - Women's or girls' suits (China) and Bed and table
linen (India). Then they are products which seem typically Indian – ‗Precious metal jewellery‘
and Diamonds. From China we get, as leading imports, consumer electronics as we might now
expect. To what degree these are Chinese brands such as Lenovo and Huawei, or foreign
brands such as Sony ‗made-in-China‘, we cannot tell from the statistics. However, what is
unexpected is the third ranking item on the Indian list – Motor vehicles.
Table 2: New Zealand’s top five imports from China and India, 2014
China
India
Code
$m
%
Code
Computers
Retail medicines
8471
742.8
8.8
3004
Telephones
and
cellphones
Precious metal jewellery
8517
630.6
7.5
7113
Office,
kitchen,
and
bedroom
Motor vehicles
9403
174.8
2.1
8703
furniture
Printers, photocopiers, and
facsimile machines
Women's or girls' suits
$m
51.4
23.5
21.6
%
11.4
5.2
4.8
164.4
1.9
7102
Diamonds
16.4
3.6
6204
159.1
Source: Statistical Abstract Tables A7and A8
1.9
6302
Bed and table linen
15.9
3.5
8443
Again these can be foreign brands now manufactured in India, such as Nissan and Hyundai. 35
However, it seems likely that these imports are of Mahindra ‗utes‘ and cars. 36 Mahindra
tractors have been on the New Zealand market for some time but recently the Indian
50
conglomerate has been exporting utility vehicles and cars to New Zealand, so much so that one
excited journalist wrote ‗Mahindra to be next big thing in NZ motoring‘. 37 This raises two
questions for further research. Firstly, is this hype justified; will Mahindra be a big player in
the New Zealand automobile market and what effect will this have not merely on the trade
relationship, but on New Zealand perceptions of India? Secondly, where are the Chinese?
China has been the largest market, and largest producer, of automobiles for some years. 38 Back
in 2009 a journalist proclaimed in respect of Chinese vehicles in New Zealand ‗The Chinese
invasion is just beginning‘ and yet little seems to have happened. 39
Currently, India and China share only four items in New Zealand‘s top 20 imports from them
(Table A10) and they are all symbolic of an earlier ‗developing country‘ trade profile:
4011:
4202:
6204:
6403:
New pneumatic rubber tyres
Trunks and cases
Rubber, plastic, or leather footwear with leather uppers
That was yesterday‘s trade – tomorrow‘s is on its way and will look different as such production
is shifted to other countries and more and more imports from India and China will be high-end
and high-tech, whether of foreign brands or indigenous ones.
As promised, this overview of the statistics of New Zealand‘s trade with India and China has
tended to identify issues, rather than offer any definitive explanations. For that further
research is necessary.
In the meantime we turn now to the opinions of those involved in New Zealand‘s trade with
both countries to give another perspective on the issues. The first section has presented
quantitative data on merchandise trade; this next section complements that by looking at
qualitative data on services.
Voices from the field
The quotations in this section are sourced from a large research project entitled Service
Success in Asia. The project, subtitled ‗Building a sustainable competitive advantage for New
Zealand service firms in Asia: Spotlight on China and India‘ was funded by the New Zealand
Foundation for Research, Science and Technology and involved a team of research from New
Zealand led by Val Lindsay of Victoria University of Wellington. 40
It should be stressed that what are presented here are perceptions of members of New Zealand
companies involved in business in both countries. Opinions, of course can be wrong,
sometimes quite markedly so. For most of history the overwhelming consensus has been that
the Earth is flat. Even when perceptions are not so definitely at variance with objective reality
they often say more about the perceiver than the perceived. In any case, perceptions are
important because, right, wrong or somewhere in between, they are the basis for action.
One interesting and important example of a perception that is contradicted by objective data is
the opinion that the middle class in India is much great than that in China:
“India already has a bigger [and] more wealthy middle class [than China].”
51
However the statistics indicate quite a different picture. The Pew Research Center published
an analysis of World Bank data in July which, they claimed, showed that ‗China‘s middle class
surges, while India‘s lags behind‘. 41 The 2015 Global Wealth Report of the Swiss banking group
Credit Suisse estimated that the middle class in China numbered 115 million, in second place
behind the United States with 122 million. India‘s middle class, though growing fast (but still
slower than China‘s) was 26 million.42 This particular company is focussed on middle class
consumers, and yet they got their estimates of market size spectacularly wrong. Why? At this
remove we can only speculate but it would seem that this was a very subjective assessment,
based more on identity than socio-economic classification. ‗Middle class‘ means ‗people like us‘.
For a monolingual New Zealander India is much more ‗like us‘ than China; there is the widespread use of English, especially in business, the common legal system inherited from Britain,
and the symbol par excellence – cricket. This is a point reiterated by many respondents. The
company respondent saw more middle class people because she, or he, came into much more
contact with people who spoke English, and knew about cricket, in India than in China.
This raises the more general issue of how well New Zealand business people do their research
about India and China, and how much knowledge they have of the markets. There is an
indication that there is an undue and unreflective reliance on New Zealanders of Indian or
Chinese ethnicity, a subject we have touched on elsewhere. 43
India and China have much in common. Size, both in terms of population and to a lesser
extent economy and land area, and cultural importance stand out. They are both multicultural
countries with a large and widely-dispersed diaspora with links back to the home economy,
and this makes it impossible to say with precision what an ‗Indian‘ or a ‗Chinese‘ is. Within this
commonality of complexity there are great differences. 44 All this presents a daunting challenge
to a New Zealand businessperson, whose education despite all the talk about ‗Asia literacy‘ of
the last couple of decades does not provide an adequate knowledge foundation for tackling
these markets.45 New Zealand companies tend to be small and under-capitalised, lacking
resources for markets which demand a long term penetration. Despite all this, New Zealand
businesspeople display remarkable initiative and determination. Coming from an
unpretentious culture they tend to carry less baggage and have more empathy. The quotations
below illustrate some of these characteristics.
These are taken from transcripts of recorded interview and so preserve the spontaneity and
roughness of spoken speech. They are often ungrammatical and no attempt has been made to
edit them into polished form since the meaning is clear. For reasons of confidentiality neither
the company name nor industry is identified. They are grouped into eight broad categories:
1.
2.
3.
4.
5.
6.
7.
8.
Culture and society
Governance
Product market difference
Infrastructure
Regionalism, diversity and identity
Investment and building relationships
Economy, growth and the middle class
The New Zealand dimension – role and image of NZ government, ‗NZ Inc.‘, and attitudes
towards overseas business
52
Obviously these categories are not watertight and some quotations straddle two or more. For
reasons of space no commentary is provided, though that is tempting. They are presented
rather in an unadorned form to give a flavour of the very complex (and sometimes confused)
perceptions of New Zealand businesspeople tackling this complex markets. Again it is hoped
that this will encourage younger researchers to delve deeper into this important, challenging,
and intriguing subject.
Perceptions of New Zealand business people regarding a comparison
between India and China
Culture and Society
Language, sport (cricket), education
We started doing designs for them, and it was a pretty good piece of work. And right at
the start we could see that it was just not going to happen. And I felt then, because I
didn‘t understand the Chinese language, and I wanted to have my interpreter there, and
we were busy in our office doing New Zealand work, and now we had India work - we
decided that China was too difficult at that time and we let it go.
But India you know may well be better in the longer term. India already has a bigger
more wealthy middle class. India‘s education standards are massively ahead of China.
So I think you‘ll find, in fact we‘ve got more in trepidation in China purely because of
the language complexities and the legal system complexities whereas India is quite easy
to understand.
One of the issues is about language difficulties and I think that is a key difference from
what I understand between India and China.
Well I think India in some ways I think may be easier to get into for New Zealand in
some ways than China. I mean it‘s a bit of a, it‘s a work in progress really isn‘t it‘s hard
to say but I think there is burgeoning economy there with a lot of disposable income
and I think there are, New Zealanders are identified with quite well in India because we
play cricket and some of these things.
In India there‘s such a strong family connection. Whereas I think with students from
China the families are much more comfortable with sending students out when they‘re
younger.‖ (Lincoln)
―From India, they come down on bank loans rather than, in China where they‘re coming
from family funding.
Governance
Legal system; Chinese Communist Party; way of doing business, corruption, Intellectual Property
Rights
India‘s been, well as we all know an open economy a lot longer than China.‖ (Pan Pacific
Travel)
The democracy in China obviously doesn‘t exist - it‘s a communist state albeit with very
westernised capitalistic tendencies coming in at the economic level. Indian love telling
us that India is the world‘s largest democracy.
If you want to do business in India, you have a government department, which is very
helpful. It‘s English law there, so it‘s all pretty easy. This is one of the issues you have
with China. I mean, it‘s a bit of a minefield there sometimes, if you‘re not careful. But
53
in India, although everything happens very slowly, at least it is based on English law,
and at the end of the day, you know where you stand.
There is a hierarchy in India whereas China they can‘t be seen to have one. They‘re all
the same.
There‘s a lot of talk about China being a difficult market. I don‘t think India is any
easier.
In India we want to build a new motorway it doesn‘t happen because corruption stops
it. Corruption takes the whole, all the money right. That tends to be the Indian story
and in China less so, corruption is basically appears to me in China to be a tax right.
In China I think the regime ultimately says, well, you know, we signed off on a
motorway and we want to know why the motorway wasn‘t built. In India, it wasn‘t built
and it‘s all too bloody hard; the money has gone somewhere and it‘s all too difficult for
someone to ask the question, so the problem just goes away.
Part of the issue that I‘ve certainly experienced in dealing with India is that they‘re slow
in paying, and that things tend to go wrong for some reason or another. You know
there‘s a customs stop, they‘re looking at this thing. Now often that means they want
money. In China, at least they‘re blatant about it. This is the situation, we need to do
this, so it will cost. But in India, there‘s still a huge Anglo Indian bureaucracy where
people are just used to everyone still having the rubber stamp and passing it along the
way, and if someone doesn‘t get their little bit it doesn‘t go any further.
The story goes… when you‘re doing business in China you know you need to put the
money under the table; when you‘re doing business in India, you need to negotiate the
table as well.
I think India is way better on copyright than China. Better and better in terms of
enforcement. It‘s way better than it was five years ago. Their prosperity is on the rise as
well, so perhaps that‘s something that helps.
My experience dealing with Indian clients is it‘s – I was going to say corrupt – but their
business dealings involve middle men, it‘s hard to get past that you know and the old
paying for services, backhanders and all of this. The experience we‘ve got there is that
appears to be more difficult [than China].
Having the right person, I think that‘s the challenge. That‘s a huge challenge in both
India and China. In India, especially, you need the right person with the right
personality, with the right attitude.
I find India much more kind of intimidating. I mean the, particularly the street level
poverty and the begging and those kind of things which is absent, completely absent in
China. I mean there is you know very little concern about personal safety and all of
those things as you wander the streets late at night whereas I don‘t think I‘d do that in
India.
From a New Zealand company point of view India is a much, much easier to do
business than China. And it‘s always interested me that there is so much interest in
charging off to China and it‘s way more difficult than doing business in India.
54
Product Market Differences
Differences attributable to a specific industry rather than generalizable over the country as a
whole
A difference in India is I would say that the counsellors, not the bosses but the other
people who are working with students, can change a lot and so there‘s not such
consistency and knowledge about us. So we feel like we are constantly renewing that
message about our own institution. I guess that‘s a major difference. The pressure on
agents in India is huge. People want from people who apply. They want immediate
responses and they will just hound agents so in turn agents will hound us. We will get
email after email after email and that‘s quite different from how we work with people in
China.‖ (VUW)
―The students from China and India are completely different from each other. For Ag
and Ag-Science, India its really very, very good, particularly in research-related
programmes. Whereas for China the students are much more in the general commerce
and non science programmes.
There‘s got to be some specific key IP wrapped up in there otherwise they just won‘t
have a chance. They will just be too expensive. The issue is even more marked in India
than China, because the wage rates are still lower. And India's pretty good at certain
things as well. So, for example, if you‘re going to export IT services to India, you‘re
probably onto a hiding to nothing because they‘re the world leaders.
The drivers in the Indian market are quite different from China. In China where people
have one, families have one child and really the possibilities for people going back to
work in Beijing or whatever are so much greater than they are by staying here whereas
in India the driver is migration very much at university level.
Well I think the recognition of our degree qualifications would be important in India in
the same way we now have the China recognition by the MOE China. We don‘t have
any organisation within India which official recognises our degrees apart from the
generic recognition of NZQA approval and accreditation which is international and have
a specific recognition in India would be important to us. The Chinese government has
supported that process I think a lot more actively than what we see in India.
Infrastructure
It is easier to get around in China than it is in India.
China has some very, very competitive prices for all sorts of things. You know good
infrastructure so very good airlines in China, lots of choices for getting from there to
there, whether it‘s a train or a flight or whatever. Good hotels, very good service can be
very, not expensive at all. All sorts of things work and in India a whole lot of that
infrastructure‘s not straightforward and it‘s very costly. India is hard work.
Just one little thing that‘s for student for recruitment is flights into New Zealand and
the fact that Air New Zealand in some cases has not been, I mean they‘ve certainly put
a focus on China which is really good, but India we‘ve got no flights from India. And
we, we are fortunate that Singapore Airlines flies into Christchurch. But you know
those kind of things are actually really, really important when a student‘s thinking of
coming to New Zealand. If they can fly direct.
I mean China is very competitive but at the same time it‘s very exciting to visit and it‘s
quite easy to get around compared with India.
55
Regionalism, Diversity and Identity
… an Indian is not an Indian and a Chinese is not a Chinese … so it is not as simple as
going to China or India.
So in India, if they can fix the warring states, if they can fix the logistics issues, which
are not trivial issues, the opportunities are there. China‘s tends not to have these
problems – they‘ve had a massive advantage being a commanded controlled
environment.
In India it‘s still more of a craft based environment with a lot more owner operators. A
lot more localised activity but again that‘s you know as you‘d well understand the pace
of change in India is just phenomenal, and I would imagine in five years time it‘s going
to be on par with where China is at.
Yes, India is much more diverse and fragmented than China. It‘s much more diverse. It
shows itself even just on the currency - they‘ve got 40 different languages written on the
one rupee, for example. In China the population is, I think, 97% Han Chinese - it has a
much more homogenous approach to everything.
In India, it‘s marked but it‘s obvious in that it is actually legislated you know it‘s
actually there to be seen that there is a difference between say Uttapradesh and
Maharashtra there was actually a different legislation. In China there‘s no different
legislation there‘s just this who societal difference that says you know we‘re not actually
going to obey what Beijing says.
And so the Chinese just have a phenomenal ability to turn stuff on and off and you
know having it‘s completed now but they did have what was it two and a half trillion of
cash on hand. They‘ve got an amazing ability to spend stuff. Whereas the Indians are
still largely doing state by state. The federal government has some mandate to build
that ring road around the country but you know it runs into problems everywhere they
go and you can‘t build it here because of this, you can‘t build it here because of that.
There is no other place like India in the world. It‘s absolute bloody chaos and it hasn‘t
changed and never will change and the contrast to China, where the populations are
the same, is that China‘s organised and structured.
Investment and building Relationships
The move from hands-off exporting to long-term, sustainable relationships
And I mean we, New Zealand businesses, I mean exporting businesses, need to be
either investing or co-investing with locals to get a piece of the pie up there. I mean the
days of exporting like we‘re trying to do in both those markets [China and India] right
now, from here with the visits to the market and getting calluses on your hand from
your briefcase - they‘re gone, it‘s too hard, it‘s too hard.
I mean China's doing the same but not to the extent and rate that India is doing the
interfacing more and more with western companies. So for India, it‘s about legitimacy
and so you know building relationships with suppliers is equally important, building
relationships with customers. And to maintain that legitimacy piracy is not something
you‘re wanting to do you know.
In my opinion the basic difference between doing business in China and doing business
in India is that India is all about relationships - if they trust you they like you. It takes
a long time to build that but if they like you, you have them forever. In China it‘s a bit
56
of relationship but it‘s all about money, the commission. In India, I‘m not saying nobody
wants money. Definitely they want money. But that‘s not the key driver, commission is
not the key driver.
India‘s very much a relationship, very much a relationship deal. Chinese, I think the
Chinese are more transactional. I think it‘s purely a case of money.
It comes down to a level of trust, in terms of being a western company. There is a level
of mistrust of you in China, whereas, I think, in India there‘s an element of, are you
going to make it or are you going to run the distance - but there's no level of mistrust.
Economy, Growth, Middle Class
Just a quick comment on opportunities.I think what‘s a stand out for both
ChinaandIndiafor us is the growth in middle classes and good prospects for economic
growth. These are going to be the building blocks of valuable potential future markets.
The growth China is more widespread and the growth in GDP is from an economic base
which is manufacturing centric and export centric. We‘re seeing India put an awful lot
of energy into the growth of services, more so than manufacturing as concurrent
streams.
India, which has followed China in many ways, is about ten years behind and we can
track the parallels and also the differences.
In advanced software, China is still another two or three steps behind India.
I think there‘s probably been a lot more change in China than there has in India. You
know really up until recently I think China hasn‘t really been a student education
market for many countries because students always stayed at home whereas India have
been going to US and UK for years and years and years.
The New Zealand dimension
NZ government, NZ Inc; NZ attitudes towards overseas business
There is a whole lot of negativity around another overseas trip. People say ―you‘re away
on another junket‖.
―New Zealand is seen as quite neutral and we‘re not seen as a threat and I think that
helps. We‘re seen as very, very well in India and China. So that neutrality is actually
really important to us.
[New Zealand] is looked on as a fair player in many corners of Asia. Whether it is China
or India, [New Zealand] is sufficiently small and stands up for the right things and does
not lecture to people.
I think NZInc does work quite well in both these environments (India and China) in
terms of fostering private sector participation and helping them to find opportunities
and connecting them with networks in going to actually do new business.
India and China are very, very difficult markets and we would much rather learn with
other New Zealand companies and share and pool our learning and if we can go into
those markets with collaborative activities we think that‘s going to be a smart way of
learning much quicker than we normally do.
Conclusion
India and China have been described as twin peaks on New Zealand‘s horizon. This is a fair
metaphor but should not be taken to imply stability and the old cliché of the ‗timeless Orient‘.
57
On the contrary as we have seen, there has been immense change both in these countries and
in their importance to New Zealand. New Zealand, too has changed greatly but arguably not as
much as either India or China. We are still struggling to come to terms with the new world
order, particularly the rise of China.
Within the changes there are also, of course, continuities. A traveller who had been to all three
countries in the 19th century, returning now, would be amazed at the transformation but would
surely still recognise which country was which. Technological, social and political
transformation, and globalisation, proceed but national characteristics linger.
This historicity gives enduring value to research however inadequate. We can only understand
the present, and attempt to predict the future, if we are aware of the past. Research is never
definitive. There are always time and resource constraints, as well as human limitations. This
essay has raised many questions for further research, and future researchers.
Moreover, since the subject is continually changing it always necessitates revisiting. To take
just one example. Centralisation and decentralisation is a fundamental, unresolvable issue in
any system, from the global politico-economy, through nation states to organisations, including
universities. India is widely seen as more ethnically and linguistically diverse than China and,
for historical reasons, has a more devolved political structure than China; it is, after all, a
union of states whereas China is a state with provinces with varying degrees of autonomy.
China is by no means a monolithic as many believe but it is more unitary than India, as so also
is New Zealand for that matter.46 A number of the respondents quoted above comment on, and
bewail, the fragmentation of India. However, as Peter Drysdale the distinguished Australian
economist notes, a core part of Prime Minister Narendra Modi‘s new economic policy is to
devolve more power to the states.47 This may well stimulate the economy, but it is likely to
make matters more complicated for foreign businesspeople. How will New Zealand business
cope with the change?
Small companies may have to choose between India and China but large companies, and New
Zealand itself, has to tackle both. It is, of course, not exclusive to New Zealand. On the
contrary it is an issue that is replicated in countries around the world. 48 How well this is done
by New Zealand will depend to some extent on the knowledge that academic research can
provide.
Statistical Appendix
Table A1: New Zealand’s exports to China and India, 1982-2014
Values in $m, shares of total exports and exports to China compared to those to India;
Index: 1983=100; June years
1982
1983
1984
1985
1986
1987
Total
$m
6,940
7,935
8,624
11,316
10,572
12,107
$m
122
177
177
298
230
425
China
%
1.8
2.2
2.1
2.6
2.2
3.5
Index
69
100
100
168
130
240
58
$m
61
46
36
48
53
71
India
%
0.9
0.6
0.4
0.4
0.5
0.6
Index
134
100
78
105
116
157
China/India
times
2.0
3.9
4.9
6.2
4.4
6.0
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
12,452
14,905
15,164
15,772
17,840
18,971
19,827
20,790
20,546
21,033
21,941
22,582
26,111
32,000
32,332
29,291
29,864
30,618
32,430
34,934
40,028
43,028
40,669
46,072
46,688
45,704
51,161
435
540
157
186
361
368
529
545
520
560
614
626
766
1,126
1,434
1,457
1,617
1,587
1,740
1,876
2,091
3,359
4,109
5,635
6,106
7,715
11,572
3.5
3.6
1.0
1.2
2.0
1.9
2.7
2.6
2.5
2.7
2.8
2.8
2.9
3.5
4.4
5.0
5.4
5.2
5.4
5.4
5.2
7.8
10.1
12.2
13.1
16.9
22.6
246
305
89
105
204
208
298
307
294
316
347
354
432
635
810
822
913
896
982
1,059
1,180
1,896
2,319
3,180
3,446
4,355
6,531
51
82
91
127
97
139
163
123
106
124
167
172
186
152
183
174
167
198
312
361
361
727
726
885
906
724
632
0.4
0.6
0.6
0.8
0.5
0.7
0.8
0.6
0.5
0.6
0.8
0.8
0.7
0.5
0.6
0.6
0.6
0.6
1.0
1.0
0.9
1.7
1.8
1.9
1.9
1.6
1.2
113
180
200
278
214
305
358
269
233
272
366
377
407
332
401
382
367
433
683
791
790
1,594
1,592
1,939
1,986
1,588
1,385
8.5
6.6
1.7
1.5
3.7
2.6
3.2
4.4
4.9
4.5
3.7
3.6
4.1
7.4
7.9
8.4
9.7
8.0
5.6
5.2
5.8
4.6
5.7
6.4
6.7
10.6
18.3
Table A2: New Zealand’s imports from China and India, 1983-2014
Values in $m, shares of total imports and imports from China compared to those to India;
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
Total
$m
6,928
8,198
11,344
10,468
10,803
10,625
11,402
14,420
14,051
14,215
$m
49
52
79
84
85
111
125
153
195
320
China
%
0.7
0.6
0.7
0.8
0.8
1.0
1.1
1.1
1.4
2.2
Index
100
107
162
171
173
228
256
314
398
654
59
$m
30
29
49
38
42
38
40
48
42
53
India
%
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.3
0.3
0.4
Index
100
99
167
129
142
129
137
161
141
178
China/India
times
1.7
1.8
1.6
2.2
2.0
2.9
3.1
3.2
4.7
6.1
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
15,979
17,019
19,745
19,798
19,785
21,010
22,584
27,460
29,885
29,776
30,161
31,342
33,433
36,586
38,671
41,925
43,438
37,940
42,666
45,060
44,159
47,469
459
517
644
713
822
1,028
1,150
1,527
2,013
2,225
2,523
2,877
3,423
4,133
4,937
5,470
6,297
5,808
6,722
7,268
7,376
8,062
2.9
3.0
3.3
3.6
4.2
4.9
5.1
5.6
6.7
7.5
8.4
9.2
10.2
11.3
12.8
13.0
14.5
15.3
15.8
16.1
16.7
17.0
939
1,057
1,318
1,459
1,682
2,103
2,353
3,126
4,120
4,554
5,164
5,888
7,005
8,459
10,104
11,195
12,887
11,886
13,757
14,874
15,094
16,500
73
80
101
107
118
128
134
153
168
180
180
172
201
215
247
268
323
345
356
381
398
429
0.5
0.5
0.5
0.5
0.6
0.6
0.6
0.6
0.6
0.6
0.6
0.5
0.6
0.6
0.6
0.6
0.7
0.9
0.8
0.8
0.9
0.9
248
269
341
363
401
433
454
518
568
609
607
580
679
728
835
905
1,091
1,165
1,206
1,289
1,347
1,451
6.2
6.5
6.4
6.7
6.9
8.0
8.6
10.0
12.0
12.3
14.1
16.8
17.0
19.2
20.0
20.4
19.5
16.9
18.9
19.1
18.5
18.8
Table A3: New Zealand’s trade with India and China, 1983-2014
Values in $m, shares of total trade and trade with China compared to with to India;
This table is included here for completeness, but for reasons of space it is not discussed in the
text
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
Total
$m
14,864
16,822
22,660
21,040
22,911
23,077
26,307
29,584
29,823
32,055
34,951
36,846
40,535
$m
226
229
377
313
510
547
665
310
381
681
827
1,045
1,189
China
%
1.5
1.4
1.7
1.5
2.2
2.4
2.5
1.0
1.3
2.1
2.4
2.8
2.9
Index
100
101
167
139
226
242
294
137
168
301
366
462
526
60
$m
75
65
98
91
113
90
123
139
169
150
213
243
223
India
%
0.5
0.4
0.4
0.4
0.5
0.4
0.5
0.5
0.6
0.5
0.6
0.7
0.6
Index
100
87
130
121
151
119
163
184
224
200
283
323
297
China/India
times
3.0
3.5
3.9
3.4
4.5
6.1
5.4
2.2
2.3
4.5
3.9
4.3
5.3
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
40,344
40,818
42,951
45,165
53,571
61,885
62,108
59,452
61,206
64,051
69,016
73,605
81,953
86,466
78,610
88,738
91,748
89,863
98,630
1,233
1,382
1,642
1,776
2,293
3,139
3,659
3,980
4,494
5,010
5,873
6,813
7,561
9,656
9,916
12,357
13,374
15,091
19,635
3.1
3.4
3.8
3.9
4.3
5.1
5.9
6.7
7.3
7.8
8.5
9.3
9.2
11.2
12.6
13.9
14.6
16.8
19.9
545
611
726
786
1,015
1,389
1,619
1,761
1,988
2,216
2,598
3,014
3,345
4,272
4,387
5,467
5,917
6,676
8,686
214
243
295
306
339
320
363
354
339
398
527
608
628
1,050
1,071
1,241
1,287
1,123
1,061
0.5
0.6
0.7
0.7
0.6
0.5
0.6
0.6
0.6
0.6
0.8
0.8
0.8
1.2
1.4
1.4
1.4
1.2
1.1
284
323
392
407
451
425
483
471
451
530
701
808
836
1,396
1,424
1,651
1,712
1,494
1,411
Table A4: The Balance of Trade, New Zealand and China, India, 1983-2014
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
China
India
Exports Imports balance Exports Imports balance
177
49
128
46
30
16
177
52
125
36
29
6
298
79
219
48
49
-1
230
84
146
53
38
15
425
85
341
71
42
30
435
111
324
51
38
13
540
125
414
82
40
42
157
153
4
91
48
44
186
195
-9
127
42
85
361
320
42
97
53
45
368
459
-91
139
73
66
529
517
12
163
80
84
545
644
-99
123
101
22
520
713
-193
106
107
-1
560
822
-262
124
118
6
614
1,028
-413
167
128
39
626
1,150
-523
172
134
38
766
1,527
-761
186
153
33
1,126
2,013
-888
152
168
-16
61
5.8
5.7
5.6
5.8
6.8
9.8
10.1
11.3
13.3
12.6
11.1
11.2
12.0
9.2
9.3
10.0
10.4
13.4
18.5
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
1,434
1,457
1,617
1,587
1,740
1,876
2,091
3,359
4,109
5,635
6,106
7,715
11,572
2,225
2,523
2,877
3,423
4,133
4,937
5,470
6,297
5,808
6,722
7,268
7,376
8,062
-791
-1,067
-1,260
-1,836
-2,393
-3,061
-3,379
-2,938
-1,699
-1,087
-1,162
340
3,510
183
174
167
198
312
361
361
727
726
885
906
724
632
180
180
172
201
215
247
268
323
345
356
381
398
429
3
-5
-4
-3
96
114
93
404
381
528
525
326
203
Table A5: New Zealand’s main exports to China, 2012-14
June years
Code
Description
2012
2013
2014
0402
Milk powder
4403
Logs
0204
%
change
(2013–
14)
1,714,475
2,349,365
5,309,408
126.0
937,422
1,300,859
1,848,613
42.1
Sheep meat
246,952
554,045
809,869
46.2
0405
Butter and dairy spreads
211,610
166,102
419,471
152.5
5101
403,057
369,960
385,709
4.3
0306
Crustaceans
110,827
235,364
255,070
8.4
0202
Frozen beef meat
20,727
165,541
207,844
25.6
9809
Confidential items
115,966
109,026
206,561
89.5
1901
Malt extract
186,028
190,477
172,772
-9.3
0406
Cheese
81,722
100,290
150,916
50.5
4407
Sawn or chipped wood of thickness 6mm and over
138,407
171,860
148,571
-13.6
3501
Casein
94,295
112,697
140,613
24.8
0810
Fruit nec
93,936
107,429
123,551
15.0
0303
Frozen fish
126,018
123,816
114,622
-7.4
4102
162,833
153,976
100,931
-34.4
0401
Fresh milk and cream
49,053
62,525
76,468
22.3
2709
Crude petroleum oils
...
...
65,976
...
4701
Mechanical wood pulp
3,246
34,217
57,945
69.3
0102
Live cattle
73,966
90,639
53,889
-40.5
4705
60,326
54,147
49,946
-7.8
Top 20 subtotal
4,830,864
6,452,334
10,698,746
65.8
NZ total exports to China, People's Republic of
6,106,143
7,715,373
11,572,310
50.0
Top 20 as % of total exports to China, People's
Republic of
79
84
92
…
Exports (NZ$000) fob
Source:"Global New Zealand – International trade, investment, and travel profile: Year ended June 2014."
Statistics New Zealand in conjunction with the Ministry of Foreign Affairs and Trade, 17 November
62
2014.http://www.stats.govt.nz/browse_for_stats/industry_sectors/imports_and_exports/globalnz-jun-14.aspx
Table A6: New Zealand’s main exports to India, 2012-14
June years
Code
Description)
4403
2012
2013
2014
%
change
(2013–
14)
Logs
175,547
163,750
212,287
29.6
9809
Confidential items
429,551
231,939
186,339
-19.7
5101
39,449
30,223
43,662
44.5
9019
Mechano-therapy and massage appliances
3,015
129,151
22,981
-82.2
7204
Ferrous waste and scrap
24,499
24,528
21,331
-13.0
0808
Apples, pears, and quinces
23,476
21,040
18,843
-10.4
7602
Aluminium waste and scrap
16,836
13,908
12,696
-8.7
4707
Recycled waste paper and paperboard
6,676
4,388
9,147
108.4
4105
Tanned sheep and lamb skins
3,303
7,253
7,578
4.5
1702
Sugars nec
6,302
6,174
7,040
14.0
4804
Uncoated kraft paper nec
6,208
8,180
6,993
-14.5
0810
Fruit nec
2,656
2,971
5,215
75.5
4705
5,229
7,970
5,125
-35.7
3502
Albumins
1,460
4,327
5,005
15.7
4102
5,102
4,312
4,347
0.8
4411
Fibreboard
3,528
4,291
4,207
-1.9
9018
Medical, dental, or veterinary instruments
490
4,064
3,453
-15.0
8474
Machinery for sorting, washing, or grinding mineral substances
4,559
2,381
3,143
32.0
8536
Electrical switches, fuses, and circuit breakers for less than
1,000V
Engines and motors nec
3,827
5,192
2,954
-43.1
Exports (NZ$000) fob
8412
542
966
2,705
180.1
Top 20 subtotal
762,254
677,009
585,052
-13.6
NZ total exports to India
906,048
724,483
631,875
-12.8
84
93
93
…
Top 20 as % of total exports to India
Table A7: New Zealand’s main imports from China, 2012-14
June years
Code
Description
2012
2013
2014
% change
(2013–14)
8471
Computers
762,848
787,083
742,850
8517
Telephones and cellphones
548,924
582,268
630,590
8.3
9403
Office, kitchen, and bedroom furniture
137,394
156,436
174,829
11.8
8443
Printers, photocopiers, and facsimile machines
156,677
139,615
164,365
17.7
6204
150,961
149,814
159,124
6.2
9401
Seats
119,276
124,981
153,656
22.9
9503
Toys
127,221
118,836
127,225
7.1
Imports (NZ$000) cif
63
-5.6
6110
Knitted or crocheted jerseys
109,741
112,001
121,112
8.1
8528
Televisions
105,867
102,538
119,804
16.8
9405
Lamps and light fittings
4011
4202
64,638
81,578
109,321
34.0
103,337
107,641
109,240
1.5
Trunks and cases
96,643
102,081
104,373
2.2
3105
Fertilisers nec
49,978
53,399
100,852
88.9
8516
Electric heaters, hair dryers, and microwave ovens
92,735
98,486
99,882
1.4
6203
Men's or boys' suits
92,003
95,849
94,411
-1.5
6109
Knitted or crocheted T-shirts and singlets
93,771
82,633
90,701
9.8
3926
Plastic articles nec
66,729
71,657
82,944
15.8
6403
83,167
81,228
82,933
2.1
3923
Plastic containers
69,523
70,880
82,560
16.5
9809
Confidential items
34,433
50,198
74,831
49.1
Top 20 subtotal
3,065,867
3,169,200
3,425,603
8.1
NZ total imports from China, People's Republic of
7,658,178
7,761,608
8,458,877
9.0
Top 20 as % of total imports from China, People's
Republic of
40
41
40
…
Table A8: New Zealand’s main imports from India, 2012-14
June years
Code
Description(
3004
Retail medicines
53,991
51,187
51,443
0.5
7113
Precious metal jewellery
24,973
24,472
23,539
-3.8
8703
Motor vehicles
7,888
15,783
21,649
37.2
7102
Diamonds
14,612
16,586
16,397
-1.1
6302
Bed and table linen
14,606
15,895
15,940
0.3
6204
7,545
7,357
8,092
10.0
3215
Printing ink
6,828
7,912
7,934
0.3
1006
Rice
5,282
5,905
6,925
17.3
4011
6,361
7,240
6,733
-7.0
3917
Plastic tubes, pipes, hoses, and fittings
4,405
3,464
6,729
94.3
8479
305
214
6,700
---
4202
Machinery and mechanical appliances with individual functions
nec
Trunks and cases
4,838
5,385
6,023
11.9
6403
5,798
5,874
6,000
2.1
6802
Monumental or building stone
4,663
5,433
5,554
2.2
7202
Ferro-alloys
967
2,120
4,849
128.7
3920
4,266
4,280
4,818
12.6
4,833
5,496
4,551
-17.2
5702
Laminated non-cellular plastic plates, sheets, film, foil, and
strips
Electrical switches, fuses, and circuit breakers for less than
1,000V
Woven carpets
2,976
3,445
4,477
29.9
7901
Unwrought zinc
3,424
2,623
4,183
59.5
2106
Food preparations nec
2,575
3,393
3,969
17.0
2012
2013
2014
%
change
(2013–
14)
Imports (NZ$000) cif
8536
64
Top 20 subtotal
181,138
194,063
216,503
11.6
NZ total imports from India
402,261
420,390
453,137
7.8
45
46
48
…
Top 20 as % of total imports from India
Table A9: Composition of New Zealand exports to China and India, 2014, in code
order
Code
0102
0202
0204
0303
0306
0401
0402
0405
0406
0810
1901
2709
3501
4102
China
NZ$m
54
208
810
115
255
76
5,309
419
151
124
173
66
141
101
%
0.5
1.8
7.0
1.0
2.2
0.7
45.9
3.6
1.3
1.1
1.5
0.6
1.2
0.9
rank
19
7
3
14
6
16
1
4
10
13
9
17
12
15
4403
4407
4701
4705
1,849
149
58
50
16.0
1.3
0.5
0.4
2
11
18
20
5101
386
3.3
5
9809
Top20subtotal
NZtotalexportstoChina
207
10,699
11,572
1.8
92.5
100.0
8
Code
0808
India
NZ$m
18.8
%
3.0
rank
6
0810
1702
5.2
7.0
0.8
1.1
12
10
3502
4102
4105
4403
4411
5.0
4.3
7.6
212.3
4.2
0.8
0.7
1.2
33.6
0.7
14
15
9
1
16
4705
4707
4804
5101
7204
7602
8412
8474
8536
9018
9019
9809
Top20subtotal
NZtotalexportstoIndia
5.1
9.1
7.0
43.7
21.3
12.7
2.7
3.1
3.0
3.5
23.0
186.3
585.1
631.9
0.8
1.4
1.1
6.9
3.4
2.0
0.4
0.5
0.5
0.5
3.6
29.5
92.6
100.0
13
8
11
3
5
7
20
18
19
17
4
2
Source: "Global New Zealand – International trade, investment, and travel profile: Year ended June
2014." Statistics New Zealand in conjunction with the Ministry of Foreign Affairs and Trade, 17
November
65
Shared 4 digit codes
0801:
4102:
4403:
4705:
5101:
9809:
Fruit nec
Logs
Confidential items
Table A10: Composition of New Zealand imports from China and India, 2014, in code
order
Code
China
$m
%
rank
3105
3923
3926
100.9
82.6
82.9
1.2
1.0
1.0
13
19
17
4011
4202
109.2
104.4
1.3
1.2
11
12
6109
6110
6203
6204
90.7
121.1
94.4
159.1
1.1
1.4
1.1
1.9
16
8
15
5
6403
82.9
1.0
18
8443
8471
8516
8517
8528
9401
9403
9405
9503
9809
Top 20 subtotal
NZ total imports from
China,
164.4
742.8
99.9
630.6
119.8
153.7
174.8
109.3
127.2
74.8
3,425.6
1.9
8.8
1.2
7.5
1.4
1.8
2.1
1.3
1.5
0.9
40.5
4
1
14
2
9
6
3
10
7
20
8,458.9
100.0
Code
1006
2106
3004
3215
3917
3920
4011
4202
5702
India
$m
6.9
4.0
51.4
7.9
6.7
4.8
6.7
6.0
4.5
6204
6302
6403
6802
7102
7113
7202
7901
8479
8536
8703
8.1
15.9
6.0
5.6
16.4
23.5
4.8
4.2
6.7
4.6
21.6
1.8
3.5
1.3
1.2
3.6
5.2
1.1
0.9
1.5
1.0
4.8
Top 20 subtotal
NZ total imports from
India
216.5
47.8
453.1
100.0
%
1.5
0.9
11.4
1.8
1.5
1.1
1.5
1.3
1.0
rank
8
20
1
7
10
16
9
12
18
6
5
13
14
4
2
15
19
11
17
3
Source: "Global New Zealand – International trade, investment, and travel profile: Year ended June
2014." Statistics New Zealand in conjunction with the Ministry of Foreign Affairs and Trade, 17
November
66
Shared 4 digit codes
4011: New pneumatic rubber tyres
4202: Trunks and cases
6204: Women's or girls' suits
6403: Rubber, plastic, or leather footwear with leather uppers
Glossary
Trade data are given here following New Zealand usage, FOB for exports and VFD for imports.
Statistics New Zealand provides the following notes:
CIF:
Cost including Insurance and Freight (CIF) is the value declared by the importer to
Customs. It represents the Free on Board (FOB) cost at foreign ports, plus shipping and
insurance.
Imports are all material goods which enter New Zealand from abroad and are valued
'CIF' (cost, insurance and freight) and 'VFD' (value for duty). The CIF value is the cost to
the importer of buying the goods and bringing them to the wharfside in New Zealand.
Confidential classifications ―Under section 37A (d) of the Statistics Act, the Government
Statistician may disclose details of external trade, movement of ships, and cargo
handled at ports. However, Statistics New Zealand understands that the release of
merchandise trade commodity information can, in some cases, place commercially
sensitive information in the public domain. This can have detrimental effects upon
companies that export and/or import goods. In light of such circumstances, Statistics
NZ is able to provide a limited form of confidential status for commodity items (at the
discretion of the Government Statistician) upon application by a company or business.
In practice, all confidential HS codes are aggregated into the code 9809.00.00.00 in
order to protect their confidentiality and to maintain total export and import values.
Any aggregations of HS codes below this level, which encompass confidential 10 digit
codes, exclude the confidential value(s) for these codes.
FOB:
Exports are all material goods which leave New Zealand for other countries and are
valued free on board (FOB). The FOB value is the current market value of goods in the
country of origin, including all costs necessary to get them on board the ship or aircraft.
It excludes freight, insurance and other costs involved in transporting goods between
countries.
VFD: Imports are all material goods which enter New Zealand from abroad and are valued
'VFD' (value for duty) and 'CIF' (cost, insurance and freight). VFD is the value on which
customs duty is based. It equates approximately with the free on board (FOB) cost of
the goods in the exporting country.
"Global New Zealand – International trade, investment, and travel profile: Year ended June
2014." Statistics New Zealand in conjunction with the Ministry of Foreign Affairs and
Trade, 17 November
2014.http://www.stats.govt.nz/browse_for_stats/industry_sectors/imports_and_export
s/global-nz-jun-14.aspx
______________
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and China, Present and Future: Issues in NZ-China Relations, edited by Tim Beal and Yongjin
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Lynch, Peter, and Dave Moore. "Genio Genius - honest Indian ute." Taranaki Daily News, 9 July
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"New Zealand in Profile: 2013." Statistics New Zealand,
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2013.http://www.mfat.govt.nz/Trade-and-Economic-Relations/2-Trade-Relationships-andAgreements/India/0-India-round9.php
"NZ - China FTA- comprehensive agreement signed with China." NZ Ministry of Foreign Affairs and Trade,
7 April 2008.http://www.mfat.govt.nz/Features/index.php
"NZ Inc India strategy: Opening doors to India." http://www.mfat.govt.nz/NZ-Inc/5-Opening-doors-toIndia/index.php.
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Parussini, Gabriele. "India Is Behind China in Building Its Middle Class." Wall Street Journal, 9 July
2015.http://blogs.wsj.com/indiarealtime/2015/07/09/india-is-behind-china-in-building-itsmiddle-class/
Ramachandran, Sudha "India‘s Impressive Space Program." Diplomat, 13 October
2014.http://thediplomat.com/2014/10/indias-impressive-space-program/
"Regional Comprehensive Economic Partnership (RCEP)." Ministry of Foreign Affairs and Trade,
http://www.mfat.govt.nz/Trade-and-Economic-Relations/2-Trade-Relationships-andAgreements/RCEP/.
Rod, Michel R. M. , Sarena E. Saunders, and Tim Beal. "Knowledge Management in a Business-toBusiness Context: An Indian Exemplar?". Journal of Information & Knowledge Management 8, no.
3 (2009).
Teng, Ssu-yu, and John K Fairbank. China's response to the West : a documentary survey 1839-1923.
New York: Atheneum, 1968.
"TPP adds urgency for China, India at RCEP negotiations." Taipei Times, 12 October
2015.http://www.taipeitimes.com/News/front/archives/2015/10/12/2003629842
Watson, Andrew , Christopher Findlay, and Yintang Du. "Who Won the ―Wool War‖?: A Case Study of
Rural Product Marketing in China." The China Quarterly 118 (June 1989): 213-41.
"Where did your new car really come from? ." Stuff.co.nz, 26 February
2014.http://www.stuff.co.nz/motoring/news/9765812/Where-did-your-new-car-really-comefrom
Xinhua. "New Zealand looking to advance RCEP trade talks: trade minister." Shanghai Daily, 10 July
2015.http://www.shanghaidaily.com/article/article_xinhua.aspx?id=291828
Young, Audrey "Groser:TPP means 'ugly compromises'." New Zealand Herald, 3 October
2015.http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11522953
Zhou, Jinzhu. "Assessing the economic impact of north-south free trade agreements : China-New Zealand
Free Trade Agreement and China-Australia free trade agreement." Victoria University of
Wellington, 2010.
------------1.
2.
3.
4.
5.
Tim Beal and Jinyi Shao, "The Emerging Asian Titans: China and India and the Transformation of
the International Business Environment" (paper presented at the Annual conference of the Australia and
New Zealand International Business Academy, Wellington, November 2006).
"TPP adds urgency for China, India at RCEP negotiations," Taipei Times, 12 October 2015.
Lily Kuo, "In the race for Africa, India and China aren’t all that different," Quartz, 27 October
2015; Sajjad Malik, "India pushing to edge past China in Africa," China.org.cn, 26 October 2015.
David Capie, "Asia and New Zealand: Early contacts with Asia," in Te Ara - the Encyclopedia of
New Zealand (2012).http://www.TeAra.govt.nz/en/asia-and-new-zealand/page-1; Henry Johnson and
Brian Moloughney, eds., Asia in the Making of New Zealand (Auckland: Auckland University Press, 2007);
Helen Clark, "Address to Chinese New Year celebrations," Beehive.govt.nz, 12 February 2002.
"How the suburb of Khandallah was named," http://www.livingheritage.org.nz/SchoolsStories/Khandallah-Street-names/How-the-suburb-of-Khandallah-was-named.
70
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
Jo Bind, "Time For Tea," NZ Geographic, May-June 2012.
Cited by Ssu-yu Teng and John K Fairbank, China's response to the West : a documentary survey
1839-1923 (New York: Atheneum, 1968). p.19
Bind, "Time For Tea."
Tim Beal, Hidden Trade: The Role of Hong Kong in Sino-British Trade, 1930-1969, East Asia Papers
(Glasgow: Department of Marketing, University of Strathclyde, 1984).
Sukti Dasgupta and Singh. Ajit, "Will Services be the New Engine of Indian Economic Growth?,"
Development and Change 36, no. 6 (2005).
Anthony P. d'Costa, "Modi’s mantra to ‘Make in India," East Asia Forum, 25 October 2015.
All dollars ($) in this essay are NZ$ unless otherwise specified
Fob – Free on Board. See the glossary section at the end of the Statistical Appendix for an
explanation of terms such as this
Michael R. Gordon, "U.S. grants Boeing a Waiver to sell Jetliners to China," New York Times, 8 July
1989; "Case Studies in Sanctions and Terrorism- Case 89-2 US v. China (1989- : Tiananmen Square
Massacre, Human Rights)," http://www.iie.com/research/topics/sanctions/china.cfm.
Tim Beal, "New Zealand and Greater China: Changing patterns of the direction of trade," in New
Zealand and China, Present and Future: Issues in NZ-China Relations, ed. Tim Beal and Yongjin Zhang
(Wellington: Centre for Asia/Pacific Law and Business, Victoria University of Wellington, 1996); John
Longworth and Colin Brown & Scott Waldron, "Features of the Wool Industry in China," University of
Queensland, China Agricultural Economics Group c2009; Andrew Watson, Christopher Findlay, and
Yintang Du, "Who Won the “Wool War”?: A Case Study of Rural Product Marketing in China," The China
Quarterly 118(1989).
"NZ - China FTA- comprehensive agreement signed with China," NZ Ministry of Foreign Affairs and
Trade, 7 April 2008.
"New Zealand-China Free Trade Agreement," Ministry of Foreign Affairs and Trade,
http://www.chinafta.govt.nz/.
Sayeeda Bano, "An Empirical Examination of Trade Relations between New Zealand and China in
the Context of a Free Trade Agreement," Working Paper in Economics 04/14 February 2014.
Tim Beal, "Korea's FTAs and their implications for the Korean wine market," CRES Visiting
Scholar's Paper Series (ed. Yang-Hee Kim) 2010.
Jinzhu Zhou, "Assessing the economic impact of north-south free trade agreements : China-New
Zealand Free Trade Agreement and China-Australia free trade agreement" (Victoria University of
Wellington, 2010).
"New Zealand-India FTA," Ministry of Foreign Affairs and Trade, http://www.mfat.govt.nz/NZInc/5-Opening-doors-to-India/3-NZ-Inc-India-strategy/5-New-Zealand-India-FTA.php.
"Ninth Round of Negotiations," Ministry of Foreign Affairs and Trade, 22 August 2013.
Gordon G. Chang, "TPP vs. RCEP: America and China Battle for Control of Pacific Trade," National
Interest, 6 October 2015.
Xinhua, "New Zealand looking to advance RCEP trade talks: trade minister," Shanghai Daily, 10
July 2015; "Regional Comprehensive Economic Partnership (RCEP)," Ministry of Foreign Affairs and Trade,
http://www.mfat.govt.nz/Trade-and-Economic-Relations/2-Trade-Relationships-and-Agreements/RCEP/;
Rahul Mishra, "RCEP: Challenges and Opportunities for India," S.Rajaratnam School of International
Studies, Nanyang Technological University, 25 July 2013.
"NZ Inc India strategy: Opening doors to India," http://www.mfat.govt.nz/NZ-Inc/5-Openingdoors-to-India/index.php.
http://www.mfat.govt.nz/NZ-Inc/5-Opening-doors-to-India/3-NZ-Inc-India-strategy/2-Strategicgoals.php
"Infoshare," Statistics New Zealand, http://www.stats.govt.nz/infoshare/. Downloaded 17
September 2015
"New Zealand-China Free Trade Agreement: Trade and Economic Cooperation Framework
between New Zealand and the People's Republic of China - 28 May 2004," Ministry of Foreign Affairs and
Trade, 28 May 2004.
Audrey Young, "Groser:TPP means 'ugly compromises'," New Zealand Herald, 3 October 2015.
71
30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
"New Zealand aims to conclude FTA talks with China first," People's Daily, 31 May 2005.
Tim Groser, "China - Trading Up or Creating Dependency?," in China at the Crossroads: What the
Third Plenum means for China, New Zealand and the World, ed. Peter Harris (Wellington: Victoria
University Press for the New Zealand Contemporary China Research Centre, 2014).
"China, UK sign landmark deals ", China Daily, 22 October 2015; Jalees Andrabi and Dean Nelson,
"India takes giant step to manned space mission," Telegraph, 19 December 2014; Sudha Ramachandran,
"India’s Impressive Space Program," Diplomat, 13 October 2014.
"New Zealand in Profile: 2013," Statistics New Zealand 2013.
Val Lindsay et al., Next Stop India: A Guide for New Zealand Business (Wellington: Asia NZ
Foundation, 2006).
"Where did your new car really come from? ," Stuff.co.nz, 26 February 2014.
"Mahindra (NZ)," http://www.mahindra.co.nz/news.
Paul Owen, "Mahindra to be next big thing in NZ motoring," The Press, 30 March 2015."Indian
giant grows its tractor range," Rural News, 21 February 2015; Peter Lynch and Dave Moore, "Genio Genius
- honest Indian ute," Taranaki Daily News, 9 July 2014.
Kendra Marr, "As Detroit Crumbles, China Emerges as Auto Epicenter," Washington Post, 18 May
2009;
"List
of
countries
by
motor
vehicle
production,"
https://en.wikipedia.org/wiki/List_of_countries_by_motor_vehicle_production.
Robert Barry, "The Chinese invasion is just beginning," New Zealand Company Vehicle,
August/September 2009.
Val Lindsay et al., Service Success in Asia (Wellington: Victoria University of Wellington, 2011).
The other researchers were Vivienne Shaw, Tim Beal (co-author this paper), Malcolm Cone, Fergus
McLean, Michel Rod, and Nick Ashill
Rakesh Kochhar, "China’s middle class surges, while India’s lags behind," Pew Research Center, 15
July 2015. See also Homi Kharas, "The Emerging Middle Class in Developing Countries," Brookings
Institution, 20 June 2011; Gabriele Parussini, "India Is Behind China in Building Its Middle Class," Wall
Street Journal, 9 July 2015.
"Global Wealth Report 2015," Credit Suisse October 2015. Table 3
Tim Beal, Valerie Lindsay, and Kala Retna, "Valuing Multiculturalism: Business Engagement with
the Challenge of Multiculturalism," in Asians and the New Multiculturalism in Aotearoa New Zealand, ed.
Jacqui Leckie and Gautam Ghosh (Dunedin: University of Otago Press, 2015). See also Nick Ellis et al.,
"Constructing identities in Indian networks: Discourses of marketing management in inter-organizational
relationships," Industrial Marketing Management 41, no. 3 (2012); Michel R. M. Rod, Sarena E. Saunders,
and Tim Beal, "Knowledge Management in a Business-to-Business Context: An Indian Exemplar?," Journal
of Information & Knowledge Management 8, no. 3 (2009).
Tim Beal, "India and China – Recognising the differences," EMERICS - Information for Emerging
Countries, 19 October 2010.
Helen Clark, "Address to Seriously Asia forum," New Zealand Government, 29 August 2003;
Pauline Keating and David Keen, Knowing Asia:The Challenge for New Zealand's Tertiary Education Sector
(Wellington: New Zealand Asian Studies Society, 2004); Steve Maharey, "Preparing for the Asian century,"
Dominion Post, 14 July 2015.
‘China’ meaning the People’s Republic of China. Greater China has been, and continues to be
more fragmented than India, with Taiwan, for instance, having de facto independence. This greater
fragmentation has been an important factor in China’s recent development; Tim Beal, "Greater China:
Competition and Complementarity," in The Managerial Process and Impact of Foreign Investment in
Greater China, ed. C. Jayachandran and Lin Guijin, Advances in Chinese Industrial Studies (Stamford: JAI
Press, 1999).
Peter Drysdale, "Can India make it without manufacturing?," East Asia Forum, 26 October 2015.
Ian Jack, "Perhaps India, rather than China, should be the target of Britain’s charm offensive,"
Guardian, 24 October 2015; Alyssa Ayres [Project Director], Charles R. Kaye [Chair], and Joseph S. Nye Jr.
[Chair], "Working With a Rising India: A Joint Venture for the New Century," Council on Foreign Relations,
November 2015.
*****
72
3.
INDIA – NEW ZEALAND RELATIONS
- AN INSIGHT VIEW
Dr. Manas Chakrabarty
Professor of Political Science
University of North Bengal,
Darjeeling. W.B. INDIA.
[email protected]
Dr. Manas Chakrabarty, M.A. Ph.D., is currently Professor of Political Science, University of North Bengal, Darjeeling, in
West Bengal.
Dr. Chakrabarty has carried out extensive research and he has to his credit four books, more than one hundred published
research articles in leading professional national and international journals including some chapters in different books.
Dr. Chakrabarty has by now completed four Major Research Projects, one on "Judicial Behaviour and Judicial Decision
Making of the Indian Supreme Court " sponsored by the Indian Council of Social Science Research and the other two on
"Women and Politics: A Study of Women Parliamentarians" and "Indian Railway Trade Unions", sponsored by the
University Grants Commission. One on “Women Empowerment at the Grass Roots: A Study of Jalpaiguri and Darjeeling
Districts “sponsored by the University of North Bengal. Currently, he is pursuing another Major Research project entitled,
“Self Help Groups: A Tool of Women Empowerment”, sponsored by the U.G.C.
His areas of interest are: Indian Government and Politics, Judicial Behaviour and Judicial Decision Making. Trade
Unionism, International Politics and Comparative Politics.
He is also the Director of Centre for Nehru Studies and Gandhian Studies (sponsored by the UGC), Coordinator of
SAP(DRS Phase-lll) sponsored by the UGC. Programme Coordinator, National Service Scheme at the University,
Chairperson in Political Science, Directorate of Distance Education, North Bengal University, and Chairman, Sports Board,
North Bengal University.
He has successfully supervised Twenty Ph.D. scholars and another Eight are in the pipe line.
Dr. Chakrabarty is a Life Member of the Indian Political Science Association, Indian Institute of Public Administration and
the American Studies Research Center.
_______
INTRODUCTION
The relationship between two countries carries significance to a great extent not only in the
matter of the two countries concerned in a particular situation or at a particular time but also
for the whole world. It has rightly been said that the present day world is a global village.
Again, a man who can live without other beings is either a God or a beast . (Malhotra, V.K. –
2001). In modern times, we can safely say that no nation or country can live in isolation.
Coexistence of the nations is the order of the day. (Malhotra, V.K. - 2001). It can therefore be
said that international relations is of prime importance in the world society from any aspect
that is taken for analysis or consideration. It is all the more important because global politics
is in the midst of dramatic and accelerating change. (Mansbach R.W. & Kirsten L. Taylor.
2012).
International Relation means the diplomatic-strategic relation of states and the characteristic
focus of International Relation revolve on issues of war and peace, conflict and cooperation.
Further, it is also cross border transactions of all kinds, political, economic and social. (Chris
73
Brown with Kirsten Ainley 2009). International Relations today refers to both an academic
discipline and the field of activity that deals as much with relations between and among states
as with transnational global actors, problems and issues. (Basu Rumki (ed), 2012). The study
of world politics and international relations has become all the more important and significant
due to the fact that World Politics today is in a state of extra ordinary transaction. At the turn
of the twenty first century, we live in a world that is both fascinating and terrifying, a world
that exhibits deep contradictions yet sometimes high hopes. World politics today poses a real
challenge to our understanding, yet we believe there are keys that will open the doors for us.
(Duncan W.R. et al- 2002).
In international society, relationship aspect is very significant. Relationship refers to the bonds
of dependent or reciprocal relations. (Martin Pierre Marie-1986).
So far as international
politics is concerned, like all politics, it is a struggle for power. Whatever may be the ultimate
aim of international politics, the power is always the immediate aim. ((Morgenthau, Hans J.
1985). On the other hand, International Relations include the study of all human interactions
across national borders and factors that affect those interactions. (Pearson F.S. & J.M.
Rochester. 1988).
There is no denying the fact that in the present day world, International Relationship is of
great significance. It is so because it includes a great variety of transitional relationships.
(Palmer Norman D and Perkins Howard C. 2011).
It is an agreed fact that the relations of
states are comprehensible against a context, as the relations of individuals are comprehensible
against a context. (Bajpai Kanti P. & Harish C. Shukul 1995). We should also keep in mind
that there exists a context which gives meaning to and channels the behaviour of states in
their relations with other states and other external entities. (Bajpai Kanti P. & Harish C.
Shukul- 1995). It should be taken into deep consideration that this context is by no means
inscribed forever, nor is there full agreement with all its elements and characteristics. (Bajpai
Kanti P. & Harish C. Shukul, 1995).
In the present context of international scenario, international relations have assumed all the
more great significance. In the twenty first century, we live in a world that is both fascinating
and terrifying - one that exhibits deep contradictions and yet manifest high hopes. (Duncan W.
Raymond et al. – 2002).
Further, the terrorist attacks on the World Trade Centre and the
Pentagon, demonstrated just how complex international relations have become in the past
decade. (Wenger, A. & Doron Zimneramann.2004). It should be stated that the relationship
of nations emits a great mark of implications not only in the relationship status of two or more
countries but also exerts a tremendous influence all over the region and the world. Therefore,
inter-national relationship is significant from all dimensions. (Chakrabarty Manas in Mishra
74
Sylvia(Ed) 2014). This definitely shapes the pattern and dimension of international relations
at large.
.
It is therefore natural that the foreign policy of a nation becomes all the more important
because it determines the nature of relationship either between two countries or a large
number of countries. As per international norms, foreign policies are the central objective to
preserve the liberty of states and to maintain the balance of power.
Again, a special care
should be devoted for understanding international relationship because there has been a
paradigm shift in its content. In fact, the disciplinary dimensions of international politics have
witnessed quantitative expansion as well as qualitative complexities since 1945. (Jaitly,
Anam- 1986).
It is also significant to note that a cursory look at the expanded scope of
international relations and politics unambiguously indicate that these have reached the
farthest corner of human creativity and as such deeply influence mankind. (Jaitly, Anam1986). The traditional conceptual categories are no longer sufficient for comprehending the
dynamics of international politics. (Jaitly, Anam- 1986).
But it should be kept in mind that the relationship is dynamic in character. It is never
permanent. It always changes with the changing conditions of time and the society. With the
passage of time and depending on a particular situation or any specific interest, the
relationship is affected and undergoes change. Like human relations, international relations
between and among countries become significant particularly when the world is being referred
as a global village. (Chakrabarty, Manas- in Mishra Sylvia(Ed) 2014). It is also an important
fact that there is no reason that a state should live in isolation. In such a case, it not only
deprives the country concerned from multifaceted development but also to exchange ideas on
different matters that may be conducive for development of a particular state. It is therefore,
perhaps a necessity that no nation should live in isolation. If it remains aloof or away from the
dynamic international social order, it shall be deprived from the advancements, developments
and particularly, the move towards betterment shall remain unknown and secondly and more
importantly, it is foolish to be away from the international social dynamics which can take a
nation in a far advanced position. Under the circumstances, it is essential to remain
within
the purview of international relations and it becomes sine qua non and of prime necessity for a
modern state to remain within the dynamics of international relations. In today‘s world, we
cannot think of remaining in isolation. It is foolish and also not possible at the same time. In
the present day society, man is social, not by choice but by necessity. (Chakraborty R. 1970). Therefore, there is no necessity to point out the importance of international relationship
in the modern world.
INDIA AND NEW ZEALAND
India–New Zealand relations, which could be historically dated back to the days of the British
Empire, lacked until recently in substance and were rocked by several irritants, the most
75
important of which were the divergent views on the issue of nuclear non-proliferation. However,
in last one decade or so there have been some remarkable developments in this bilateral
relation, as the security interests of the two nations have converged, volume of trade increased,
educational
ties
grew
stronger
and
people-to-people
contacts
improved
significantly.
(Bandopadhyay, 2013). New Zealand and India enjoy a long standing and warm relationship.
Common historical links mean that we share the same language, the same democratic
traditions and a passion for cricket. (New Zealand High Commission).
Further, India-New Zealand bilateral relationship can be characterised as comfortable and
warm but at least historically not particularly deep. Some signs of depth in the relationship,
however, were beginning to emerge. India and New Zealand share a common historical past of
being British colonies, follow the Westminster model of government, and are thriving
democracies in the Asia-Pacific region. As members of the Commonwealth, they have had close
ties though they tended to give greater weightage to their respective strategic interests. India
and New Zealand, sharing a common historical connection with the British Empire, have
enjoyed cordial and friendly relations rooted in the linkages of Commonwealth, parliamentary
democracy and the English language. The two countries have been fellow travellers in their
commitment to disarmament, global peace, North-South Dialogue, human rights, ecological
preservation
and
combating
international
terrorism. (HIGH
COMMISION
OF
INDIA,
WELLINGTON, NEW ZEALAND).
India and New Zealand traditionally share close and friendly relations which are reinforced by
their commonwealth background. Both the countries today are fellow travelers in their
commitment to disarmament, global peace, North-South Dialogue, human rights, ecological
preservation and combating international terrorism. The first Indian settlers migrated to New
Zealand in 1810. Now Indians constitute the second-largest Asian-Kiwi group in our population
(having more than doubled in number between 1991 and 2001). This increasing diversity has
initiated a fresh debate on New Zealand's changing national identity, with the emphasis
shifting from its bicultural foundation to greater recognition of ethnic minorities within the
nation-space.
(Bandopadhyay, 2013). As per the latest Census figures released in December 2013, a sizeable
Indian origin population of over 1, 50,000 has made New Zealand its permanent home. Hindi
has now emerged as the fourth most spoken language in New Zealand. Tourism and sporting
links, particularly in cricket, hockey and mountaineering, have also played a significant role in
fostering goodwill between the two countries. However, the bilateral trade and economic
relationship
is
currently
below
potential,
despite
strong
growth
in
recent
years.
Notwithstanding the difference in size and the distance between India and New Zealand, the
two economies are essentially complementary and there is considerable potential to increase
76
bilateral trade and economic relations, particularly if tariffs and other current barriers are
adequately addressed through a CECA/FTA.
The history of the relationship had had its up and downs but a new phase of deeper
engagement commenced with the visit in 2004 of then-Prime Minister of Newzealand Helen
Clark. The visit represented something of a watershed as it was at that time that New Zealand
really began to look at, and think about, the relationship differently. So the bilateral
relationship has begun to get forward momentum moving recently from first to second gear.
The aim in 2009 was to move the relationship into third gear something which will be assisted
by the commencement of FTA negotiations that started in April 2010. Whilst that is a welcome
development, this relationship will - if not now in the very near future - want to be in the top
tier of New Zealand's bilateral relationships. . (Panda & Jha, 2010). This being the case, the
aim is to move the relationship to the fourth gear. In order to move forward, it is absolutely
essential that both India and New Zealand need to continue to add depth and breathe to the
relationship both in the economic sphere more broadly. The year 2009 also saw a number of
other 'firsts' which have added depth and breath to the relationship. It is said that the ties
between India and New Zealand have gone through a roller coaster ride but it must be said that
there is a sense of stability in the relationship. It must be said that this has definitely been
propelled by the advent of globalisation as well as increasing interdependence between the two
countries. The most common factor between India and New Zealand is that both the countries
were once a part of the British Empire. After the attainment of India‘s independence, India–
New Zealand relations were definitely cordial but not extensive and deep rooted. However, a
close scrutiny would reveal the fact that New Zealand and India enjoy a long standing and
warm relationship. So far as the India-New Zealand relationship is concerned, the tie revolves
mainly around business and cricket. It is so because New Zealand stands out as a country well
adapted for long-term competitiveness. It also offers an extensively deregulated, low-cost and
resource-rich environment, ensuring its attractiveness as a place to do business. From the side
of New Zealand, it is often said that India is a priority relationship for New Zealand and our
most developed relationship in South Asia. The base of the relationship between India and New
Zealand lies in the fact that India and New Zealand, share a common historical connection with
the British Empire. Further, they have enjoyed cordial and friendly relations which are rooted
in the linkages of Commonwealth, parliamentary democracy and the English language. Again
the two countries have been fellow travellers in their commitment to disarmament, global
peace,
North-South
Dialogue,
human
rights,
ecological
preservation
and
combating
international terrorism. Another most important dimension is the people-to-people contacts
which have been in focus since migration from India to New Zealand that began at the turn of
the last century. Further, a sizeable population of Indian origin (estimated to be over 1, 10,000)
77
has made New Zealand its permanent home. We should take into account the rapid emergence
of India as a rising power in the Asia-Pacific in the first decade of the twenty-first century, and
its "greater economic integration and multifaceted strategic engagement with every country in
the region" and a similar level of enhanced strategic engagement could be perceived in India's
engagement with New Zealand, ".one of the most important players in the south Pacific and an
ardent advocate of regional concerns". (Kaul and Shekhar (Eds.), 2012).
There is no denying the fact that India‘s importance to New Zealand is growing gradually. It is
significant to note that this reflects India‘s expanding economy which has emerged strongly
from the global recession. Further, its growing geopolitical importance, and its increased
openness to the rest of the world has also been a deciding factor. With this backdrop, the
New Zealand Government is implementing an inter-agency NZ Inc India strategy that is
working towards India being a core trade, economic and political partner for New Zealand by
2015. Naturally it can be said that the relationship between India and New Zealand is
developing at a fast pace.
THE NZ-INC INDIA STRATEGY
In the bilateral relationship between India and New Zealand, the NZ Inc India Strategy has
occupied an important place. The NZ Inc India Strategy was launched by the Prime Minister
John Key on 20 October 2011 at The Cloud, Auckland. It is the first of a series of all-ofgovernment strategies. It aims to set priorities and coordinate relations with key offshore
partners. The Strategy articulates a clear vision that India should be a core trade, economic
and political partner for New Zealand by the year 2015.
The Strategy which aims to cement the bond on a more solid foundation has six broad goals:
1. To grow merchandise exports to at least NZ$2 billion per year by 2015;
2. To grow services trade with India by an average of 20% per year;
3. To improve the bilateral investment framework and facilitate growth in the investment
relationship;
4. To attract and retain skilled migrants from India who are able to make an effective
contribution to New Zealand‘s economic base;
5. To engage more deeply with India on regional and global issues that will impact on
New Zealand‘s future prosperity and security; and
6.
To raise the profile of New Zealand‘s value proposition in India through a series of
conscious steps, from enhanced cricket diplomacy to increased political contact with India.
78
The NZ Inc India Strategy was launched by the Prime Minister John Key on 20 October 2011 at
The Cloud, Auckland
TRADE AND ECONOMIC RELATIONSHIP
India and New Zealand have a longstanding and positive bilateral relationship. India is New
Zealand's 15th-largest bilateral trading partner. (New Zealand Ministry of Foreign Affairs and
Trade). However, the bilateral trade and economic relationship is currently below potential,
despite strong growth in recent years. Notwithstanding the difference in size and the distance
between India and New Zealand, the two economies are essentially complementary and there is
considerable potential to increase bilateral trade and economic relations, particularly if tariffs
and other current barriers are adequately addressed through a CECA/FTA. It is expected that
a comprehensive CECA/FTA would increase in both countries.
It is discernible that India and New Zealand are dynamic market economies, seeking to develop
their international linkages and maximise the benefits that flow from international trade. They
are intent on improving their positions in the global economy and promoting the
competitiveness and sustainable development of their economies and the prosperity and
welfare of their populations. Building on their efforts to promote trade and economic
liberalisation at the regional and multilateral levels and on their longstanding political and
economic relationship, India and New Zealand have recognised the value of further
strengthening their bilateral trade and economic relationship.
It is observed that with the passage of time India is becoming increasingly an important trading
partner for New Zealand. The statistics show that trade with India has nearly doubled over the
past five years, and the growth rate is definitely on a steady rise. . It is important to note that
for the year ended June 2013, overall goods trade between the two countries was over NZ$ 1.1
billion. Of that total, $725.912 million was New Zealand exports going to India, making India
our twelfth-largest export destination. (International Business Forum). So far as New Zealand‘s
main exports to India are concerned, it includes the primary commodities. It should be pointed
out that although exports have significantly grown over the past years but high tariffs on items
of interest to New Zealand, particularly agricultural and value-added products, has become a
hindrance factor which is restricting our exports. It is to be noted that in recent years, India‘s
average applied tariff rate has been significantly reduced due to its tariff policy and WTO
commitments. It is discernible that there has been steady growth in trade with India. The
growth area may be witnessed mainly in the field of tourism and education. India is considered
as second largest market for international students. It may further be noted that opportunities
for growth in other service sectors include professional and business services, environmental
79
services, engineering and construction services, and services incidental to agriculture forestry
and other areas. In order to boost the trade aspect, New Zealand is negotiating a free trade
agreement with India.
EDUCATION
The bilateral relationship between India and New Zealand also revolves round the educational
sector. Education has become a key sector for the two countries. Both governments recognised
the enormous potential for cooperation in the education sector – both in terms of Indian
students studying in New Zealand, and in establishing joint education ventures in India.
Following a tertiary education-focused mission in 2005, India and New Zealand signed a
bilateral Education Cooperation Arrangement. This led to the establishment of an Education
Joint Working Group. Reflecting the importance of this sector, Auckland has appointed an
education Counsellor at the New Zealand High Commission in New Delhi, to promote and
advance the opportunities offered by New Zealand education. (Goff, 2007).
It may be stated that in the field of education, India and New Zealand signed an Education
Cooperation Arrangement, a broad framework for bilateral cooperation, in 2005 which was
renewed for five years in April 2010. It should further be stated that India and New Zealand
also have an education JWG of senior officials under the arrangement to discuss educational
cooperation.
As part of the Prime Ministers‘ Education Initiative, announced during PMJK‘s
visit in June‘11, the two countries have set up an India-New Zealand Education Council.
Again, New Zealand India Research Institute (NZIRI) was one of five MoUs signed between New
Zealand and Indian institutions, covering areas such as vocational training, joint research,
training, student exchanges and ICT.
So far as the realm of education is concerned, India is New Zealand‘s second largest market for
international students. As per record, there were 11,349 international fee-paying students from
India in New Zealand in 2012 which marks a steady rise as compared to the figure of 6,348 in
the year of 2008. It should be stated that the New Zealand and Indian governments have
formed the India-New Zealand Education Council (INZEC) to co ordinate educational links
between the two countries of New Zealand and India. The main areas that the INZEC focuses
are on areas including academic and student exchanges, joint research activities and industry
collaborations. In this regard the New Zealand India Research Institute is a consortium of
scholars actively engaged in research on India in New Zealand universities.
80
TOURISM
In the field of Tourism, there is a close tie between India and New Zealand. It is recorded that
in the year 2012, 29,856 people from India visited New Zealand, contributing an estimated
NZD 90 million to the New Zealand economy. To facilitate greater tourist traffic, New Zealand
signed an air services agreement with India in May 2006, which allows direct flights between
Auckland and Mumbai. Under the Agreement the two countries can each operate direct aircraft
services between Mumbai and Auckland, with the option of using Australia, Singapore or Hong
Kong as intermediate points. In view of the introduction of direct air route between India and
New Zealand (Mumbai and Auckland), the number of tourists is on the rise.
POLITICAL AND CULTURAL LINKS
So far as the political and cultural link between India and New Zealand is concerned, India and
New Zealand‘s historical ties stretch back to when Indian migration to New Zealand began as
early as in the year 1890. It may be said that most of these early migrants came from Punjab
and Gujarat. But there has been a total change of the current scenario because currently
New Zealand is home to people with origins from all over India.
It should be specifically pointed out that New Zealand and India share much in common. The
two countries share a Commonwealth heritage, legal system, business, language, democratic
traditions, and personal links. It may further be stated that Mahatma Gandhi is an admired
figure in New Zealand. We should also refer that Sir Edmund Hillary and Tenzing Norgay‘s
legacy as Everest pioneers is also well known in India. Apart from all these, we find that there
exists shared love of hockey, mountaineering, and cricket between the two countries.
VISITS AS MECHANISM OF BOND
It is well known that just as between friends so in the case of two countries, the visits and
counter visits by the political dignitaries help greatly in cementing the bonds between two
countries. In the context of bilateral relationship between India and New Zealand, we find the
record of several visits and counter visits by the political dignitaries. High-level visits from and
to India, have cemented the bilateral relationship.
SUMMIT LEVEL VISITS
We may mention that from India, Smt. Indira Gandhi and Shri Rajiv Gandhi visited New
Zealand in 1968 and 1986 respectively. On the other hand, from New Zealand, Prime Minister
Norman Kirk visited India in 1973. It may be stated that there was no high level bilateral visit
during PM Robert Muldoon‘s era from 1975-1984, though Sir Robert himself visited India twice
to attend CHOGM in 1980 and 1983. One significant point that should be specially mentioned
81
is that the former Prime Minister David Lange visited India four times during 1984-85 – first as
Opposition leader in the month of February 1984 and subsequently as Prime Minister in the
month of October 1984, followed by his visit in November 1984 to attend the funeral of Smt.
Indira Gandhi and to meet Prime Minister Rajiv Gandhi in April 1985.
Prime Minister Helen
Clark paid official visit to India from October 16-20, 2004.
RECENT VISITS TO INDIA BY THE POLITICAL DIGNIRATIES OF NEW ZEA LAND
1. Minister of Foreign Affairs, Hon Murray McCully, visited India in June 2013.
2. Minister of Primary Industries, Hon David Carter, visited India in November 2012.
Minister Carter was joined by leading representatives of New Zealand‘s dairy, meat,
horticulture and agri-tech sectors.
3. Minister of Conservation, Hon Kate Wilkinson, visited India in October 2012 to attend the
11th Convention on Biological Diversity in Hyderabad.
4. Minister for Tertiary Education, Skills and Employment, Hon Steven Joyce, visited India
in October 2012. Minister Joyce lead a delegation of government officials and education
providers and with his Indian counterpart co-chaired the inaugural meeting of the India
New Zealand Education Council.
4. Prime Minister John Key, accompanied by the Minister of Trade, Hon Tim Groser, Mr
Kunwaljit Singh Bakshi MP and high level business delegation, visited New Delhi and
Mumbai on a state visit to India in June 2011.
5. Minister of Defence and Minister of Science and Innovation, Hon Dr Wayne Mapp, visited
India in April 2011.
6. Minister of Immigration and Associate Minister of Tourism, Hon Dr Jonathon Coleman,
visited India in March 2011, which coincided with the New Zealand Black Caps presence in
India for the Cricket World Cup.
7. Governor-General Hon Sir Anand Satyanand, GNZM, QSO, and Her Excellency Mrs Susan
Satyanand visited India in January 2010 to attend the Privasi Bharatiya Divas Conference in
New Delhi. This is an annual event that recognises the global contribution of the Indian
diaspora. The Governor-General delivered the key-note address at the Conference
8. Governor-General Hon Sir Anand Satyanand, GNZM, QSO, and Her Excellency Mrs Susan
Satyanand visited India in September 2010 to represent New Zealand and support the New
Zealand team at the Delhi Commonwealth Games
RECENT VISITS BY THE POLITICAL DIGNIRATIES OF INDIA
1. Minister of Human Resource Development (who covers Education in India), Hon Dr MM
Pallam Raju, visited New Zealand in July 2013.
82
2. Hon Meira Kumar, Speaker of the Lok Sabha visited New Zealand in April 2012 as a Guest
of the New Zealand Parliament. Mrs Kumar was accompanied by a group of Indian Members
of Parliament.
3. Minister of State for Foreign Affairs, Hon Preneet Kaur, visited New Zealand in September
2011 to participate in the Pacific Islands Forum (PIF)‘s post-Forum Dialogue.
4. Minister of Commerce and Industry, Hon Anand Sharma, visited New Zealand with a large
trade delegation. The visit focused on the roadmap to propel forward the trade and economic
relationship between India and New Zealand.
5. Dr Vijay Mallya, MP, Chairman of Kingfisher Airlines and United Breweries Group, visited
New Zealand in January 2011 as part of a project organised to scientifically examine
whiskey recovered from Ernest Shackleton‘s Hutt in Antarctica.
6. Minister for Overseas Indians, Hon Vayalar Ravi, visited in June 2010. Minister Ravi
previously visited and participated in New Zealand‘s Diwali festival in October 2006.
7. Minister of Power, Hon Shushilkumar Shinde, visited New Zealand in June 2010.
8. Human Resources Development Minister (education portfolio), Hon Kapil Sibal, visited
New Zealand in April 2010.
9. Rahul Gandhi, MP, visited New Zealand in February as the first annual Sir Edmund
Hillary Fellow.
CONCLUSION
By way of conclusion it may be said that the ties between India and New Zealand have gone
through a roller coaster ride but there is a sense of stability in the relationship. This has been
propelled by the advent of globalisation as well as increasing interdependence. While New
Zealand cannot ignore India‘s huge market and its services sector, India cannot overlook New
Zealand‘s important position in the Asia–Pacific region as well as its increasing clout in various
global and regional fora. There has been growing convergence but there is a need for mutual
understanding which can be promoted through greater investments, trade and people-topeople contact. Although on the regional scenario, both countries have been part of the East
Asian Summit and have addressed non-traditional security concerns, there is need to address
the differing policy perceptions and work collectively for promoting peace and greater trade.
There are three primary reasons for states to come together: to aggregate power, to solve
problems or to build community. If New Zealand and India were to come together for the
purpose of power aggregation, there would be three sources of shared threats in the future. The
first and most obvious threat would be China, though both countries would be least interested
in arriving at an arrangement aimed at ‗containing‘ China. The second would be the rise of
radical Islam in Indonesia and the threat it poses to that country. A third, convergence is likely
to emerge in the future from non-traditional, trans-border disruptive forces and issues
83
necessitating cooperation through multilateral for a bilateral engagement. Of the three, the
third issue has greater potential for convergence. (Sahni, 2007)
It should be stated that the relationship between the two countries is perfect example of
different set of policy options combining both economic and strategic interests dictating
bilateral ties. The subsequent globalisation and the changed policy stance from both sides saw
mutual admiration and understanding of each other‘s perspective. Apart from that there are
only three reasons for states to come together: to aggregate power, to solve problems or to build
community. (Panda & Jha, 2010). If New Zealand and India were to come together for power
aggregation purposes, there would be three sources of shared threat in the future. The first and
most obvious threat is China, but none of the two countries would be interested in any
balancing arrangement aimed at 'containing' China. The second is the rise of radical Islam in
Indonesia so much so that it threatens the democratic fabric of Indonesia and the subsequent
establishment of the 'caliphate 'in Indonesia and subsequently to Malaya archipelago. Thirdly
the convergence is likely to emerge in the future from the non-traditional, trans-border
disruptive forces and issues. In that case cooperation through multilateral forums and bilateral
engagement would be the benchmark for the engagement between the two countries. But it
should be kept in mind that of all the three, the third issue has seen the potential for
convergence more than the earlier two. Therefore we can say that the bilateral relationship
between India and New Zealand has a bright prospect which would benefit both in the long
run.
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******
85
4.
Role of Great Power in South Pacific Islands
Balaji Chandramohan
(Balaji Chandramohan is a Visiting Fellow with Future Directions International, a policy think tank based in
Perth. He alternatives his life between New Zealand and India.)
The essay discusses the role of big powers in the South Pacific. India, Australia, China, United States and
France are some of the Great Powers in the South Pacific Islands.
India’s role in the South Pacific Islands
India’s Great Power ambitions in the South Pacific Islands: Extension of New Delhi’s
Look East and Act East policy
As like any expanding Great Power which shows its ambitions to spread its diplomatic, military
and economic reach beyond its own region, India in an effort to strengthen its existing place in
the multi-lateral institutions such as the United Nations, is renewing it‘s Look East Policy by
both extending the range and scope of it by including the region of South Pacific Islands within
the policy.
The above fact was emphasized by the much sought out state visit of the Indian Prime Minister
Narendra Modi to Fiji in November 2014 after his visit to Australia. The visit attracted attention
world wide as this was considered as a significant step in India‘s expanding horizon in the geopolitical entity Indo-Pacific which of course includes the region of South Pacific Islands.
As India has cemented good relations with the two big players in the South Pacific namely
Australia and New Zealand, the impetus to take the New Delhi‘s reach to the Pacific Islands
countries was visible during Narendra Modi‘s visit to Fiji.
Subsequent to the Indian PM visit to Fiji and South Pacific Islands Forum meeting was held in
Jaipur this is seen as a soft power counter to the rising Chinese presence in the South Pacific
in general and Fiji in particular.
Further, one of the attractions for the Pacific Island countries (of) India is that, India happens
to be a democratic country. Many of these Pacific Island countries have benefited from the
Third Wave of Democracy which happened from the 1970's to the 1980's so they naturally have
a greater attraction towards India rather than towards China. And to an extent to having
others - some of the Western Powers - which have not in a way helped them in their cause to
address some of the issues such as climate change and so forth in the United Nations. So
therefore, that mutual attraction is quite understandable. The Prime Minister happens to have
styled himself as the one who's going to raise the issues of those Pacific Island countries to the
highest table, such as at the United Nations. In return the Pacific Island countries will vote for
India's formal membership for the United Nations Security Council. One of the prestige points
for India, is to have a position in the UNSC in a way that it can influence its relations with
other countries, say for example with China and Pakistan. That has been the basic reason why
Narendra Modi has used this Pacific Island Countries Forum to give a subtle message to the
other countries, especially (those) among its immediate neighbours, that India is actually ready
86
to look beyond them and not necessarily be swayed away by some of the smaller countries in
South Asia - say for example, Pakistan or Bangladesh (pulling) strings on India.
Though at present India-Fijian relations are limited to active diplomatic and cultural overtones,
the military dimension of the relationship can‘t be ignored especially the significance that is
given from the Indian side as this was the first state visit from India to Fiji after Indian Prime
Minister Indira Gandhi visited the island nation in 1981.
India’s Look East policy in the South Pacific Islands
India‘s strategic-military interest in the South Pacific islands is an extension of New Delhi‘s aim
to be a maritime power in the wider Indo-Pacific which can court island atoll countries for its
effective maritime power-projection all which is embedded in the Look East Policy. Further, it to
be an effective maritime power with overreaching presence in the Indo-Pacific region
Earlier, the expanding maritime presence in the Indo-Pacific has been included within the
ambit of the Indian government‘s Look East Policy in the South-East Asia such as Vietnam,
Philippines and Indonesia.
From India‘s point of view, it can easily amplify its diplomatic and strategic presence in the
South Pacific after the September 2014 Fijian elections which in fact have closed the gaps of
fissure in the Fijian society. Therefore, the Arc of Instability in Fiji is over for the foreseeable
future.
Second, Fiji as it occupies a strategic presence in the South Pacific Islands and as it connects
the Australasian continent to the Latin American countries, Indian establishment has
understood for its energy needs to be fulfilled it needs to expand its presence in the Global Sea
Lanes of Communications extending from the Indian Ocean till the South-East Pacific region
which includes both the South Pacific and countries in the Latin America which are energy
rich.2
The above ambitious thought could be achieved as countries which happen to have military
presence in the South Pacific such as the United States, Australia, New Zealand and France
will be happy to have the Indian military presence as an effective counter-weight to Beijing‘s
ever expanding military presence in the South Pacific.
Operationally, a greater Indian military presence in the South Pacific islands could include a
significant intelligence sharing among India and countries in the region including New Zealand,
Australia and France. Also, as with Fiji is reviewing its national security and defense policy
framework in 2015 which will include the coming out of the Defense White Paper, Indian
military establishment will also be keen in contributing to the outcome of the paper and so in
having greater military co-operation. That means perhaps there will be collaboration at Track
1.5 between India and Fiji.
Further, a greater military co-operation between India and Fiji comes at a time when the Fijian
military after the September 2014 elections is primarily moving towards a professional military
with civilian control over it. Therefore, Fijian military is expected to boost its combat
capabilities in co-operation with the Indian military forces which can boost Fiji military greater
co-operation to the United Nations Peace Keeping Missions.
87
India's other Asian competitor China is expanding its presence in the South Pacific through its
maritime, naval capabilities. India, too, has its own vision of expanding its naval presence.
India's Eastern Fleet has its operations through the Straits of Malacca but not still South
Pacific. For that to happen India should have co-operation with other maritime powers in the
region which include the United States, Australia and New Zealand or could urge any of the
countries in the South Pacific for example to Fiji to accommodate its military presence.
Whereas China‘s maritime strategy is based on the three island chain strategies by which
Beijing hopes to challenge the United States naval supremacy in the Asia-Pacific, India‘s
maritime strategy is based on expanding its Blue Water presence first in the Indian Ocean and
extending till South-West Pacific. What India would like to do is expand its maritime
capabilities or to have some sort of an understanding with countries including Fiji to have its
military presence in this region, maybe which includes having its military presence in one of
the islands of Fiji or in any of the South Pacific countries which would be comfortable with
such an idea.3
India‘s s expanding naval presence is in keeping with the view that there is a need for it to have
sea lanes of communication for its population. It is because of the fact that India feels
threatened by China's expanding presence in this Indo-Pacific region and for the fact that the
other powers in the region, the United States, has its military commitments in the other parts
of the world, and for the fact that Australia and some of the countries like Indonesia will not be
in a position to challenge China's expanding maritime profile. It seems obvious for India to
have its expanding maritime region in a way which will help both its economic, military and
diplomatic outreach in this region by choosing Fiji as one of their springboards for that and
because of the fact that the newly elected (Fiji) government is a democratic government and
India has helped that democratic transition to happen. So the fact that India has got a
Diaspora there India feels there is a chance for it to use that leverage for its expanding naval
presence or maritime presence in the South Pacific region.
Historic ties between India and South Pacific Islands
India‘s present strategic interest in the South Pacific islands should compensate for the lack of
it during much part of the 20th century. India‘s interest in the South Pacific islands region was
dismal for most part of the last century as Independent India failed to identify its geographic
and cultural overreach. Though India shows the characteristics of both continental and
maritime country Indian policy makers has concentrated more on its former as New Delhi has
to overstretch its diplomatic initiatives vis-à-vis Pakistan since Independence in 1947. But with
India‘s economy growing and with a place secured in the world affairs in the 21st century,
India should now start re- linking its historical maritime and cultural contacts politically
through ‗Cultural and Naval Diplomacy‘4
Historically, Fiji and India‘s relations date back to 1879 when Indian indentured laborers were
sent to Fiji to work on sugarcane plantations by the colonial British after subjugating the
islands as a colony in 1874.
Incidentally, the cultural ties between South Pacific and India goes back to age of trade link
between the Cholas kings in Tamil Nadu and the Polynesians as pointed out by famous Indian
Historian V R Ramachandra Dikshitar in the book ‗Origin and Spread of the Tamils‘ 5
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Independent India established its diplomatic presence in Fiji through a Commissioner in Suva
in 1948 before Fiji‘s independence. India was also a crucial ally for Fiji in its independence
struggle. India-Fiji ties strengthened with Fiji‘s first Prime Minister and late President, Ratu Sir
Kamisese Mara‘s visit to India in 1971 after Fiji got independence in 1970.
Fiji benefited out of the third waves of democracy in 1970 and so unlike the first waves to
which the western nations benefited lacks time and so has the interference of outside power
which hinders building effective nation-state. India and Fiji relations at present can‘t be
understood without looking out Fiji‘s events nearly in the last 30 years. In April 1987, an
alliance led by Dr. Timoci Bavadra, a native Fijian backed by the Indo-Fijian community, won
the general election. Less than a month later, Fiji‘s first coup took place with Lieutenant
Colonel Sitiveni Rabuka removing Prime Minister Bavadra from office. The reason for the 1987
coups was clearly to keep Indo-Fijians from having political power. India condemned the 1987
coup, passed sanctions involving trade and severed diplomatic ties with Fiji. Further, India
used its influence in the Commonwealth of Nations and the United Nations to marginalize Fiji.
Meanwhile, 12,000 Indo-Fijians had fled Fiji which in turn resulted in ‗brain drain‘, the effects
of which are being felt still in Fiji.
Though Indian government severed ties, it didn‘t lose interest in the Fijian affairs. India
welcomed the finalized 1997 Fiji constitutional reforms which allowed better treatment of IndoFijians. Some of the observations of the constitutional reform committee such seats set aside
for each ethnic group went along nicely with the India.
Fiji welcomed the new millennium with much rejoice as Mahendra Chaudhry the newly elected
PM after the May 1999 elections was steering Fiji ahead till George Speight, a failed business
man stormed the Fiji parliament on May 19th 2000 and staged a civilian coup. Frank
Bainimarama, the present Fiji PM and then Head of the Interim Military Government staged a
‗counter-coup‘ to establish a functioning state in Fiji. The Indian government condemned the
coup and called for a return to democracy. India was also dismayed at the attacks against
Indo-Fijians that occurred in the weeks following the coup.
When Frank Bainimarama staged another coup in December 2006 ousting then Fiji PM Prime
Minister Laisenia Qarase, India didn‘t impose sanctions against Fiji, as the 2006 coup didn‘t
target Indo-Fijian community. It‘s interesting since a year before Laisenia Qarase was on a
state visit to India. Further, despite a military coup, India didn‘t suspend the functioning of the
formal dialogue. India also reached out to Fiji through a join mechanism called the Fiji – India
Foreign Office Consultations (FOC) established in 2005 6.
India had understood the need to engage with Fiji though financial aid, military assistance,
and Information Technology which in turn will make the Fijian government to respect the
rights of its Indo-Fijian citizens. Fiji too on its part decided to pursue the ―Look North‖ policy
for the last decade in an effort to boost its local economy and to get legitimate place in the
international arena after being sidelined for nearly a decade by regional powers such as
Australia and New Zealand.7
In fact, the above conciliatory methods by the Indian government resulted in a positive good
will in Fiji which had to face hard years financially since the coup of 2006. In reflection of
understanding the good will shown by India and the active role played by the Indo-Fijians, the
new Constitution of Fiji which came out in 2013 rightly recognizing the descendants of the
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indentured laborers from British India and the Pacific Islands, their culture, customs,
traditions and language; and recognizing the descendants of the settlers and immigrants to
Fiji, their culture, customs, traditions and language, declare that all are Fijians united by
common and equal citizenry as a part of its permeable. The clause helped India to both engage
actively with the Fiji government and so to help its long lost Diaspora in the island nation.
Thus, India will engage diplomatically with the Fijian government and so will understand the
sensitivity of its Diaspora and the relationship has strengthened after the September 2014 Fiji
elections and the Indian Prime Minister‘s state visit in November.
India’s Soft Power in the South Pacific Islands
India‘s presence in the South Pacific Islands through its Look East Policy is both a variation of
its hard and soft power. If the hard power impetus was provided by the geo-strategic
importance of South Pacific islands, the soft power initiative is a supplanting of projecting its
compliance image as a Great Power.
The Soft Power is image is not limited to both economic investment and diplomatic foot-print
but the scope was increased to have skill developmental initiative to be done by the Indian side
in the South Pacific Islands.
At present, India has facilitated scholarship each year for 25 students from Fiji to take up
undergraduate and postgraduate studies in India and 18 civil servants from Fiji travel to India
to further their studies in various universities and institutes under the Indian Technical and
Economic Cooperation (ITEC).8
Further, the Indian government decided to give Visa on Arrival for the residents and citizens of
the countries in the South Pacific Islands and also to train them at the Foreign Service
Institute in New Delhi.
India‘s Look East policy has as of yet not fully extended through the Malaccan Straits, in the
next five years it is envisioned that India‘s eastern outreach will expand diplomatically in the
South Pacific, particularly in Australia, Fiji, and New Zealand. Each of these countries has
important political and cultural ties with India. Fiji‘s domestic demographic contains a
population in which nearly 40 percent are identified as ―persons of Indian origin.‖ For their
part, Australia and New Zealand have sizable and long-established Indian expatriate
communities. These communities wield significant economic and political influence in each
country and provide an open source conduit for information exchanges between the
Southwestern Pacific neighbors and the Indian homeland.
In contrast to perceptions of the Chinese diaspora in the South Pacific, the Indian expatriate
community is diverse in its loyalties and not as unified in its support for the Indian state or
any particular political party. It is therefore not considered to be a source of espionage or
influence-peddling in the measure that its Chinese counterparts are, however mistaken the
latter belief may be. Whatever the case, the Indian expatriate presence in the South Pacific has
the potential to facilitate Indian soft power projection in the Southwestern Pacific, particularly
given the post-colonial cultural and ethnic ties that bind India to Fiji and the Antipodes.
Diplomatically, India has shown interest in the South Pacific affairs by participating in the
Pacific Islands Forum (PIF) annually from 2002. India also has begun to provide foreign aid to
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the islands in the South Pacific by offering soft loans for development projects. Along with aid
programs from traditional donor states such as the US, Australia and New Zealand as well as
those of Western based charities and non-governmental agencies; this is seen as a soft power
counter to the rising Chinese presence in the South Pacific.
On the other hand, China, India‘s competitor and rival in the Asia-Pacific region, has been
quite active in the South Pacific. After Fiji was expelled from the Pacific Islands Forum, China
encouraged it to be an active participant in the Melanesian Spearhead Group and even
provided funds for the establishment of its secretariat.
At present, India has no military presence in the Pacific, but this may change in the next five
years as India starts increasing the Eastern Command‘s operational capabilities. Given its
expanding commercial engagement with Southeast Asia and Western pacific, it would seem like
a natural evolution for its navy to participate in maritime patrols along the sea lanes involved.
For that to happen however, it will have to secure the support of Australia, New Zealand, the
US and the other states that comprise the strategic arc that acts as a containment mechanism
on Chinese military ambitions in the region.
Secondly, India should push itself forward on the strategic and politico-military levels, if it has
to play a major role in international affairs. Narendra Modi has made several references to this
issue at meetings with leaders in various countries including with the countries in the South
Pacific islands.
The Agreements that were signed with Australia during his visit to that country in November
2014 is a case in point. Fiji is also getting closer as a beneficiary of $70 million loan and $5
million grant announced during Modi‘s visit on November 19 last year.
Further, a Special Adaptation Fund of $1 million to provide technical assistance and training
for capacity building to the Cook Islands, Tonga, Tuvalu, Nauru, Kiribati, Vanuatu, Solomon
Islands, Samoa, Niue, Palau, Micronesia, Marshall Islands, Fiji and Papua New Guinea was
also announced. A hike in Grant-in-Aid from $125,000 to $200,000 annually to each island for
community projects selected by them and a trade office of the Pacific Island nations in New
Delhi was also launched. 3The Indian Prime Minister proposed the Forum for India-Pacific
Islands Cooperation (FIPIC) be held on a regular basis and that the next meeting could be held
in 2015 in a coastal location in India.
The highlight of New Delhi‘s vigorous outreach of diplomacy will be displayed at the proposed
first India-Pacific Islands Cooperation Meeting in India this year which has been scheduled as
an annual summit9.
However, the Indian presence in all of the South Pacific Islands is some warranted. The Indian
Diplomatic Missions are present only in two countries of the South Pacific Islands in Fiji and
Papua New Guinea apart from New Zealand and Australia in the entire South Pacific. A better
Indian diplomatic presence should also include more presence in Cook Islands and Samoa
where as significant as Fiji in geo-strategic orientation.
In conclusion,
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Finally, as a graduating power in the Asia Pacific, India‘s interests in the South Pacific Islands
states are manifold. It can be safely said that the Pacific Islands Nations are India‘s Far Flank
and the interest has been included in India‘s Extended Look East Policy.
The above policy and the fact that India‘s Graduation as an external power in the Pacific
Islands will be welcomed by the regional powers such as Australia and New Zealand which
works in India‘s favor.
China’s role in the South Pacific
China‘s maritime strategy involves having ―three island chain‖ approach enunciated by Admiral
Liu Huaqing in 1988. By 2010 China seeks to establish a permanent blue water presence in
the first island "chain" arrayed on a Japan-Taiwan-Philippines axis, to include the South China
Sea. By 2025 it proposes to establish a permanent blue water presence in the second island
"chain" stretching from the Aleutians through the Mariana Islands to the East Coast of Papua
New Guinea, and which includes the Malaccan Strait. By 2050 the reach will extend to the
third island "chain" starting in the Aleutians and ending in Antarctica, to include waters
offshore of New Zealand and Australia.
China‘s blue water capabilities are not the main focus for China‘s naval developments. As the
People Liberation Army (PLA) Navy‘s Indian Ocean deployments and increasing naval forays
into the Pacific demonstrate, China intends to be able to operate more frequently beyond the
East Asian littoral environment, which is characterized by a number of narrow seas stretching
north to south adjacent to the Asian continent, ‗semi-enclosed‘ by chains of islands
The newly coined Indo-Pacific region overlaps the first and the second island chain. Countries
that have been wary of this island chain strategy are the United States, Australia, Philippines,
Indonesia and Vietnam.
Even so, the expansion of Chinese influence in the South Pacific provides a potential basis for
the eventual projection of military power especially as an external actor. The South Pacific
region which gained geo-political importance in the 20th century following two World Wars
might witness significance with the rise of China as a maritime power. China understands that
the region surrounding the South Pacific has rich resources in energy for its population and in
that capacity has extended good will to the countries in the South Pacific such as building
stadiums, courthouses, parliaments and resorts, infrastructural projects that modernize
deepwater harbors, airports and land transport corridors in places like Fiji, Tonga, Samoa, the
Solomons, Vanuatu, Papua New Guinea and the Cook Islands have possible dual purpose.
The extension of good will can serve purpose on military as well in the years to come
culminating in Beijing‘s military power projections and added to the fact that the absence of a
countervailing strong military presence in South Pacific. It‘s to be noted that South Pacific geopolitical comes as it‘s forms a major sea lines of communication between the Western
Hemisphere and Australasia which is not fully patrolled by countries such as France,
Australia, New Zealand, United States, any countries in the South Pacific or to the fact that
any of the countries from the Latin America has got enough capacity to project its power in the
South Pacific.
As a result, China has filled the void in the South Pacific geostrategic environment with an eye
towards expanding its maritime power enabling its Great Power ambition
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France in the South Pacific
The French armed forces is an expeditionary forces, those that are organized and trained to
fight in the South Pacific. That includes a logistics and supply capability that permits ongoing
off-shore combat operations. France home ports its Pacific Fleet in Papeete, French Polynesia
and has sizable land-based garrisons there and in New Caledonia. Although these garrisons are
designed to reinforce French sovereignty over its territorial possessions and thus have internal
security functions within them, they constitute overseas deployments for the soldiers involved
and are combat-ready (local and mainlander gendarmes do domestic policing). French military
forces in the South Pacific are not as integrated into US strategic planning as are Australian
forces, but nevertheless exercise and share intelligence with their Antipodean and US
counterpart.
The one remaining Western power that has retained its sovereign presence in the South Pacific
region is France. It is present in its three entities: New Caledonia, French Polynesia, and Wallis
and Futuna. It‘s also true that France faces increased pressure from these island countries for
self-determination movements especially in the New Caledonia where there is increased
pressure from the Canak independence movements. Despite that France is trying it‘s best to
keep it‘s presence in the South Pacific 10.
Australia in the South Pacific Islands
The South Pacific is viewed by Australia as its ‗Near Abroad‘ and, as such, part of Australia‘s
natural sphere of influence.
It is an area of key strategic importance to Australia, which has a long standing concern over
what has been termed ‗the arc of instability‘; the region to the north of Australia, from the
South West Pacific through archipelagic South East Asia.
While there have been some improvements over recent decades, such as in Aceh in Indonesia,
instability and the potential for fragile states to fail continues in places such as East Timor, the
Indonesian provinces of Papua and West Papua, Bougainville in Papua New Guinea, and the
Solomon Islands.
The Pacific islands are relatively sparsely populated, with isolated coastlines and limited
policing. Their geographic position between Asia and South America potentially makes them
attractive places to tranship illegal drugs, with and money flowing in both directions. The UN
office on drugs and crime has reported that fishing vessels, with their legitimate presence at
sea and distribution networks, but often opaque ownership and lack of supervision, have been
key enablers in the smuggling of drugs, guns and people.
Australia‘s security interests align very closely with the Pacific island nations on transnational
crime, with Australia putting real resources on the ground and seeking to strengthen regional
cooperation and structures. From a Pacific island viewpoint, some of Australia‘s responses and
initiatives have seemed heavy handed, with Australia rather too keen on arresting Pacific island
government members and officials, often on charges relating to corruption. These incidents
immediately hit the headlines and the public, as well as private rhetoric on both sides
inevitably strains inter-governmental relations.
93
Despite the above constrains, it‘s true that Australia views the security situation and the
strategic challenge posed by China seriously and will co-operate especially with the United
State‘s Seventh Fleet in an effort to thwart Beijing‘s increased maritime ambition.
United States in the South Pacific Islands
United States Pivot and its impact on the South Pacific
Although the South Pacific formed an important part of the United States‘ strategic denial
policy during the Cold War, the twenty years or so after its end saw the U.S. withdraw a
number of its resources from the region , the Obama Administration has again strengthened its
ties with the South Pacific, firstly through engaging with the major regional powers – Australia
and New Zealand – and secondly, through engaging with Pacific Island countries. In August
2012, Hillary Clinton became the first U.S. Secretary of State to attend the Pacific Islands
Forum‘s annual meeting; a symbolic move that suggested the U.S. considers the Forum to be
an important institution, while also representing a wider commitment to the region. Here,
Clinton addressed concerns that the South Pacific was being ignored as part of the
rebalancing, stating that the United States recognised the region was continuing to become
more important globally (Clinton, 2012). Additionally, the U.S. has expanded its diplomatic
posts in the region, for example it opened the region‘s largest embassy in Fiji in 2011 and has
also expanded its aid. In October 2011 it opened a new USAID office in Papua New Guinea, the
first since its Fiji office closed in 1994.
So, what has prompted the United States to return to the region? The most prominent
explanation is that it is a consequence of China‘s increased presence in the region.
Furthermore, the United States‘ rebalancing towards the Asia-Pacific is based on a number of
pillars which includes military, political, trade and investment, development and our values‖
The China-threat discourse generally over-emphasises the military and security elements of the
rebalancing. For instance, the United States‘ rebalancing can be seen as influenced by an
attempt to engage with a region where economic growth will happen. Proof that the U.S. wants
to remain economically engaged comes through its enthusiastic support for the Trans Pacific
Partnership , which, if successful, would facilitate U.S. access to growing Asian markets much
freely and create a common interest between Asia-Pacific powers Although China is currently
not a party to the TPP it has been welcome to join the negotiations.
On a broader level, there is economic interdependence between the United States and China on
a level not seen during the Cold War between the United States and the Soviet Union. This is
because of China‘s integration with the global economy, and consequent of the globalisation of
supply chains. For example, there are strong connections between the U.S. and Chinese
economies, with this economic interdependence helping to underpin U.S. economic and
national security.
In conclusion,
With the Great Powers such as India, China, United States, Australia and France vying for
influence in the Energy rich South Pacific countries, the chances for a Great Game in the
region is immense. Further, it‘s also true that India, Australia, France and the United States
will co-operate to thwart any active Chinese influence in the region.
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End Notes :
1) Ramesh Thakur, India and Overseas Indians: The case of Fiji Asian Survey
Vol. 25, No. 3 (Mar., 1985), pp. 356-370 Published by: University of California Press
2) Paul G Buchanan Could Fiji emulate Singapore? 36th Parallel Assessment September 26, 2014
http://36th-parallel.com/2014/09/26/could-fiji-emulate-singapore/
3) Interview of Balaji Chandramohan with Radio New Zealand dated 11th November 2014
http://www.radionz.co.nz/international/programmes/datelinepacific/audio/20156830/indian-pm%27sfiji-trip-aimed-at-countering-china-says-expert
4) Balaji Chandramohan ―India should lift its game with Fiji ― Indian Newslink January 15,
http://www.indiannewslink.co.nz/india-should-lift-its-game-with-fiji/
5) V R Ramachandra Dishit Origin and Spread of Tamils Adyar Library 2007
http://www.amazon.com/Origin-Spread-Tamils-Ramachandra-Dikshitar/dp/1406742597
6) Fogleman, Julia, "Fiji‘s Relationship with India: The Answer to or the Source of Fiji‘s Problems?" (2008).
Independent Study Project (ISP) Collection. Paper 581.
http://digitalcollections.sit.edu/isp_collection/581
7) Prasad, Kailash K. and Mullen, Rani D. "India – Pacific Islands Brief," India Development Cooperation
Research (IDCR) Project, Bilateral Brief no. 7, 23rd April, 2014 (last updated 23rd April, 2014). Available
at http://idcr.cprindia.org/blog/india-pacific-islands-brief
http://idcr.cprindia.org/blog/india-pacific-islands-brief
8) Dr.Pankaj Jha India and South Pacific - Multilateral Engagement, Bilateral Ties and Diasporic
Connections-Asia New Zealand Foundation
http://asianz.org.nz/sites/asianz.org.nz/files/files/Jha%20-%20India%20and%20South%20Pacific%20%20Multilateral%20Engagement,%20Bilateral%20ties%20and%20Diasporic%20Connections%20%20FORMAT.pdf
9) Prime Minister‘s Office India ―Text of PM‘s remarks at Pacific Island Leaders meeting‖ November
19,2014
http://pmindia.gov.in/en/news_updates/text-of-prime-ministers-remarks-at-pacific-island-leadersmeeting/
10) Status of Forces Report Part-2 – 36th Parallel Assessment
http://36th-parallel.com/2012/05/25/status-of-forces-report-part-2-military*****
95
5.
Indo-New Zealand evolving strategic co-operation
Balaji Chandramohan
(Balaji Chandramohan is a Visiting Fellow with Future Directions International, a policy think tank based
in Perth. He alternatives his life between New Zealand and India.)
India and New Zealand both having vibrant democracies and having shared Commonwealth
Heritage will move into the decades of the 21st century with a shared interest in securing the
Global Commons such as Sea Lanes of Communications secured and vital for their expanding
economies.
In many ways, India and New Zealand have moved on from the decades of the Cold War when
both the countries pursued divergent strategic paths with India opting for the Non-alignment
group of nations and New Zealand deciding to take Washington‘s strategic umbrella.
The above arrangement has changed with both India and New Zealand deciding to closely
aligning with the United States for an outright partnership if not an explicit alliance 1.
Such an arrangement will develop robustly with the Indian government under its Prime
Minister Narendra Modi actively involving himself personally to develop the Indian foreign
policy posture.
India’s Power Projection till New Zealand
As being an expanding maritime effective, Indian maritime strategy envisages expanding the
strategic reach till the Australian isthmus.
As part of India‘s power projection efforts in the Indo-Pacific and in the greater Asia-Pacific,
New Delhi has decided to strengthen its Eastern Fleet in Vishakhapatnam and the tricommand service in the Andaman and Nicobar Islands. In the future, South-East Asian
countries such as Singapore and Malaysia will increasingly look to India, as well as the United
States, for security.
This coincides with New Zealand‘s interests in South-East Asia‘s Indian Ocean littoral and its
long-standing commitments under the Five Power Defence Agreement. India‘s increased power
projection in the South-West Pacific region could benefit New Zealand‘s strategic interests
there, which tend to parallel those of Australia.
For instance, both India and Indonesia have decided to enhance their counter-terrorism
mechanisms and maritime strategic co-operation, the latter primarily with China in mind. On
the other hand, the lingering differences between Indonesia and Australia over issues related to
the province of West Papua could be resolved through Indian back-channel negotiations with
Indonesia. That would be welcomed by Indonesia and Australia, as well as the South-East
Asian countries and New Zealand.
Of additional relevance is the United States‘ decision to augment its base in Guam, a
brainchild of the George W. Bush Administration. It was a vision of containing China in the
Indo-Pacific through the United States-Japan Realignment Roadmap of 2006 which included
the relocation of US personnel to Guam from Okinawa. As a part of those changes, the Guam
base is expected to host an Air and Missile Defence Task Force of over 10,500 US Marines by
2017. Further options include a second Amphibious Ready Group to transport a Marine
Expeditionary Unit.
Looking to Australia, the above changes represent a paradigm shift in US strategic thinking
under the Obama Administration. President Nixon‘s 1971 ―Guam Doctrine‖ influenced
Australian strategic thinking and in a way gave Canberra the ―strategic autonomy‖ to deal with
adverse situations unless threatened by a nuclear power. The Guam Doctrine assumed more
significance when the US pulled its troops out of Vietnam, which meant that every Australian
Defence White Paper since 1976 has been a part of the Guam Doctrine. The case of Australia
assumes significance in relation to the new Guam Doctrine as, other than India and Japan, no
96
other country has assumed the tag of an aspiring power willing to check China‘s spheres of
influence in the Indo-Pacific. It is precisely the reason why the US has decided to court
Australia.
Both India and Australia have welcomed the changed posture of the United States, which
means, logically, that New Zealand too will be in a better position to aid its traditional ally,
Australia.
Paradigm Shift
Close followers of the Indo-New Zealand relations aren‘t surprised by the paradigm shift in the
relations in the past couple of years. Also, India had been following the Naval Diplomacy of late
in the South-East Asia extending up to South Pacific as a part of its ―Look East‖ policy and it‘s
understood New Delhi with an improving economy wants extend this policy till New Zealand.
The shift in the Indo-New Zealand relations has occurred because at present both right-centre
government in India and in New Zealand had shed the ideological trappings and are conducting
their bilateral relations not only based on shared values of democracy but with real politick and
sound understanding of the present geo-political change. Earlier, India‘s ideological trappings
which included Non-alignment and its ambiguity in the Nuclear Disarmament stance never
went well in the Beehive whether it was occupied by the Labour Party or the National Party.
On the other hand, both India and New Zealand has understood that as a part of their foreign
policy endeavours, it‘s important to connect with the shared Commonwealth History. It‘s no
more a secret that with India‘s emergence as a Great Power in the Asia Pacific, India could colead the Commonwealth Countries and assume leadership role among the English-speaking
democracies2.
On that note, it‘s a welcome sign that India has understood the importance of New Zealand and
its clout in the Pacific community. On the other hand, New Zealand had understood the
importance of India as a major power in the Asia-Pacific region and especially in the 21st
century which in many ways happens to be an Asian century. The geo-political shift which has
occurred in the first decade of the 21st century with the emergence of China as a major power
is noticed by strategic experts both in India and New Zealand.
India has explicitly state that it‘s not in the mood of forming an alliance with democratic
nations rallied against China. Neither New Zealand can afford to form an alliance explicitly
against Beijing considering that it had signed the Free-Trade Agreement with China in April
2008. But, a diplomatic initiative between democratic nations and countries such as India and
New Zealand which has shared values and common interests in the Asia-Pacific region has to
come closer. Further, India and New Zealand relations have specific areas of interest to both
the countries and there are areas in which both the countries can work effectively for better
bilateral ties.
However, closer strategic relations between India and New Zealand should also include
initiatives to be taken at the Track 1.5 level from the present Track 2 initiatives and this will
seal closer strategic arc between the two countries.
India’s membership in the Nuclear Suppliers Groups
The 46-member nation Nuclear Suppliers Group which was incidentally formed after India‘s
first nuclear test in 1974 is a multi-national body which checks upon the nuclear nonproliferation. New Zealand with its strong anti-nuclear stance is a member of the NSG and it‘s
influential. India after the Indo-US civil nuclear deal which made India a non-signatory of the
Nuclear Non-Proliferation Treaty to get access to nuclear technology for civilian purposes from
the US is viewing for a membership in the NSG. It‘s true that the non-signatories of the NPT
won‘t be able to get into the NSG easily and there has no previous occasion on which it has
happened, but India for effective maximization of the nuclear deal would like to get a
membership in the NSG for which it requires member-nations to support it and would urge
New Zealand through back-channels for it. Further, in the June 24, 2010 meeting of the NSG
members in the Christchurch, China came out with a proposal for a civil nuclear deal with
97
Pakistan on a similar note like the Indo-US nuclear deal which didn‘t go well with the
establishment in New Delhi5. To scuttle any such moves on the part of Pakistan and China,
India would wish to be a member in the NSG. On that note, New Zealand also expressed its
displeasure on the proposed China-Pakistan civil nuclear deal.
On the issue of Nuclear Non-Proliferation and having effective relations with India in strategic
aspect, Wellington under a National government is more comfortable to deal with than a leftcentre government in the Labour party. The shifting political mood between New Delhi and
Wellington has a lot with that which was buttressed in the John Key‘s visit to India and may
witness more during Narendra Modi‘s state visit to New Zealand.
Free Trade Agreement
As the political climate has reached a stage of maturity and understanding between India and
New Zealand, its high-time in the interest of both these countries to seal the much awaited
Indo-New Zealand Free Trade Agreement comes through.
Objectively, its Indian establishment‘s slow-approach to FTA with New Zealand has in many
ways dragged the issue. The Indian establishment will need to understand that there‘s a
competition with China on trade and Beijing is on a rampant path in having trade agreements
with countries around the world.
India and New Zealand decided to undertake a joint study probing the implications of the FTA
in 2007. The aim of the study which was carried out by Joint Study Group of officials from
both India and New Zealand reviewed the bilateral relationship and identified the economic
benefits of a FTA negotiation. The recommendations had been approved by both India and New
Zealand government and first round of FTA negotiation started in April 2010.
Already many rounds of negotiations have already been completed there has been no concrete
steps towards maturation of the agreement. Indo-New Zealand FTA‘s core area include goods,
rules of origin, customs procedures and cooperation, trade remedies, cross border trade in
services, movement of natural persons, investment, and technical barriers to trade are now on
the table. Discussions also covered government procurement, competition policy, intellectual
property, trade and environment, and trade and labour.
In the FTA negotiations, New Zealand has been bargaining hard on a broad based and even
handed agreement involving goods and services and technology. The reason is obvious as New
Zealand‘s tariff rates are lower than India. New Zealand‘s average tariff rate imposed on a most
favoured nation is 2.2 per cent which includes 1.4 per cent for agricultural products. On the
other hand, the corresponding overall tariff rates for India are 13 per cent which includes 32
per cent for agricultural products.
Trade in services is another area where both countries could find complementarities. While
India is strong in Information and Communication Technology (ICT)-enabled and professional
services (76 per cent in 2009), New Zealand‘s service exports are concentrated in the areas of
tourism, education and recreation. A broader FTA could facilitate partnership between Indian
companies and New Zealand organisations, involving liberalisation of ICT-enabled services.
Similarly, New Zealand‘s potential in the education sector can help overcome the major
constraints in India‘s progress towards a knowledge-based economy. New Zealand already has
been attracting a large number of Indian students (about 9,000) and they in turn contribute
around $72 million to its economy.
Indian Diaspora
Indian Diaspora in New Zealand accounts for about 2 per cent of the total population and has
a greater share of about 5 per cent in New Zealand‘s economy. The Indian Diaspora is actively
involved in promoting better relations between India and New Zealand 3
But the Indian government should have a comprehensive policy towards Diaspora which
should be aimed having increased exchanges of students of Indian origin to study and visit
India. This also means facilitating scholarships program to the student of Indian origin in New
98
Zealand. As a part of this program, it should include having Indo-Fijians settled in New
Zealand to be beneficiaries of the scholarship program which in other ways means there is a
three-way interaction between India, New Zealand and Fiji.
Also, the Indian Diaspora in New Zealand would be pleased if India could open another cultural
centre in Auckland besides having the present one in Wellington.
In conclusion,
India and New Zealand have a lot in common with the both countries inheriting a democratic
system based on the Westminster parliamentary system of government, members of
Commonwealth, shared interest in the overall security of the Asia-Pacific region and a keen
interest in having an international system with a rule of law. These shared interests should
serve as glue for the relations besides the challenges that can occur and the areas that they
can work in the 21st century.
For its part, after the end of the Cold War, India shed its ideological trappings and now seeks to
conduct its bilateral relations not only on shared values of democracy, but also to incorporate
notions of realpolitik and a sound understanding of the present geo-political changes. India‘s
previous position of non-alignment and its ambiguous stance on nuclear disarmament never
sat comfortably in Wellington.
On the other hand, both India and New Zealand have understood the value of connecting with
a shared Commonwealth history as a part of their foreign policy endeavours. It is no longer a
secret that, with its emergence as a great power in the Indo-Pacific, India could co-lead the
Commonwealth countries and even come to assume a leadership role among the Englishspeaking democracies.
New Zealand, like India and Australia, has understood the changing strategic outlook in the
Indo-Pacific. China‘s emergence as a major power was reflected in the Defence White Paper
released in November 2010. Though the NZ White Paper did not explicitly state the threat
posed by China, unlike the 2009 Australian version, it nevertheless called for better cooperation among democratic countries in the Asia-Pacific region and clearly noticed India‘s rise
in the region.
The White Paper also called for increased strategic relations with the United States. The
Wellington Declaration of November 2010 and the June 2012 Washington Declaration were
both part of that increase. As the US seeks to maintain its influence in the Indo-Pacific, it has
looked to countries such as India, Vietnam, Indonesia, Australia and New Zealand. The
warming of US-New Zealand defence relations, which has escalated rapidly over the last few
years, confirms the importance to Washington of working more closely with likeminded
countries in the wider region.
New Zealand will come out with its White Paper on Defence in the year 2016 with definite
responses to it‘s strategic priorities in the Asia-Pacific and India too will find it‘s mention in
that paper and the kind of strategic relations that both the countries are to develop in the years
to come.
However, the challenge for India and New Zealand in forming an effective strategic relationship
lies in finding a consensus within their domestic constituencies for greater strategic
relationships with the United States in the years to come4.
NOTES
1) New Zealand announces new Initiatives for India, Indian Newslink, 29 June 2011
2) Beyond Britain, Why India Should Lead the Commonwealth, Indian express, 27 November 2009
99
3) Dr. Sekhar Bandyopadhyay, ‗India and New Zealand; A sixty year roller coaster‘ New Zealand
International Review Volume XXXII, No.4 July-August 2007, pp-10—14
4 New Delhi Looks South-East India-New Zealand relations in evolving into Indo-Pacific partnership –
Future Directions International
http://www.futuredirections.org.au/publications/indian-ocean/734-new-delhi-looks-south-east-indianew-zealand-relationship-evolving-into-indo-pacific-strategic-partnership.html#sthash.9XZGvzGy.dpuf
*****
100
6.
Bilateral Trade between New Zealand and India
: Patterns and Prospects
Dr. Sayeeda Bano
Department of Economics
Waikato Management School
The University of Waikato
Hamilton,New Zealand
[email protected]
&
Dr. Frank Scrimgeour
Co-author
Department of Economics
Waikato Management School
Hamilton,New Zealand
[email protected]
Abstract
This study examines bilateral trade between New Zealand and India. It presents an analysis of primary
and manufactured products export flows from New Zealand to India and from India to New Zealand. It
reports the responsiveness of manufacturing exports and agricultural exports volumes to GDP of the two
economies, world income, the exchange rate and FDI. In addition, we test hypotheses drawn from trade
theory to identify the key determinants of agricultural and manufactured exports. Our findings show that
country‘s population, GDP, GDP per capita and exchange rate are important causal factors to both New
Zealand‘s and India‘s agricultural and manufacturing export. These factors indicate positive effects on
both New Zealand and India trade with varying degrees of statistical significance.
This study discusses related policy issues in the context of ongoing attempts to foster trade and
investment relations between New Zealand and India especially those initiatives consistent with an
ongoing Commercial Alliance in Agribusiness a joint initiative by the governments of India and the New
Zealand and an ongoing free trade agreement.
Key words: International trade, agriculture, manufactured exports, agribusiness, FDI, FTA
JEL: F01, F02, F10, F13, F14, Q1
Acknowledgments: This paper is an extension of Bano (1986) (NZIER), Bano and Scrimgeour
(2015), International Trade and Finance Conference paper, held in Sarasota, Florida, May
2015,We acknowledge the support of the Department of Economics and Waikato Management
School. Any errors and omissions are our own.
_______
Introduction
The Indian economy is approximately 11 times the size of the New Zealand economy. The World
Bank reports the Indian GDP at US$1,861billion in 2013 compared to the NZ GDP at US$188
billion. Despite the size difference, the New Zealand (NZ) Government is oneof many seeking
greater commercial engagement with India. To that end in 2011 it established a ―NZ Inc. India
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strategy‖ with six goals relating to merchandise exports, services trade, improving the bilateral
investment framework, attracting and retaining skilled immigrants, and engaging more deeply
with India on regional and global issues. The strategy is focused around six sectors: food,
beverages and agri-technology; high value manufacturing and technologies (ICT and health);
construction and interiors; high value services in agriculture, forestry, infrastructure and
aviation; tourism; and education.
One aspect of this engagement is New Zealand and India currently seeking to negotiate a free
trade agreement but negotiations are proceeding slowly. The question arises as to what extent
there is potential for an increase in trade between the two nations. Countries have their areas
of comparative advantage but dynamic comparative advantage change over time in response to
production and consumption technologies, changes in incomes and changes in government
policies. Predicting the growth in trade on the basis of trade agreements is notoriously difficult.
This is particularly challenging in the context of New Zealand and India where one is a large
economy and one is small; one has a relatively high per capita income and one has a low per
capita income; one has exports dominated by agriculture and one has exports dominated by
manufactured goods. Further, the global increase in the trade of services is important. Despite
the differences, there are commonalities between the two countries that facilitate trade. They
both have British Commonwealth connections and English is the common language of trade.
Further, there are strong cultural linkages associated with cricket, the Himalayas, Sir Edmund
Hilary and related themes.
The potential for India-New Zealand trade is a matter of contention given the growth that has
occurred in New Zealand-China trade. Bano (2014), (Scrimgeour, 2014) (and the potential
impact of both countries trading efforts being focused elsewhere given the progress made with
the Trans Pacific Partnership and New Zealand commencing trade negotiations with the
European Union). India was ranked as the 16th most important destination for NZ export goods
in 2014 (12th in 2013) and the 9th most important destination for service exports in both 2013
and 2014. Similarly for imports: India was ranked as 18 th source of import goods for NZ in both
2013 and 2014 and the 16th more important source or service imports in 2014 (18th in 2013).
New Zealand imports from South Asia and exports to South Asia have increased in each of the
last 12 years. In the year ending June 2015, NZ exports to South Asia were NZ$1,105m and
imports from South Asia were NZ$732m or 2.83 times what they were in 2000. This is
equivalent to consistent annual growth of 7.2 percent per year. Given that both countries have
growing economies and increasing interconnections it would appear sustained growth could be
realized.
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This paper makes five contributions. It reviews both New Zealand and Indian trade; it reviews
bilateral trade growth during the period 1988 to 2014 by export category; it examines the
determinants of exports for different sectors and it considers the development of trade in
services and in foreign direct investment (FDI). In addition, this study highlights the
importance for future trade prospects. The results of this analysis provides evidence to be used
in determining trade prospects and policy between the economies.
1.
New Zealand Trade
According to Statistics New Zealand (2015), trade in goods constituted most of the top 30
categories of New Zealand‘s total trade. For example, exports of milk powder, butter and cheese
represented the largest proportion at 18percent in 2013 and 23 percent in 2014 in New
Zealand‘s total exports. The total amount of exports in this category amounted to nearly NZ$16
billion in 2014. The exports of meat and edible offal, logs, wood and fruit together contributed
more than 15 percent (NZ$10 billion) to New Zealand‘s total exports in goods. Evidence suggest
that the exports of milk powder, butter and cheese, which increased by more than NZ$4 billion
from 2013 to 2014.
In addition to trade in goods, trade in services has also experienced favorable growth. For
example, the export of business and other personal travel reached NZ$6 billion in 2013, and
increased to NZ$7 billion in 2014. It increased significantly by NZ$1 billion and accounted for
more than 10 percent of New Zealand‘s total exports in services. Also, exports of other services,
such as education, travel and air transport, both amounted to more than NZ$3 billion in 2014.
The top 30 categories of New Zealand total imports was NZ$54 billion in 2013, and increased to
NZ$57 billion in 2014. Imports of petroleum represented the largest proportion of total imports,
13 percent in 2013 and 12 percent in 2014. Although the share of this category decreased
slightly from 2013 to 2014, the actual amount of import flows has increased from NZ$7.7
billion to NZ$7.8 billion. The imports of mechanical machinery and equipment has increased
by NZ$600 million from 2013 to 2014. Business and personal travel constituted the largest
percentage (7.5 percent) of New Zealand total imports of services. Other categories, such as sea
and air transport, jointly represented more than 6 percent of total imports. China is now New
Zealand‘s largest trading partner. In 2014, Australia, merchandise trade with New Zealand
amounted to NZ$ 15 billion, compromising 17 percent of New Zealand‘s exports and 12 percent
of imports. In the same year, China overtook Australia with bilateral trade amounting to NZ$19
billion. New Zealand‘s exports to China are about 22 percent of total exports, with the major
commodities being milk powder, meat and a wide range of other primary products. China
supplied 17 percent of New Zealand‘s total imports, with the major commodities being
computers, telecommunications equipment and apparel (The Treasury, 2015).The third largest
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trading partner of New Zealand is the European Union (EU). The EU member countries jointly
received NZD$7.5 billion of New Zealand‘s goods and services in 2014.
The top ten sources of imports to New Zealand are the European Union, Australia, China,
U.S.A., Singapore, Japan, Malaysia, Korea, Republic of Thailand, and United Arab Emirates.
India is New Zealand‘s 18th largest source of imports.The EU member countries jointly ranked
the largest importer of New Zealand at NZD$11 billion in 2014. Germany was the largest EU
exporter to New Zealand in both 2013 and 2014. In addition to the EU, Australia, China and
the U.S. are the three largest individual exporters to New Zealand. Moreover, the imports from
Australia have decreased by nearly NZD$800 million from NZD$11.7 billion to NZD$10.9
billion in 2013-2014. Conversely, the imports from China and the U.S. have increased during
the same period. Both of them increased their exports to New Zealand by around NZD$1
billion. The ranking of Japan, Malaysia, South Korea and Thailand remained constant.
However, India, the 10th largest export destination of New Zealand, ranked only 16th of New
Zealand‘s import source. In other words, New Zealand was more reliant on its exports to India
than importing India‘s goods and services.
New Zealand‘s major trading partners are in Asia (e.g. China, Japan, South Korea, India and
ASEAN countries), South Pacific, Australia, Europe (e.g. the EU) and the U.S.
Sector-specific aspects are summarized in Figures 5a, 5b and Figures 6a and 6b
2.
India Trade
India‘s total exports by the top 30 categories in 2014 totaled to over US$318b. The exports of
petroleum oils or bituminous minerals represented the largest proportion of India‘s total
exports in both 2013 and 2014 with 20 percent and 19.2 percent, respectively. Exports of
pearls and precious stones accounted for 9.0 percent in 2013 and 7.7 percent in 2014. It is
clear that India‘s exports are concentrated on non-manufactured products. One of the
agricultural products, rice, represented 8.2 percent in 2013 and 7.9 percent in 2014. In
contrast, exports of manufactured products accounted for no more than 8 percent in both
2013 and 2014. For example, exports of both motor vehicles and articles of apparel accounted
for 6 percent in 2014. Moreover, the commodities which have experienced an increase from
2013 to 2014 tend to be manufactured products. However, the exports of non-manufactured
products tended to decrease in the same period. Accordingly, the changing patterns of Indian
trade structure have been moving toward manufactured products in recent years.
Imports of petroleum oils represented the highest proportion at nearly 30 percent in 2013 and
2014, which are greater than the exports in the same years. In addition to oils, precious stones
and metals remained the top import commodities into India. Most importantly, trade in some of
104
the top commodities revealed a high level of intra-industry trade in 2013 and 2014. For
example, petroleum oils represented the largest proportion in both exports and imports.
Similar evidence can be found in the trade of pearls and precious stones. Additionally, most of
the top imported commodities concentrated on manufactured products in 2013 and 2014.
With regard to the destination of exports and sources of imports, the EU has been found to be
the largest trading partner. The UK and Germany are the largest partners within the EU. The
EU countries together accounted for more than 15 percent of India‘s export and import in both
2013 and 2014. In terms of individual economies, the USA, United Arab Emirates (UAE) and
China are the top three destinations of India‘s exports. The USA. and UAE each accounted for
more than 10 percent of India‘s total exports. China is the third largest destination of India‘s
export. However, the share of China in India‘s total export is much less than the share of the
USA and UAE. In contrast, China is the largest source of India‘s imports in both 2013 and
2014 with 16.3 percent in 2013 and 18.8 percent in 2014. In other words, India is more
dependent on imports from China than its exports to China. Saudi Arabia is the second largest
source of India‘s imports with an average of 11 percent during 2013-2014. The top destinations
of India‘s exports are also the top sources of India‘s imports in 2013 and 2014. In other words,
exports and imports between India and its partners have been developing simultaneously in
recent years.
3.
Bilateral Trade
Bilateral trade between New Zealand and India has been analyzed using UNComtrade data and
SITC categories for the period 1988-2013 (and 2014). Data was analyzed relatively to four key
categories: agriculture, food and live animals, chemicals, manufactured goods, and machinery.
The complete methodology, data and results are reported in Bano and Scrimgeour (2015).
Comparing bilateral trade between NZ and India reveals that NZ exports to India were greater
than NZ imports from India throughout the period suggesting an advantage in trade for NZ. In
comparison, the imports from India increased gradually even in 2012 and 2013, in which
exports decreased by around US$ 200 million. Overall, NZ‘s bilateral trade with India has been
improving significantly with exports growing toNZ$615m in 2014 and imports growing to
NZ$483m in 2014.
Evidence suggest that New Zealand has significant advantage in agricultural exportsto India.
(with NZ agricultural imports from India averaging 16 percent of NZ agricultural exports to
India). The exports to India peaked at around US$350 million in 2011. After that, the exports
reduced but by 2014 they were nearly back to 2011 levels. In contrast, NZ agricultural imports
from India increased gradually to almost US$ 60 million in 2014.
105
With regard to food and live animals, NZ exports to India were greater than the imports
between 2009 and 2012 (post-crisis period) but this should not be taken as the norm as NZ
experienced a food and live animals trade deficit for more than half in the sample including
2013 and 2014. This indicates that NZ did not have an enduring advantage in the food and live
animals sector- the largest sector of NZ agriculture, when it is trading with one of the largest
agricultural country in the world- India. NZ imports of food and animal products from India
tend to be stable over the period, while the exports to India fluctuated significantly with nearly
half the years showing an export contraction while in other years growth occurred. On three
occasions the growth was 280 percent or more in a single year. Exports experienced significant
growth in 2002, 2006 and 2009 respectively. More recently, imports have remained steady
while exports have been well down on 2010 and 2011.
NZ‘s bilateral trade with India in manufacturing experienced a large trade deficit throughout
the period averaging $83m over the period and $192m per year between 2010 and 2014.On
average, NZ manufacturing exports to India have only around a third of manufacturing imports
from India. Moreover, the increase in imports was greater than the increase in exports. Looking
now at NZ bilateral trade with India in Chemicals (SITC 5), Manufactured Goods (SITC 6) and
Machinery (SITC 7), respectively, it can be observed that NZ has a significant trade deficit in
Chemicals and Manufactured Goods especially. On average NZ chemical exports to India have
only been 17 percent of chemical imports from India. In the period 2010 to 2014 NZ, chemical
exports to India were only 9 percent of imports from India. With Machinery, both imports and
exports increased over the sample period. NZ‘s exports of Machinery to India peaked at US$ 65
million in 2010, the year in which imports to NZ amounted to US$ 28 million. In the majority
of years NZ imported more machinery from India than it exported machinery to India yet on
average NZ machinery exports to India were 117 percent of machinery imports from India.
There is a significant effect from very high levels of machinery exports from NZ to India in a
limited number of years.
NZ exports of manufactured goods to India have increased from US$1.8m in 1989 to $22.6m in
2014 but they have not kept up with manufactured goods imports from India.
Tables 1 and 2 summarize the relative performance of different sectors in bilateral trade
between New Zealand and India
Table 1: New Zealand Trade with India by Major Sectors
Agricultural
Average Exports 1998-2014 (US$ million)
114.55
106
Manufacturing
36.72
Export growth pa
11%
20%
Export growth variability (sd)
24%
60%
Export growth variability (cv)
2.14
2.97
18.44
122.65
Import growth pa
12%
13%
Import growth variability (sd)
18%
16%
Import growth variability (cv)
1.48
1.24
Average Imports 1998-2014 (US$ million)
Table 2: NZ Trade with India by UN SITC Code
0 - Food & live
animals
5Chemical
s
6 - Manufactured
goods
19.88
2.44
13.68
12.65
43%
43%
20%
44%
Average Exports
1998-2014
Export growth pa
7Machiner
y
Export growth
variability (sd)
117%
105%
91%
114%
Export growth
variability (cv)
2.71
2.42
4.48
2.62
Average Imports
1998-2014
12.86
24.61
50.30
14.17
Import growth pa
11%
21%
10%
23%
Import growth
variability (sd)
18%
24%
17%
33%
Import growth
variability (cv)
1.62
1.14
1.71
1.46
4.
Determinants of Exports
This section reports results from models of exports as a function of fundamental economic
variables following Bano, (1986). The underlying proposition is that the GDP, population, GDP
per capita, FDI and exchange rate have positive effects on both a country‘s total trade and the
country‘s bilateral trade with partners. The dependent variable used in each case is the value
of New Zealand‘s (or India‘s) manufacturing or agricultural exports to the trading partners- the
107
World or India (or New Zealand) in current US millions of dollars. These values were obtained
from The World Development Indicators database. The values for the independent variables
(except FDI) were also taken from The World Development Indicator database, though GDP per
capita (or GDP/Population) was calculated by the authors. FDI was taken from UNCTAD
Statistics, which are measured by FDI inflows in US$ millions. New Zealand (or India) itself is
excluded when the world is regarded as the trading partner of New Zealand (or India). For
instance, New Zealand (or India) exports to the World means that New Zealand (or India)
exports to the countries in the world excluding itself (or rest of the world).Models were
estimated in logarithms in order to identify the marginal effects (or elasticities) of each
determinants on country‘s exports.
When bilateral exports in manufacturing between NZ and India are used as the dependent
variables, the log of population in NZ and India has the most significant effects on NZ and
Indian exports. Aone percent increase in population has a positive effect of 4.0 percent increase
in NZ manufacturing exports to India. Similarly, a one percent increase in the population tends
to increase Indian manufacturing exports to NZ by around 3.85 percent. In contrast, the NZ
exchange rate had the least effects on NZ manufacturing exports to India. Most importantly, all
the determinants have a stronger impact on Indian manufacturing exports to NZ than their
influence on NZ manufacturing exports to India. This is reasonable since India is the larger
economy than NZ. These results are consistent with Fabling and Sanderson, (2015) who found
significant impacts of bilateral exchange rate levels on both the propensity to export and the
value of exports. They found exchange rate appreciation reduced the number of exports and
the volume of exports per exporting firms. The results of Panda and Mohanty, (2015)are also
relevant in that they found a moderation in the exchange rate volatility can increase export
volumes.
When reviewing the effects of the determinants on agricultural trade between NZ and India,
nearly all the determinants affect NZ agricultural exports to India significantly, except the
exchange rates of NZ and India. Specifically, the log of population has the strongest influence
on NZ agricultural exports to India. A one percent increase in the population can increase NZ
agricultural exports to India by 6.6 percent. In contrast, the log of population has a more
significant effect on Indian agricultural exports to NZ of approximately 7.25 percent. The log of
GDP per capita has the second strongest effects on both NZ and Indian exports. A one percent
increase in GDP per capita tends to increase their exports by 0.97 and 1.97 percent
respectively. Moreover, the Indian exchange rate tends to be positively correlated with Indian
exports in both the manufacturing and agriculture sectors, which is inconsistent with
expectations. However, the estimated coefficients of NZ exchange rates remain negative and
inconsistent with expectations.
108
Overall, three determinants GDP, population and GDP per capita- have the strongest effects on
both NZ and Indian exports. Moreover, they have more obvious impacts on both NZ and Indian
agricultural sectors than on their manufacturing sectors.
5.
Foreign Direct Investment
Given the importance of FDI for encouraging trade, it is appropriate to compare total FDI.
Mauritius, Singapore and UK are the largest investing economies in India, with Mauritius
accounting for more than 35 percent of India‘s FDI inflows since April 2000 at US$89 billion.
Singapore is the second largest investor to India, with its investments representing 13.2
percent of India‘s total FDI inflows. It is interesting that China ranked only 20th of India‘s
foreign investors. The total amount of Chinese direct investment in India was US$922 million
in the same period. The services sectors have received the greatest amount of investment at
US$42 billion (around 17 percent in India‘s total FDI inflows). In addition to services,
manufacturing industries (e.g. construction development, telecommunications, computer
software and hardware) received large amount of investment from overseas. Overall, the top 30
sectors together accounted for more than 90 percent of India‘s total FDI inflows since April
2000.
Figure 1: FDI Inflows to India and New Zealand (US$ Millions)
50000
Inward FDI USDm
40000
30000
20000
10000
-10000
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
0
India
New Zealand
Source: UNCTAD (2015). Authors Calculation
New Zealand total foreign investment was US$3.4 billion in 2014. The majority derives from
Australia (36 percent), United Kingdom (17 percent) and the United States (10 percent). Other
significant investors are Japan, Singapore, Hong Kong (SAR), Netherlands and the People's
Republic of China but none has more than three percent of the total.
109
Figure 1 reports inward FDI. It shows that this century NZ has continued to attract FDI except
in 2003 and during the global financial crisis. In contrast India dramatically increased inwards
FDI between 2003 and 2008 but it has been unable to sustain this level in subsequent years.
Figure 2 reports FDI outflows. It shows that that both countries have struggled to sustain
consistent flows of outwards FDI. India has done better in the sense that between 2006 and
2012 it was able to sustain outwards FDI at levels not previously seen. However, this has fallen
away and it is not clear how long it will take to achieve the levels seen in 2008.
Figure 2: FDI Outflows from India and New Zealand (US$ Millions)
25000
15000
10000
5000
0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Outward FDI USDm
20000
-5000
India
New Zealand
110
Figure 3: Service Exports from India and New Zealand (US$ Millions)
160000
Service Exports USDm
140000
120000
100000
80000
60000
40000
20000
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
0
NZ total
India total
Figure 4: Service Exports from India (adjusted) and New Zealand
16000
Service Exports USDm
14000
12000
10000
8000
6000
4000
2000
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
0
India total/11
NZ total
6. Services Trade
The growth of the service sector has been important for both economies. Figure 3 shows the
significant growth in Indian export of services between 2003 and 2013. Figure 4 divides the
Indian services by 11 to make the numbers more comparable with NZ. It shows the level of
services exports by the two nations increased significantly and converges, when adjusted for
size of respective economies.
7. Discussion and Conclusions
111
In terms of the bilateral trade between the New Zealand and India, both exports and imports
increased significantly between 1988 and 2014. Moreover, both countries have significant
potential to increase agricultural product exports to each other (especially in Food and Live
Animals- SITC 0). The results also indicate New Zealand does not show a large potential for
exports of manufactured goods to India (except in Machinery- SITC 7). In contrast, India‘s trade
in manufactured goods (SITC 6) was dominant with respect to both New Zealand and the
world. Our findings seem to suggest that despite the recent bilateral trade, growth between
New Zealand and India is below potential level. Given the sustained economic growth in India
over the decades and one billion populations, it is reasonable to expect high demand for high
quality differentiated New Zealand products (both agricultural and manufactured goods) from
the Indian high income middle population of about US$330 million.
Our econometric analysis shows that a country‘s GDP, population and GDP per capita are the
most important factors explaining variations in country‘s trade. When we compare NZ‘s
manufacturing and agricultural exports to the world and India‘s manufacturing and
agricultural exports to the world, we found that these factors have greater effects on India‘s
exports than NZ‘s exports. When we estimate the bilateral trade between them, we found that
GDP and population have the most significant and positive explanatory power in both sectors.
This conclusion is consistent with trade theory. In addition, the results indicate that FDI
inflows have a more significant influence in both countries‘ manufacturing sectors than their
agricultural industries.
These findings have implications for policy and practice. Both countries should focus on
producing what the partner nation wants. This requires understanding categories and
understanding market niches. Tables 3 and 4 show details of export volumes to the partner
country relative to the level of import demand. Category 1 country has high import demand but
perhaps the export partner struggles to provide the product. Categories 2, 3, and 4 are
opportunities for growth. Category 5 is where these does not seem to be demand. This suggests
there are many opportunities for exporting products where export experience has already been
obtained. Specific opportunities also exist. New Zealand can focus on specific Indian cities.
Indian companies could focus on NZ as a test market. Both countries can build on culture as
an asset; and trust building with respect to governance and the environment.
In conclusion, this paper shows the responsiveness of manufactured exports and agricultural
exports to GDP, world income, the weighted average official exchange rate and FDI inflows. A
trade agreement between the two countries has potential given the complementarities of
production and the anticipated economic growth in both countries. The negotiation challenges
may be symbolic of wider communication challenges and differing objective functions which
112
may constrain trade development. Finally, reader should recognize this analysis is based on
recent history but we should expect export elasticities to change through time in response to
changes in the respective economies of the nations and their trading partners.
Table 3
India Agricultural Exports Codes Using FAO 2012 Data (of more than USD1m pa)
Exports of animal based products
Category
1:
NZ
total
imports > India exports
Category
2:
NZ
total
imports
>
50%
India
exports but less than 100%
of India exports
Category
3:
NZ
total
imports > 1% India exports
but less than 50% of INDIA
exports
Category
4:
NZ
total
imports < 1% India exports
Pet food; Cheese, whole cow milk; Lactose; Cheese,
processed; Pigmeat; Ice cream and edible ice
Wool, hair waste;
Milk, skimmed dried; Glucose and dextrose; Meat Sheep
Fresh;
Butter; Milk, whole fresh cow
Meat Bovine Fresh; Fatty acids; Offals, edible, cattle;
Eggs, dried;
Poultry Meat; Meal, meat; Meat, chicken; Offals,
sheep,edible
Category 5: NZ does not Animal Vegetable Oil; Honey, natural; Eggs, hen, in shell;
import these exports from Silk;
India
Cocoons, unreelable& waste; Meat Poultry Fresh; Animal
fats;
Grease incl. lanolin wool; Eggs, liquid; Canned Meat nes;
Fatty substance residues; Hides, cattle, wet salted
Exports of plant based products
Category 1: NZ total imports
> India exports
> 50% India exports but less
than 100% of INDIA exports
> 1% India exports but less
than 50% of India exports
Food prep nes; Sugar confectionery; Chocolate products nes;
Cereals, breakfast; Beer of barley; Bananas; Juice, fruit nes;
Infant food; Oranges; Cocoa, butter; Macaroni; Beverages,
non alcoholic;
Wafers; Bread; Wine; Mixes and doughs; Oil, rapeseed;
Coconuts, desiccated; Sugar, nes; Cake, cottonseed; Beans,
dry; Oil, olive, virgin; Oil, sunflower; Malt; Pineapples; Oil,
soybean; Vegetables, fresh or dried products nes
Pastry; Beverages, distilled alcoholic; Fruit, prepared nes;
Cigarettes; Food preparations, flour, malt extract; Sorghum;
Oil, vegetable origin nes; Vegetables, preserved nes;
Vegetables, frozen; Nuts, nes; Lemons and limes;
Watermelons; Cereal preparations, nes
Wheat; Sugar Raw Centrifugal; Coffee, green; Coffee,
extracts; Pulses; Tobacco products nes; Grapes; Vegetables,
dehydrated;
Flour, wheat; Raisins; Ginger; Molasses; Walnuts, shelled;
Barley; Nuts, prepared (exc. groundnuts); Oilseeds nes; Oil,
coconut (copra); Fruit, dried nes; Chillies and peppers, green;
Rubber, natural; Vegetables, preserved, frozen; Oil, boiled
etc; Flour, cereals; Mushrooms, canned; Flour, maize;
113
< 1% India exports
Category 5: NZ does not
import these exports from
India
Apples; Garlic; Oil, sesame; Sunflower seed; Papayas;
Vanilla; Sweet corn frozen
Rice; Cake, soybeans; Maize; Sugar refined; Groundnuts,
shelled;
Cashew nuts, shelled; Oil, essential nes; Oil, castor beans;
Tobacco, unmanufactured; Tea; Chillies and peppers, dry;
Sesame seed; Anise, badian, fennel, coriander; Spices, nes;
Chick peas;
Vegetables in vinegar; Pepper (piper spp.); Nutmeg, mace and
cardamoms; Vegetables, fresh nes; Rubber natural dry;
Fruit, fresh nes; Tomatoes; Vegetables, temporarily
preserved;
Oil, groundnut; Tea, mate extracts; Soybeans; Millet;
Rapeseed;
Potatoes, frozen; Vegetables, homogenized preparations;
Linseed;
Coffee, substitutes containing coffee
Cotton lint; Fodder & Feeding stuff; Oilseed Cake Meal;
Oilseeds;
Tobacco; Fixed Vegetable Oils; Onions, dry; Cake, rapeseed;
Miscellaneous Food; Mangoes, mangosteens, guavas; Feed,
compound, nes; Oilseed Cake nes; Natural Rubber; Cotton
waste;
Coconuts; Cotton linter; Potatoes; Copra; Flour, pulses;
Oranges+Tang+Clem; Jute; Feed and meal, gluten; Cloves;
Cashew nuts, with shell; Rape+Mustard Oils; Cassava
Equivalent; Cake, sunflower; Olive Oil,Total; Cinnamon
(canella); Cake, groundnuts;
Oth Citrus Frt; Cabbages and other brassicas; Peas, green;
Cassava dried
Table 4
NZ Agricultural Export Codes Using FAO 2012 Data (of more than USD1m pa)
Exports of animal based products
Category
1:
India
total
imports > NZ exports
Category
2:
India
total
imports > 50% NZ exports
but less than 100% of NZ
exports
Category
3:
India
total
imports > 1% NZ exports but
less than 50% of NZ exports
Category
4:
India
total
imports < 1% NZ exports
Wool, greasy; Lactose; Hair, fine; Beeswax;
Glucose and dextrose
nil
Wool, degreased; Hides, cattle, wet salted; Skins, sheep, with
wool; Pet food; Meat, pig sausages; Eggs, hen, in shell; Milk,
whole condensed; Whey, dry;
Milk, whole dried; Meat, sheep; Butter, cow milk
Milk, skimmed dried; Cheese, whole cow milk
Milk, products of natural constituents nes; Infant food;
Honey, natural; Cream fresh; Ice cream and edible ice; Meat,
114
Category 5: India does not
import these exports from NZ
chicken, canned
Meat, cattle, boneless (beef & veal); Tallow; Meat, game;
Meat, beef, preparations; Meal, meat; Offals, edible, cattle;
Meat, cattle; Cheese, processed; Milk, whole fresh cow;
Offals, sheep,edible; Meat, nes; Meat, chicken; Fat, cattle;
Milk, skimmed cow; Hides, nes; Meat, goat; Oils, fats of
animal nesMeat, horse; Meat, dried nes; Yoghurt,
concentrated or not;
Exports of plant based products
Category
1:
India
imports > NZ exports
total
Category
2:
India
total
imports > 50% NZ exports
but less than 100% of NZ
exports
Category
3:
India
total
imports > 1% NZ exports but
less than 50% of NZ exports
Category
4:
India
total
imports < 1% NZ exports
Category 5: India does not
import these exports from NZ
Beverages, distilled alcoholic; Peas, dry; Pears; Oil, vegetable
origin nes; Oil, essential nes; Malt; Coffee, extracts; Oranges;
Tomatoes, paste; Tea; Fruit, fresh nes; Grapes
Crude materials; Apples; Beverages, non-alcoholic; Chocolate
products nes; Cigarettes; Tobacco products nes; Wafers;
Cereal preparations, nes; Flour, maize; Sugar, nes;Coffee,
roasted
Food prep nes; Pastry; Fruit, prepared nes; Sugar
confectionery;
Potatoes, frozen; Juice, fruit nes; Beer of barley; Cereals,
breakfast;
Sugar refined; Mixes and doughs; CherriesVegetables,
dehydrated
Waters,ice etc; Fruit, dried nes; Sweet corn prep or
preserved;
Maize;
Vegetables,
preserved,
frozen;
Strawberries;
Tangerines,
mandarins,
clementines,
satsumas; Asparagus; Bran, maize;
Cabbages and other brassicas
Wine; Kiwi fruit; Food preparations, flour, malt extract;
Vegetables, frozen; Vegetables, preserved nes; Chillies and
peppers, green; Sweet corn frozen; Cider etc; Tomatoes;
Forage products; Apricots; Margarine, short; Vegetables,
fresh nes; Rapeseed; Lemons and limes; Mushrooms and
truffles; Lettuce and chicory; Garlic; Melons, other
(inc.cantaloupes)
Onions, shallots, green; Pumpkins, squash and gourds;
Avocados
Blueberries; Potatoes; Persimmons; Cherries, sour; Mustard
seed
115
Graph 5a and 5b: New Zealand exports by top 10 categories in 2013 and 2014
Mechanical
machinery and
equipment 2.5%
Crude oil 2.7%
Wine 2.0%
Milk
power, butter
and cheese 18.3%
Fruit 2.5%
2013
Air transport
3.2%
Education 3.9%
Logs, wood, and
wood articles
5.4%
Business and
other personal
travel 10.4%
Meat and edible
offal 8.5%
Mechanical
machinery and
equipment 2.3%
Crude oil 2.1%
Fruit 2.5%
Wine 2.0%
2014
Milk
Powder, butter, a
nd cheese 23.3%
Air Transport
2.9%
Education 3.6%
Logs, wood, and
wood articles
5.9%
Business and
other personal
travel 10.5%
Meat and edible
offal 8.3%
Source: Statistics New Zealand, 2015. Authors Calculation
116
Figure6a and 6b: India exports by top 10 categories in 2013 and 2014
Motor vehicles
1.7%
Articles of
apparel 1.5%
Cotton 1.4%
Made-up articles
1.4%
2013
Textile yarn 2.1%
Rice 2.4%
Petroleum oils
20%
Medicaments
3.2%
Jewellery 3.3%
Pearls and
precious stones
9.0%
Articles of
apparel 1.8%
Cotton 0.9%
Made-up articles
1.4%
Motor vehicles
1.8%
Petroleum oils
19.2%
Textile yarn 2.0%
Rice 2.5%
Medicaments
3.4%
Jewellery 4.2%
Pearls and
precious stones
7.7%
Source: UNCTAD Statistics, 2015. Authors Calculation
References
Bano, Sayeeda (2014), ―Trade Relations between New Zealand and China:An Empirical Analysis in the
Context of a Free Trade Agreement. Review of Economics & Finance. Vol. 4. PP 75-92,November
2014.
117
Bano, S. (1986). Determinants of New Zealand Manufacturing Exports. Wellington: NZIER. Wellington:
NZIER.
Bano, S., & Scrimgeour, F. (2015). Exploring the Trade Potential in Agricultural and Manufactured
Products and Agribusiness Cooperation between New Zealand and India. In International Trade and
Finance Association 25th International Conference. Sarasota Bay, Florida.
Fabling, R., & Sanderson, L. (2015). Exchange rate fluctuations and the margins of exports (No. New
Zealand Treasury WP 15/08). Wellington.
New Zealand Treasury (2015). http://www.treasury.govt.nz/economy
Panda, S., & Mohanty, R. K. (2015). Effects of Exchange Rate Volatility on Exports: Evidence from India.
Economics Bulletin, 35(1), 1–9.
Scrimgeour, F. G. (2014). Agricultural Trade and Trade Policy. In A. Emerson, J. S. Rowarth, & F. G.
Scrimgeour (Eds.), New Zealand Agriculture: An Economic Perspective.Wellington.
Statistics New Zealand (2015).
UN COMETRADE (2014). United Nations Commodity Trade Database.
UN COMETRADE (2015). United Nations Commodity Trade Database.
UNCTAD Database (2014). The United Nations Conference on Trade and Development Database.
UNCTAD Database (2015). The United Nations Conference on Trade and Development Database.
World Bank Databank (2015). World Development Indicators.
******
118
7.
New Zealand Immigration Policies
– The Case of Indian Migrants
Dr. Nathan(Eswaranathan Ehambaranathan)
Lecturer (International Relations & Business)
IPU, New Zealand
[email protected]
[email protected] (UCOL, New Zealand) &
[email protected] (ULiv, United Kingdom)
Nathan's academic experience encompasses International Relations across the Asia Pacific region. He has a Doctorate
in South East Asian Political Economy. As an academician, he was a lecturer and a course leader at RMIT International
University, Vietnam and subsequently led the Business School at HELP University, Malaysia. Prior to joining IPU as well
as UCOL (part time), University of Liverpool (online) he was the Director of Studies at the Royal Business College,
Hastings Campus, New Zealand. He is currently the co-chair for NZIIA (Palmerston North Branch), New Zealand.
Dr.SupapornChalapati
Assistant Professor (International Business & Management)
I-Shou University in Taiwan
[email protected]
SupapornChalapati is an Assistant Professor in the Department of International Business Administration at I-Shou
University in Taiwan. She holds a PhD in International Studies from RMIT University, Australia. She has over fifteen
years of international experience working in both academia and business industry in Thailand, China, Vietnam and
Australia. Her knowledge and interests bridge the humanities and business disciplines. She has taught and
coordinated various international business and management courses at Melbourne Polytechnic, RMIT International
University, Vietnam, Box Hill Institute, RMIT University, Australia. Her current research interests span a wide range of
topics in government policy in internationalisation of higher education, English-medium business education, human
development and culture and business practices in the Asia-Pacific region.
Ms. ShagesheelaMurugasu
Lecturer (Business)
IPU, New Zealand
[email protected]
Ms. Sheela received her Bachelor Degree in Information Management and Master’s Degree in International Business
from Malaysia and has been teaching at IPU, New Zealand on part time basis since 2014. Prior moving to New
Zealand, she was a lecturer at Linton University College, Malaysia. She specializes in International Business, Marketing
and Entrepreneurship.
Abstract
New Zealand is a state that has been attracting thousands of migrants over the centuries.
Since then,the New Zealand immigration policies have been fundamental towards the growth of
New Zealand particularly in the economy. Concurrently, similar to other states the Indian
migrants have been migrating to New Zealand since the early days and contributing their
knowledge as well as skills towards New Zealand‘s economy. Therefore, today,New Zealand is
the home for many successful Indians who have been migrating primarily from India. As a
119
result, due to these high influx of migrants,the immigration policies in New Zealand over the
years have been subjected for many changes. Some of these changes can be seen as
opportunities and some can be considered as challenges for the future Indian migrants. Thus,
this paper explains the evolution on the New Zealand immigration policies since its early days
from the perspective of the Indian migrants. This paper also concludes the possible future
opportunities and challenges based on the current New Zealand immigration policies and
landscape.
New Zealand Immigration Policies
New Zealand is a sovereign state that is located in Oceania and has the land size of
approximately 267,710 sq. km (Central Integence Agency 2015). The state consists of two
main islands which known as the North Island and South Island. The capital city, Wellington
and the largest populated city, Auckland are both located in North Island. Despite being
ranked the 76th largest state in the world in terms of the land size, New Zealand has small
population. New Zealand is currently ranked only the 127th in terms of population with the
current population at approximately 4,618, 540 (Statistics New Zealand 2015). Due to her
geographic remoteness, New Zealand has been the last land to attract and been migrated by
human migration.
Immigration process can be defined as an act of individuals entering a foreign country as well
asthe emigration process can be seen as an act of individuals leaving a country to live in
another. Thus, since New Zealand became a sovereign state, the migration particularly
immigration has been essential for New Zealand‘s economy growth. The increase in
immigration has accelerated the productivity, export and growth of New Zealand‘s economy
(Poot, Nana and Philpott 1988). Currently, New Zealand‘s main export industries are the dairy
products (26.2%), meats (11.5%) and forest products (8.7%). Thus, migrants‘ workers have
been fundamental in its productivity and growth (Statistics New Zealand 2015).
However, New Zealand‘s international trade had mainly prospered during the ―wool boom‖
period in 1950s. Since then, the Kiwis who are known as the New Zealanders have been
enjoying a high standard of living compared to other states in the pacific region. Due to its
prosperity and economic demands, many foreign migrants have gained access into New
Zealand through the New Zealand immigration policies. In early days such as the early 19
century, the New Zealand immigration policies were flexible as the authorities encouraged more
migrants in moving into New Zealand. However, since 1881 there have been barriers set to
prevent further more immigrants flooding into the country. For example, the Chinese
immigrants were held back and prevented to enter into New Zealand and this was followed by
the Russians, Italians, Japanese and Africans. In fact, on the 9th of November 1920 the New
Zealand authority introduced ―White New Zealand‖ act that would prevent any non-white
British entering New Zealand and require those immigrants to apply for a residence permit
before arriving into New Zealand (New Zealand History 2014).
However, such racial immigration policy did not last long as New Zealand progresses in the
economy and the society were moving towards liberalism with high emphasis on freedom and
equality. Thus, at the end of the 20th century, the immigration policies focused on other
conditions such as skilled immigrant jobs, financial assets and refugee status. Subsequently in
2003, the skilled migrant category (SMC) was introduced with only those applicants with
qualifying above the required level points were invited and given the opportunity to apply for
120
residence (Beaglehole 2012). As a result, this residence selection system has provided equal
opportunity to everyone regardless of their nationality or racial background. Therefore,between
1st July 2010 and 31st August 2015, statistics revealed that 215,451 people from 190 countries
were granted residence visas. Almost 38,040 from the total successful people who were granted
residence visas were from China, followed by 35,416 people from India and 30,434 from Great
Britain (New Zealand Ministry of Business, Innovation & Employment 2015).
Indian Immigrants in New Zealand
The Indian community is the second largest Asian community in New Zealand. Most of these
Indian migrants had migrated into New Zealand as a migrant labourers. Most of them were
originated from India, Pakistan, Bangladesh and their descendants such as Fiji and Malaysia.
Migrants can be defined as individuals who moves from one location to another through jobs in
order to have better living conditions (Oxford 2015). The Indian migrants came into New
Zealand since the late 18 century as most of them arrived in New Zealand via British East
Indian Company ships. Some of them were the crew members who were working with the
company and were employed to supply goods to Australia.Therefore, due to Britain‘s long-term
administration and colonization in India, it further allowed migration of Indians to New
Zealand. Indians from Gujarat as well as their descendants were the primary migrants that
moved to New Zealand. In 1951, there were 2,425 Indians in New Zealand and had increased
in 1981 with 11,244. The Indians worked and ventured in various industries, thus contributed
towards the New Zealand‘s growing economy. Many Indians owned and operated convenience
stores as well as video stores. Their business establishments were prominent especially in the
1980s. By 2001, the Indian population rose to 62,646. This increase was subjected to the
Helen Clark‘s immigration policy which also allowed the Fiji Indians to migrate into New
Zealand.Helen Clark was outspoken particularly in the 2006 Fijian Coup as well as supported
the minority Fiji Indians (British Broadcasting Corporation 2006). Thus, there was a sharp
increase of 31.3% Fiji Indians into New Zealand during her administration (Swarbrick 2012).
Therefore, during this period of time, Indians were also extensively offered opportunity to work
in various skilled jobs such as in hospitals, education institutions and information technology
industry.
Currently, it is estimated that the Indians in New Zealand comprises of 4% and it has been
revealed during the 2013 census that 143,250 New Zealand residence indicated that their
ethnic group as Indians and additional 10,929 residence indicated as Fiji Indians (Swarbrick
2012). In addition, at the moment, almost 30% of them are in professional roles such as
business, arts, medicine, education and even politics whereby only 5% are involved as
labourers in the horticulture and agriculture industry (Te Papa Tongarewa 2015).
Opportunities and Challenges
New Zealand offers natural beauty and an abundant opportunities including life quality with
open and friendly people. The reasonable living cost in comparison with other developed
countries such as United Kingdom and Australia, has moved many Indians to New Zealand.
Furthermore, the encouraging immigration policy towards skills has grabbed much attention
among the Indians. The changes in New Zealand migration policy in 2003 have encouraged
growth in the Indian population by 48% since 2006 (Booth 2015). Meanwhile, in 2013, New
Zealand witnessed India as the main supplier for skilled migrants as it overtook migrants from
Great Britain. The reasons cited were that India has been the home for large, young, well-
121
educated as well as experienced workforce that always determine to seek better opportunities
aboard (Hunt 2013).
Moreover, New Zealand offers flexible immigration policy which allows international students
studying in New Zealand to obtain their open job search visa after their postgraduate
studies.There are also some education institutions in New Zealand offer one-year program
duration of postgraduate studies. Thus, subsequently, after completing their one-year study
program, those students will have a one-year opportunity open for job search visa and then
would be able to obtain a work visa if qualified and finally a residence visa if they meet the
requirements as well as able to obtain the required points.So, it is possible for an international
student from India to obtain his or her residence visa within four years upon his or her arrival
into New Zealand provided he or she meets the necessary requirements by the New Zealand
immigration policy. Meanwhile, the New Zealand Ministry of Education has also reported that
international students tend to gain skills and knowledge in most of the New Zealand
universities and tertiary institutions which match most of the employers‘ demand (Generosa, et
al. 2013). This brings a boom in the education sector in New Zealand with the support of
international students particularly from India which continues to contribute towards the New
Zealand workforce. Thus, it is estimated that in 2025 the Asian population in New Zealand
would grow up to 800,000 and the contributing factor would be the influx of high Indian skill
migrants. Therefore, it is anticipated within the next ten years,more Indians especially from
India, would be migrating into New Zealand as skilled migrants as well as tertiary students.
However, despite the abundant opportunities offered in New Zealand, it still remains
unattractive for many skill migrants from India. Due to the worldwide trend, New Zealand
continues to fall behind the United States, Canada, Great Britain and Australia (Hunt 2013).
The contributing factors are limited job and business opportunities in New Zealand as well as
its isolated geographic location. All these factors are directly correlated with the New Zealand‘s
small population. Thus, being a small populated state, immigration plays an important role in
the growth as well as in the decline of New Zealand‘s economy. Therefore, the increasing
number of migrations will create potential challenges if the jobs and business opportunities
remains constant.
Recently, the New Zealand statistics reported for the first time, the number of migrants into
New Zealand who can be considered as long term visitors have exceeded 60,000. Most of these
migrants which are approximately 12,700 are from India (New Zealand Ministry of Business,
Innovation & Employment 2015). These challenges are being associated with the possibility of
an increased unemployment rate. It has been anticipated that the unemployment rate may
increase from 5.9% to 7% by the mid of 2017 which is very much subjected to the high influx
of migrants (Rutherford 2015).International students have been associated with this potential
issue because it is seen that students tend to fill most of the jobs as well as acceptance
towards a low pay and conditions is high. Therefore, the huge number of migrants not only
may increase the unemployment rate in New Zealand but also may hurt the New Zealand
economy from other perspectives such as encouraging a low-wage economies (3 News 2015).
Furthermore, there are possibilities that the New Zealand government may revise its current
immigration policy as well as may tighten and reduce the number of migrants including
migrants from India moving to New Zealand. Such revision will certainly carry an impact and
also reduce the number of intake in Indian students coming into New Zealand. Meanwhile, it
has been noted that the future trend in the immigration policies among the developed states
122
may focus on labour market demand with high as well as specific skills (Akbar and MacDonald
2014). Therefore, moving forward, it can be anticipated that there will be less focus seen on the
human capital as developed states will demand for only migrants with specific set of high skills
which is not easily attainable. Thus, such policies may put an Indian migrants at risk in
moving into New Zealand.
Looking at the policies being enforced, it can be concluded that despite the odds and changes,
New Zealand will still remain as an attractive state for many international migrants including
Indian migrants. The liberalism, fair and equal opportunity offered by New Zealand through
their immigration policies will attract more Indian migrants into the state. Thus, there would
be opportunities open for prospective Indian migrants though education, job and business into
the state. New Zealand could expect a sharp rise of Indian population in New Zealand to 10%
by 2025. Despite the challenges and possible future strict migration policy, Indian migrants are
observed to keep their strong preference into moving to New Zealand because it offers great
opportunities compared to its challenges.
References
3 News. (2015, September 21). 3 News . Retrieved from NZ migration number increase driven by students:
http://www.3news.co.nz/nznews/nz-migration-number-increase-driven-by-students2015092112#ixzz3mhBKacMc
Akbar, A. H., & MacDonald, M. (2014). Immigration Policy in Australia, Canada, New Zealand, and the
United States: An Overview of Recent Trends. International Migration Review, 48(3), 801–822.
Beaglehole, A. (2012, November 9). Te Ara - the Encyclopedia of New Zealand. Retrieved from Immigration
Regulation: http://www.teara.govt.nz/en/immigration-regulation
Booth, A. (2015). The Impact of Immigration Policy on Indian Arts in New Zealand. Christchurch:
Canterbuty University.
British Broadcasting Corporation. (2006, December 8). British Broadcasting Corporation. Retrieved from
Background to Fiji's Four Coups: http://news.bbc.co.uk/2/hi/asia-pacific/6209486.stm
Central Integence Agency. (2015). The World Factbook. Retrieved September 24, 2015, from The World
Factbook - New Zealand: https://www.cia.gov/library/publications/the-world-factbook/geos/nz.html
Generosa, A., Molano , W., Stokes , F., & Schulze, H. (2013). The Satisfaction of International Students.
Wellington: New Zealand Ministry of Education.
Hunt, T. (2013, March 16). Stuff.co.nz. Retrieved from Indian skilled migrants overtake British:
http://www.stuff.co.nz/national/8433025/Indian-skilled-migrants-overtake-British
New Zealand History. (2014, November 17). Ministry for Culture and Heritage. Retrieved from White New
Zealand Policy Introduced: http://www.nzhistory.net.nz/page/white-new-zealand-policy-introduced
New Zealand Ministry of Business, Innovation & Employment. (2015, September 4). Immigration New
Zealand. Retrieved from Immigration New Zealand Statistics:
http://www.immigration.govt.nz/migrant/general/generalinformation/statistics/
Oxford. (2015). Oxford Dictionary . Oxford: Oxford Press.
Poot, J., Nana, G., & Philpott, B. (1988). International Migration and the New Zealand Economy: A Longrun Perspective. Wellington: Victoria University Press.
Rutherford, H. (2015, September 21). Stuff.co.nz. Retrieved from Migration Tops 60,000 For First Time,
Riisking Higher Unemployment: http://www.stuff.co.nz/business/industries/72250261/migration-tops60000-for-first-time-risking-higher-unemployment
Statistics New Zealand. (2015, Sepetember 24). Statistics NZ Home. Retrieved from Population Clock:
http://www.stats.govt.nz/tools_and_services/population_clock.aspx
Swarbrick, N. (2012, June 13). Te Ara - the Encyclopedia of New Zealand. Retrieved from Indians - Indian
communities: http://www.TeAra.govt.nz/en/indians/page-1
Te Papa Tongarewa. (2015). Museum of New Zealand - Te Papa Tongarewa. Retrieved from Indians in New
Zealand : http://www.tepapa.govt.nz/LEARNING/AAINAA/ceremonies/indians_nz.html
*****
123
8.
Multiculturalism and Indian Diaspora in New Zealand
Dr Pushpa Bhardwaj-Wood
Director of Westpac Massey Fin-Ed Centre, New Zealand
(Dr. Pushpa Bhardwaj-Wood works as the Director of Westpac Massey Fin-Ed Centre in New Zealand. She is one of
the founding members of the Wellington Interfaith Council, one of the founding members of the Wellington Chapter
of the Global Organisation of the People of Indian Origin (GOPIO) and the current Chair of the GOPIO Wellington
Chapter.)
New Zealand has been regarded as a land of milk and honey by many migrants who have made
this country their home. I migrated to this country in 1980 and since then have seen many
changes, not only in the general society itself, but also within the Indian Diaspora.
Wellington in 1980 (on the surface) was a multicultural city,but the diversity of cultures and
ethnic groups was limited – in numbers and in variety. In those days one had to really search
hard for ethnic food, other than some Chinese items. As far as Indian spices and other food items
were concerned, you really had to either ask your friends in Auckland or bring it with you from
home. I still vividly remember that most of my 20kg airline weight allocation was taken up with
spices, pickles and other specific items that I was allowed to bring in. How things have changed!
During the past 35 years my experience and observation in my adopted country have been that,
as a society, we have come a long way as a country of diverse cultures and ethnicities but, as a
truly ‗multicultural‘ society, we are not there yet. The mainstream and the ethnic communities
both recognize that we have work to do.
In an article Mervin Singham (then Director of the Office of Ethnic Affairs) stated that:
“We are no longer so naïve as to think we can simply bring people from all parts ofthe world
together and expect them to integrate or adapt to each other.Multiculturalism is a complex issue
with potential for both disaster and opportunity”.
In the same article he also raised a question whether it was time for New Zealand to revisit its
approach to diversity. This need to revisit our approach has been further supported by the
latest forecasts from StatisticsNewZealand1predicting that in 2038–twenty-five years from the
most recent Census and just two years before the bicentenary of the signing of the Treaty of
Waitangi:
20 percent of New Zealanders will be Māori,
21 percent will be Asian,
11 percent will be Pacific and
66 percent will be Pākehā2
124
Statistics New Zealand further notes that the Māori,Pacific and Asian populations will continue
to grow faster than the average beyond that date and further increase their proportion of
the overall population. This has been widely accepted and considerable research is under
way to learn about appropriate approaches and policy development to ensure that the
‗multiculturalism‘ in New Zealand truly reflects the aspirations, contribution and
achievements of various cultures and ethnic groups.
New Zealand is in many ways a unique nation when it comes to recognizing the place of the
tangata whenua or, as we would say in Sanskrit language,Bhumiputra (people of the land). As a
nation New Zealand has its history deeply steeped in the ‗bi-cultural‘ roots and proudly
acknowledges the special place of Maori. This special place is based on the Treaty of Waitangi
which is central to our understanding and defining of ourselves as a nation.
It is important to note that the Treaty not only clarifies the special place of Maori, it also provides
the foundation for multiculturalism. The Treaty is acknowledged in law and policies,understood
and celebrated by ethnic communities along with the rest of the society,taught in our schools and
explained to new migrants.
However, this has also presented our society with some challenges to ensure that the special ‗bicultural‘ character of this nation, and therefore the special place of Maori, is not subsumed by
our quest to become a ‗multicultural‘ nation. Genuine concern has been raised at various
meetings, workshops and discussions I have attended. These sentiments only confirm that a
widespread ignorance about the history and meaning of the Treaty and the relationship it
preserves between Māori and the Crown persists. Minority ethnic communities, especially new
migrants, are uncertain about their place in relation to the Treaty alongside Māori and Pākehā.
The Federation of Multicultural Councils has introduced an initiative to measure the level of
understanding of various ethnic/cultural communities in New Zealand towards the future makeup
of this nation, and the challenges and opportunities it will present.These future challenges are
not unique to New Zealand and neither is this nation immune to the similar sentiments, as
delivered in a speech in 2011 by the British Prime Minister David Cameron. He defined
multiculturalism as a strategy which has "encouraged different cultures to live separate lives,
apart from each other and apart from the mainstream" 3. As expected this statement generated a
considerable amount of criticism including some well-considered reactions as well as some very
emotive responses.
During 2011, Lord Sacks, Chief Rabbi of the United Hebrew Congregations of the Commonwealth
said in the Times that ‗multiculturalism‘ was intended to create a more tolerant society, one in
which everyone, regardless of colour, creed or culture, felt at home. Lord Sacks also stated that
multiculturalism's message is "there is no need to integrate".
He distinguishes between tolerance and multiculturalism - using the Netherlands as an example
of a tolerant, rather than multicultural, society.
125
In The Observer, the editor of Prospect magazine, David Goodhart, distinguished between the "live
and let live" multiculturalism of the 1950s, which "assumed that if people could keep significant
aspects of their culture they would choose to integrate in their own way"; the 1980s "'soft'
multiculturalism of tolerance and equal rights"; and the more recent 'hard' multiculturalism "of
positive promotion of religious and ethnic identities".
Multiculturalism thus has become shorthand for a multi-racial and multi-ethnic Britain at ease
with its modern identity. Right-wing criticisms are therefore seen merely as an attack on modern
Britain.
So what does it really mean for me?
The term ‗multiculturalism‘ has been used both in positive and negative context by different
societies, individuals, politicians, academics and the media alike. For example the International
Federation of Library Associations and Institutions (IFLA)in an article on their website in
November 2013 defined the term as follows:
"Multiculturalism" is the co-existence of diverse cultures, where culture
includes racial, religious, or cultural groups and is manifested in customary
behaviours, cultural assumptions and values, patterns of thinking, and
communicative styles.
The article further goes on to explain that traditionally immigrant minorities, persons
seeking asylum, migrant people, and nationally recognized minority groups are regarded
as the ‗underserved‘ groups in a multicultural society.
Various dictionaries have defined the term multiculturalism in different ways for example:
Merriam-Webster dictionary- „relating to or including many different cultures‘
Oxford Dictionary– ‗the presence of, or support for the presence of, several distinct
cultural or ethnic groups within a society‘
The Oxford English Dictionary also offers a broad definition of multiculturalism as the
"characteristics of a multicultural society" and "the policy or process whereby the distinctive
identities of the cultural groups within such a society are maintained or supported 4".
Shabdkosh (English to Hindi) –defines the term as
However, I find the definition used by the South Australian government truly reflects my
understanding of this term and it offers a very simple and practical approach to multiculturalism.
It states that:
“Multiculturalism means that we all have needs and desires; we have likes and dislikes.
We are different but there is nothing wrong or threatening in that difference. We are all
seeking a better life for ourselves and future generations and there is no place for an „us
and them‟ mentality in our society, today or in the future.”5
126
According to the 2013 Census, New Zealand has more ethnicities than there are countries in
the world. We‘re a country made up of Māori, European, Chinese, Indian, Samoan, Filipino
(and many more) ethnic groups.
A report ‗Our Multicultural Future: New Zealanders talk about Multiculturalism‟ produced by the
New Zealand Federation of Multicultural Councils presents the information gathered through a
series of workshops conducted during February to June 2015. The report explores the views,
opinions, understanding and misunderstandings of people from various ethnic backgrounds
when it comes to the term multiculturalism.The report noted that there is a lack of recognition
of the status of Māori as the indigenous people of New Zealand. This lack of recognition
manifests itself in a lack of knowledge of te reo Māori (Māori language), tikangaMāori (Māori
protocol) and the impacts of colonisation and a lack of engagement of ethnic communities with
Māori.
Multiculturalism and Indian Diaspora in New Zealand:
The landscape of New Zealand society has changed dramatically in my 35 years of living here
and Indians are now the second largest group of Asians (the first being Chinese) residing in
New Zealand. As the diversity of New Zealand increases and Asian peoples become a significant
proportion of the population, there is an urgent need to examine the understanding, or the lack
thereof, by the migrant communities about the role of Maori and their special place in this
nation – socially, culturally, constitutionally and legally. The lack of effort to understand, and
where necessary, improve this understanding can spell a new set of challenges and social
disharmony for New Zealand as a nation.
NZ is demographically multicultural, but this is not articulated in law. New Zealanders endorse a
multicultural ideology, although endorsements tend to be symbolic and some types of cultural
diversity are preferred over others.6
It has been my experience and observation, which was also confirmed by some of the
workshops conducted by the New Zealand Federation of Multicultural Councils during
2015,that some communities do not want to integrate into the wider society, preferring to
remain in their own group. Their efforts seem to have been concentrated on maintaining and
strengthening their own culture, but not necessarily being interested in intercultural or
multicultural activities. This applies to various groups of Indian diaspora. Not only do they not
necessarily mix with other cultural/ethnic groups, they also do not mix with the wider
communities of Indians. Consequently we have a number of regional associations and
community groups that have been set up to meet the needs of these groups. An example would
be the Indian Association, Bengali Association, Fiji Indian Association, Tamil Society,
Malayalam society to name the few. This inward looking attitude at times prevents people from
integrating within their country of residence.
The Indian diaspora in New Zealand is not a homogenous group and represents people of
Indian origin, not only from India,but also from Fiji, Australia, the United States of America,
the United Kingdom, Surinam, Kenya, South Africa, Zimbabwe, Mauritius and various other
countries around the world where Indians have settled over the past few generations. Indians
have been known to be explorers and a well-travelled race long before the turn of this
millennium.
127
The data from Census figures shows that Indian population in New Zealand has dramatically
increased in the past decade. The latest data about the distribution of Indians in New Zealand
is given below:
155,178 live in New Zealand,nearly 7 out of 10 in Auckland
93.7% live in the North Island
90.8% speak English,withHindi as the second‐most common language
93% have a religion, mostly Hindu, followed by Sikh and Islam
$27,400 median income - main industries worked in being retailtrade,healthcare and social
assistance
Over81per cent fulltime employed -the most common occupations being
professionals,managers and sales workers.
Source:Census2014
New Zealand records show the arrival of Indians in New Zealand began before 1840. Indians
have come to New Zealand since the late 18th century. At that time the British East India
Company ships brought supplies to Australian convict settlements, and often stopped in New
Zealand to pick up homeward cargoes. Their crews included Lascars (Indian seamen) and
Sepoys (Indian soldiers), some of whom deserted in New Zealand.
A Bengali man is said to have jumped ship in 1810 to marry a Māori woman. One man was
living with his Māori wife in the Bay of Islands in 1815; another took up residence on Stewart
Island after 1814.
Before the 1880s Indians were not identified in census records, but their presence was noted.
One, Edward Peter (also known as ‗Black Peter‘), arrived around 1853. Although the Australian
Gabriel Read is credited with discovering gold at Tuapeka in Otago, it was Edward Peter who
told him where it could be found.The 1881 census recorded six Indian men, three of whom
lived in Canterbury and were probably servants of wealthy English settlers who had lived in
India.
An unofficial estimate of the total number of people of Indian origin living outside India is
about 22 million people. Whether they come from Africa, Asia, the Americas, Australia, the
Caribbean or Europe, they are Indians in body and spirit. Almost all of them maintain their
Indian cultural traditions and values. They seem to have meaningfully integrated in their
countries without losing their ethnic identity. To have a better understanding of our
communities in different parts of the world, it is essential to know and share the history of the
migration as well as their experiences in various countries.
128
3,560
4,352
1780
Auckland
1,450
5,600
Wellington
17,450
Waikato
Bay of Plenty
155,178
Canterbury
Manawatu/Whanganui
Hawkesbay
New Zealand‘s Indians are people native to countries in the Indian subcontinent, notably India,
Pakistan and Bangladesh, and their descendants. After the Chinese, they are the country‘s
largest Asian ethnic group. New Zealand has many different Indian communities, distinguished
by place of origin, language, religion and caste. Often these differences have not been well
understood by other New Zealanders.
Steadier Indian migration to New Zealand began in the 1890s. By 1896 the number of Indians
in New Zealand had grown to 46. The numbers fluctuated over the next 20 years as people
arrived and departed, but by 1916 there were 181, including 14 females. They came mostly
from the Navsari and Surat regions of Gujarat province, but also from Jalandhar and
7
Hoshiarpur in the Punjab.
Why did Indian come to New Zealand?
Overpopulation, under-employment, and the decline of village industries led many Indians to
seek advancement in other countries. The rising standard of living, combined with crippling
family wedding expenses, also made it vital to earn more money. Gujaratis and Punjabis had
always had close contact with Westerners through British-run industries in India, and were
aware of opportunities overseas. Some who were seafarers or employees of British civil servants
heard about New Zealand‘s employment possibilities.
8
But New Zealand‘s Immigration Restriction Amendment Act 1920 made it possible to block
Indian immigration while maintaining the reciprocity principle. The act required anyone not of
British birth and parentage to apply for a permit before entering New Zealand. The definition of
British birth excluded Indians and other ‗aboriginal natives‘ of British colonies or dominions.
9
Few women arrived before the Second World War. The Indian community remained
predominantly male, as it was cheaper for men to leave their families behind and send money
129
home. Many intended to return to India eventually anyway. During this period, the official
numbers of Indians of ‗mixed blood‘ increased significantly: there were liaisons and
intermarriage with both Māori and European women. The Indian population grew steadily into
the 1940s and numbered 1,554 in 1945.
The White New Zealand League, established in 1926, was opposed to both Chinese and Indian
immigration because it was seen as a threat to the racial integrity and economic prosperity of
European New Zealanders. The league found support among a range of groups including
grower associations, labour organisations, local bodies and the Returned Soldiers‘ Association,
but flourished for only a few years.
However, racial tensions persisted at Pukekohe. Until the late 1950s, Indians there were
excluded from barbers, private bars, and balcony seats in cinemas, and could not join the local
growers‘ association.
One of the fastest growing groupof Indians in New Zealand has been overseas students from
India. There has been a dramatic rise in numbers in the past ten years as shown in the table
below
IndianStudentEnrolments2006‐2014
16,000
14,000
12,000
10,000
Source for all the graphs
above:http://www.enz.govt.nz/markets‐research/india/market‐overview
Some of the highlights of achievements by the Indian diaspora
The achievements of the Indian diaspora in New Zealand are many but to highlight a few:
Well settled and well established communities of Indian diaspora from various parts of
the world
130
Diwali festival is celebrated at Parliament and hosted by the government
Almost every professional sector in New Zealand has Indian diaspora members involved
In economics and business sectors Indian have been making their mark
New Zealand appointed the first person of Indian origin as its Governor General – Sir
Anand Satyanand
New Zealand Parliament now has three Indian origin members of parliament
The Medical profession is heavily dominated by Indian diaspora
Three women of Indian origin were nominated as finalists in the national Women of
Influence awards – Dr Pushpa Wood, Dr Sangeeta Karmokar and Ranjana Patel.
In sports, Indians have dominated the hockey and cricket scene for a number of years.
Various groups of Indian communities have also been well aware of the challenges facing its
members and a number of initiatives are under way to ensure that new arrivals are well
supported, inducted into the new way of life, and are made aware of the social norms and legal
requirements of this country.
In summary, navigating between cultures is never easy and if left unguarded and unattended
some of the misunderstandings and tensions can pose a major challenge for social harmony.
With the increase in numbers predicted, as a nation, New Zealand needs to ensure that the
migrant population does not become marginalised, unrepresented or under represented in key
decision-making processes and thus giving rise to ‗unrest‘ or tension within communities. For
its part, the Indian diaspora also needs to take responsibility for learning, understanding and
living up to the expectations of their country of residence.
Notes:
1.Statistics New Zealand (2015), National Ethnic Populations
2013 (base) – 2038
2. Note that this adds up to more than 100 percent because people can identify with more than one ethnicity.
3.http://www.theguardian.com/commentisfree/2013/apr/22/multiculturalism-won-uk-move-on
(downloaded on 22/11/15)
4.http://www.bbc.com/news/magazine-12381027
5. www.multicultural.sa.gov.au/__.../what-does-multiculturalism-mean.pdf
6. Stuart,J., Unpacking the Impacts of Cultural Diversity: Why Multiculturalism Matters.
(downloaded from http://newsettlers.massey.ac.nz/publications_pdfs/Jaimee%20Stuart.p)
df on 22/11/15
7.http://www.teara.govt.nz/en/indians/page-2
8. Ibid
9. Ibid
*****
131
9.
The Role of New Zealand in Regional Integration
Dr. Sayeeda Bano
Hamilton, New Zealand
Email: [email protected]
Abstract
This study describes and analyses New Zealand‘s regional trade integration through the Asia-Pacific
Economic Cooperation Forum, Trans-Pacific Partnership Agreement,ASEAN-Australia-New Zealand Free
Trade Agreement, New Zealand-Gulf Cooperation Council Free Trade Agreement, and the Pacific Islands
Forum. The discussion includes selected aspects of New Zealand‘s regional integration; New Zealand‘s
trade and trade policy and its evolution; the nature, extent and current status of regional integration;
actual and the expected benefits(and costs) to New Zealand and to its regional partners from integration;
and prospects for extending and deepening economic integration.The major finding is that New Zealand
has been an open trading economy and, despite its small size, has played, and continues to play, an
important role in bilateral, multilateral and regional economic integration.
Key Words: International trade, regional economic integration, New Zealand Trade,
FTAs, APEC, TPP, ASEAN, CER, AANZFTA, GCC, PIF
JEL Classification: F13, F15, F21, F35, Q17, Q37, Q38
Acknowledgments: The author expresses sincere thanks to the Department of Economics,
Waikato Management School, The University of Waikato. Author‘s sincere thanks to Brian
Silverstone and Jose Tabbada for valuable comments. My thanks also go to Nelwin Luo for
research assistance. Any errors and omissions are my own.
______
Introduction
New Zealand is situated in the South Pacific Ocean and is 1,200km‘s east of Australia, its
nearest large neighbour. The country has a total land area of 103,000 square miles and a
population of 4.5 million in 2014. Over the last few years, the New Zealand economy has grown
at the annual rate of 3.5 percent on average (The World Bank, 2015).Real GDP growth was
3percent in the last quarter of 2014.expected to grow between 2 and 4 percent over the next
four years. Unemployment rate was under 6 percent in 2014 (NZ Statistics, 2015).
Being a small open economy, New Zealand realizes the importance of establishing economic
cooperation with large economies like China, Japan and the U.S., and participating in regional
integration. New Zealand has been a member of the WTO since January 1995 and its
predecessor, General Agreement on Trade and Tariffs (GATT), since July 1948. In recent years,
New Zealand has also entered into several bilateral and multilateral free trade agreements
(FTAs).
132
In 2015, New Zealand signed two important free trade agreements (FTAs): a bilateral FTA with
South Korea (New Zealand-Korea FTA) in March 2015 and a landmark economic and trade
agreement between New Zealand and 11 Pacific Rim countries known as Trans-Pacific
Partnership Agreement (TPPA) on 5 October 2015. According to New Zealand‘s Ministry of
Foreign Affairs and Trade (MFAT 2015), the latter agreement is expected to secure New
Zealand‘s trading interests with TPPA‘s diverse member countries in the long run. The TPPA is
also expected to provide New Zealand an opportunity to push further and enhance trade
liberalisation in the Asia-Pacific region.The former FTA, on the other hand, formalizes and
enhances existing trade and economic relationship with one of East Asia‘s most dynamic and
developed economies.
In 1983, New Zealand signed its first bilateral FTA with Australia, theAustralia-New Zealand
Closer Economic Relations (CER). In 1995, New Zealand became a member of the World Trade
Organization (WTO). Over the years, but especially during the decade and a half since 2000,
New Zealand has signed a number of free trade agreements (FTAs). These are:the Trans-Pacific
Strategic Economic Partnership (2005); New Zealand-Korea Free Trade Agreement (2015); New
Zealand-Australia Closer Economic Relations Investment Protocol (2013); New Zealand-Hong
Kong, China Closer Economic Partnership (2011); New Zealand-Malaysia Free Trade Agreement
(2010); ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA, 2010); New ZealandChina Free Trade Agreement (2008);New Zealand-Thailand Closer Economic Partnership
(2005); New Zealand-Singapore Closer Economic Partnership (2001. Several agreements are
currently under negotiation:Anti-Counterfeiting Trade Agreement; the Environmental Goods
Agreement;New Zealand-Gulf Cooperation Council Free Trade Agreement (NZ-GCC FTA); New
Zealand-Russia-Belarus-Kazakhstan Free Trade Agreement; New Zealand-India Free Trade
Agreement;New Zealand-Hong Kong Closer Economic Partnership Investment Protocol;
andRegional Comprehensive Economic Partnership (RCEP),Trade in Services Agreement and
more recently a free trade agreement with European Union (EU) has intiated in October 2015
(MFAT, 2015).
It can be said that New Zealand has been a very active participant in initiatives aimed at
regional integration.
New Zealand’s Trade Policy: Historical Overview
New Zealand‘s trade policy is based on ―four tracks‖,according to MFAT,strengthen
foreign trade through domestic policies such as deregulation and the removal of protection,
trade liberalisation under the WTO‘s (previously GATT) multilateral rules-based system,
thepursuit of trade liberalisation through regional initiatives and bilateral approach, which
involves dealing on a one-to-one basis with bilateraltrading partners (MFAT and NZ Treasury,
2015).
New Zealand was active in laying the foundations of the Doha round of WTO negotiations
because of their importance through agriculture and services.New Zealand has also been
―working with other like-minded countries to reduce barriers to trade in goods and services and
(to) provide improved market access for New Zealand exporters‖ (NZ Economic and Trade
Overview, 2015).
a) Trade policy 1990-2000
New Zealand has been a member country of WTO since 1995. However, the negotiations under
WTO‘strade rules place certain constraints on New Zealand‘s pursuit of international trade.
133
Hence, New Zealand has focused on regional and bilateral trade deals. It joined the Asia Pacific
Economic Cooperation (APEC),which wasexpected to enhance mutual trade liberalisation
among members countries which were not being fulfilled by the early 2000s. Being a member
of WTO and joining APEC did not generate all the expected benefits,but the rise of East Asia,
especially the rapid economic growth of China since 1990s, changed New Zealand‘s trading
patterns significantly. In the late 1980s, China represented only around four percent of New
Zealand‘s exports and one percent of its imports. In 2014, China dominated New Zealand‘s
bilateral trade, accounting for 18.4 percent [See Figure 1b]. New Zealand‘s other significant
new trading partner since the 1990s was South Korea (MFAT, 2015).
b) Trade policy 2000-2015
It was during this period that New Zealand entered into many bilateral and regional FTAs,
which are listed above.
c) New Zeland trade with selected regional partners
Table 1shows New Zealand trade with selected regions. Table 2 and 3 show the top 10
destinations of exports and top 10 sources of imports of New Zealand. Table 2 shows that
China has become New Zealand‘s largest export market, with exports to NZ$13.2 billion in
2014, from NZ$9 billion in 2013. China has displaced Australia as New Zealand‘s largest
trading partner, especially in terms of exports.
The European Union (EU)is New Zealand‘s third largest trading partner, absorbing NZ$7.5
billion of New Zealand‘s export of goods and services in 2014, and with the United Kingdom
(UK) receiving one-third of New Zealand‘s exports amounting to NZ$2.6 billion.
Table 3 shows that Australia, China and the U.S. were the three largest individual country
exporters to New Zealand.Imports from China and the U.S. (or exports to New Zealand)
increased by around NZ$1 billionduring 2013-2014.
EU was the largest importer of New Zealand products, with imports worth NZD$11 billion in
2014.Germany accounted for most of EU exports to New Zealand in 2013 and 2014. The
shares of Japan, Malaysia, South Korea and Thailand in New Zealand‘s imports remained
constant during the period. But India, which is the 10th largest export destination of New
Zealand‘s products, ranked only 16th as New Zealand‘s source of imports.
Table 2 and Table 3 show that New Zealand‘s trade is concentrated in Asia (particularly East
Asia), the EU and the U.S. How to develop and capture other markets like South America, the
Middle East and Africa may be crucial to New Zealand‘s future economic growth.
c) New Zealand’s direct investment
Table 5 presents New Zealand‘s direct investment flows by country in 2013 and 2014. It reveals
that New Zealand‘s direct investment abroad focused mainly on the member nations of APEC,
with Hong Kong and the U.S. as the two main destinations of New Zealand‘s direct investment,
accounting for NZD$223 million and NZD$216 million, respectively, in 2014. In contrast, the
two biggest trading partners of New Zealand, mainland China and Australia, received a
relatively small amount of investment in 2014. In terms of foreign direct investment (FDI) in
New Zealand, APEC nations as a group and Hong Kong as an individual country/region
invested the most, with FDI flows of NZD$2.4 billion and NZD$2.1 billion in 2014. These
investment figures show that New Zealand has received more investment from foreign countries
134
than it has invested abroad. A major challenge for New Zealand is how to encourage more
domestic corporations to invest abroad.
Does New Zealand matter in regional integration?
In order to highlight the role of New Zealand in regional economic integration, five of the
agreements that it had signed will be discussed: the APEC Forum, TPPA, AANZFTA, the NZGCC FTA, and the Pacific Island Forum (PIF).
Figure 1a shows New Zealand‘s trade with the selected regions.The statistics show that APEC
and TPP had the most intensive trade integration with New Zealand, followed by the PIF
countries and ASEAN.Total trade of New Zealand with APEC in 2014 amounted to US$61.2
billion, representing a nearly fourfold increased since 1995. Trade with the GCC, by contrast,
has been much less, amounting to only US$3.9 billion in 2014.
Figure 1a: NZ Trade with Regional Partners over time (in US$
90.0
World
80.0
APEC
ASEAN
70.0
60.0
50.0
40.0
30.0
20.0
20…
20…
20…
20…
20…
20…
20…
20…
20…
20…
20…
20…
20…
20…
20…
19…
19…
19…
19…
0.0
19…
10.0
Source: UNCTAD Database, 2015.
Figure 1b shows the shares of each regional partner in New Zealand‘s total trade. It is obvious
that APEC and TPP, with shares of more than 70 percent and 40 percent, respectively,
represented the largest shares in New Zealand‘s trade flows in 2014.The PIF countries come in
third with around 15 percent of New Zealand‘s total trade, while ASEAN is a close fourth with
13 percent.On the other hand, the share of GCC has remained very small at 4.6 percent in
2014.(Note: The percentages do not add up to 100 because there are overlaps in the
memberships of the various regional FTAs.) Thus, in contrast to trade with Australia, China
and the U.S., New Zealand‘s integration through trade with the GCC countries has been underexpected.
135
Figure 1b: The Share of Partners in NZ Total Trade: 2014
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
APEC
ASEAN
TPP
GCC
PIF
Australia
China
US
Source: UNCTAD Database, 2015. Author‟s calculations.
Figure 1c: The Share of NZ in APEC, TPP and PIF Total Trade
2.00
1.80
25
Share in APEC
Share in TPP
Share in PIF
1.60
20
1.40
1.20
15
1.00
0.80
10
0.60
0.40
5
0.20
0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
0.00
Source: UNCTAD Database, 2015. Author‟s calculations.
Note: Due to the availability of data, Figure 1c includes the share of NZ in PIF over 1995-2014
only. Because of the large difference in magnitude, Figure 1c contains two vertical axes- the left
for the share of NZ in APEC and TPP and the right for the share of NZ in PIF, which was plotted
in a line.
Figure 1c shows New Zealand‘s share in APEC, TPP4 and PIF trade over time. Quite
surprisingly, the share of New Zealand in APEC during 1990-2014 has been diminishing, from
0.69 percent to 0.49 percent. Its share in TPP also decreased significantly, from 1.76 percent in
1990 to 1.13 percent in 2000, but thereafter it increased gradually, with some fluctuations,
from 1.21 percent in 2001 to 1.60 percent in 2014. What these statistics show is that, as far as
trade is concerned, TPP is more important to New Zealand than APEC; this became especially
obvious since 2001.
Although smaller in absolute terms, New Zealand‘s share in PIF,which averaged 16 percent
over the period, has been much greater than its share in both APEC and TPP. This is
136
understandable given the relatively much smaller size of PIF. But this share has been
decreasing substantially, especially between 2004 and 2011, although it increased slightly from
12.6 percent in 2012 to 14.7 percent in 2014.
a. Asia Pacific Economic Cooperation (APEC)
APEC was established in 1989 with 12 members, which included New Zealand as one of the
founding members. APEC now comprises 21 member countries 1 spanning four continents.
APEC accounts for approximately 40 percent of the world's population in 2014 (APEC,
2015),almost 50 percent of the world‘s trade, and 57 percent of global GDP, according to 2014
UNCTAD estimates. As can be seen in Figure 2a, the trade flows and GDP per capita of APEC
have been increasing gradually, the exception being the year 20092. The overall trend in trade
flows shows that both export and import substantially increased, from less than US$1,500
billion in 1990 to nearly US$10,000 billion in 2014. As a group, APEC countries imported
more than they exported to the world over the period 1990-2014, although the difference
between their exports and imports is negligible. During the same period 1990-2014, GDP per
capita of APEC member-countries increased threefold from US$5,000 dollars to more than
US$15,000 dollars.
Figure 2b shows both FDI inflows and outflows of APEC over the period 1990-2014. There was
a significant increase in inward FDI flows to APEC from 1992 to 2000 and again from 2003 to
2009. During the same period, the outward FDI also increased. Overall, both inward and
outward FDI increased from a low level of US$90 billion in the early 1990s to around US$652
billion and US$960 billion, respectively, in 2014 (UNCTAD, 2015).
As a region, APEC has become one of the most important trading partners of New Zealand.
APEC as a group accounted for 73.0 percent and 72.6 percent of New Zealand's exports and
imports respectively in 2014 (UNCTAD, 2015). Individually, member economies of APEC, like
Australia, China and the U.S., have very intensive trade relations with New Zealand: together
these three countries contributed more than 40 percent of New Zealand‘s total trade in 2014.
As for investment, the major investors in New Zealand in 2014 were Australia (NZ$2,816
million), Canada (NZ$496 million), China (NZ$564 million) and The Netherlands (NZ$900
million).On the other hand, the three major destinations of New Zealand‘s FDI in 2014 were
Australia, China and the U.S., which received, respectively, NZ$4,688 million, NZ$935 million
and NZ$2,600 million(NZ statistics, 2015).
137
10000
Figure 2a: APEC trade (US$ Billions) and
GDP per capita (in US$ Dollars) over time
20000
X
M
GDP per capita
8000
15000
6000
10000
4000
5000
2000
0
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
0
Figure 2b: APEC FDI flows over time (in
US$ Billions)
1200
Outflows
Inflows
1000
800
600
400
200
2014
2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
0
Note: Due to the large difference in magnitude, Figure 2a contains two vertical axis- the left for
trade flows (export and import), the right for GDP per capita.
APEC's core work on regional economic integration,particularly towards the realisation of the
Free Trade Area of the Asia-Pacific (FTAAP),has been a key priority for New Zealand (MFAT,
2015). New Zealand has also actively used its current role as Chair of APEC's Economic
Committee to strengthen work on structural reform and issues such as regulatory cooperation.
Other priorities for New Zealand within APEC include ―improving supply chain connectivity;
lowering transaction costs at the border, including through improved customs and standards
procedures; and trade-related measures to improve food security‖. (NZ Economic and Financial
Overview, 2015).
b. Trans-Pacific Partnership Agreement (TPPA)
The Trans-Pacific Strategic Economic Partnership Agreement (hereafter TPP or TPPA), also
known as P4, was originally an FTA between New Zealand, Brunei Darussalam, Chile, and
Singapore. It came into force in 2006 and included measures to expand trade in services and
opportunities to compete for government procurement contracts. The agreement also promotes
138
cooperation on customs procedures, intellectual property and competition policy; members also
became party to binding agreements on environment cooperation and labour cooperation
(MFAT, n.d.). Further negotiations to expand the agreement beyond its original four
membershave been launched since 2009;TPPA now has 12 member countries including New
Zealand1, all of which are also members of the WTO. In total, there are more than 180
preferential trade agreements among Asia-Pacific countries, only a few of which include New
Zealand.
According to UNCTAD statistics, the 12 member-countries of TPPA together contributed nearly
50 percent of world GDP in the late 1990s. Since the 2000s, however, the percentage has
gradually decreased and in 2014 it was down to 36.3 percent. The decline could be attributed
to the rapid growth of some non-member countries like China and India, both of which have
experienced high GDP growth during the past several years: 7.4 percent for China and 5.6
percent for India (The World Bank, 2015).
Figure 3a shows both trade and GDP per capita for 1990-2014, with exports and GDP per
capita moving parallel to each other. Italso shows that TPP as a group has been a net importer,
with the gap between imports and exports growing in recent years. After growing more or less
steadily since 1990, GDP per capita of TPP members has remained constant at
US$35,000since around 2010; still the levelputs its members in the high-income category.
Figure 3a: TPP Trade (in US$ Billions)
and GDP per capita (US$ Dollars) over
6000
40000
time
5000
4000
X
M
GDP per capita
3000
30000
20000
2000
10000
1000
0
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
0
139
700
Figure 3b: TPP FDI flows over time
(in US$ Billions)
Outflows
600
Inflows
500
400
300
200
100
2014
2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
0
Note: Due to the large difference in magnitude, Figure 3a contains two vertical axis- the left for
trade flows (export and import), the right for GDP per capita
TPP member-countries were home to nearly 816 million people in 2014. What this means is
that more than 11 percent ofthe world‘s population could be potential consumers of New
Zealand‘s goods and services.In fact, New Zealand‘s trade with TPP in 2014 contributed more
than 40 percent of the country‘s total trade, broken down into 40.2 percent and 43.0 percent,
respectively,for exports and imports.Although the contribution of TPP to New Zealand‘s trade
was less than that of APEC, the potential gains to New Zealand can be substantial.TPP as a
region together also represented more than 30 percent of the world‘s FDI,with 28.1 percent
(US$345 billion)and 42.8 percent (US$579 billion)as inflows and outflows, respectively (See
Figure 3b). According to estimates of MFAT, New Zealand‘s economy stands to benefit from TPP
by at least NZD$2.7 billion a year by 2030. TPP is likewise estimated to save NZD$259 million
a year in foregone tariffs for domestic exporters4.
The negotiations and finalisation of the TPPA should be an opportunity for New Zealand to gain
better access to Japan, the U.S. and other East Asian countries. Participation in TPP should
likewise help New Zealand further diversify its foreign markets and thus mitigatethe risks
arising from over-reliance on a few markets. TPP could yet become the biggest trade outcome
for New Zealand, since it will now have an FTA covering its top five trading partners, namely,
Australia, China, the U.S., Japan and South Korea.
However, there are major concerns in New Zealand regarding the impacts of multinational
corporations on domestic decision-making and policies. For instance, Gleeson et al. (2013)
argue that TPPA, especially the U.S. agenda of constraining the pharmaceutical access
programs of other countries, would ―increase costs and reduce access to affordable medicines
for New Zealanders‖. Other concerns focus on the lack of transparency of negotiations. For
instance,Monasterio et al. (2015) charge that the negotiations under TPPA are completely
concealed from the New Zealand public. There are more than 600 U.S. corporations that
―appear to influence the negotiating process‖ while the ―negotiating documents will remain
confidential for four years after negotiations are concluded or abandoned‖. There is thus a
140
danger that New Zealanders may be subject and bound to a secret agreement that is virtually
impossible to reverse.
c. ASEAN-Australia-New Zealand Free Trade Area (AANZFTA)
The ASEAN-Australia-New Zealand Free Trade Area (hereafter AANZFTA) was signedin Thailand
on February 2009 and entered into force on January 2010 (NZ Treasury, 2015) 5.AANZFTA
represents a significant milestone in New Zealand's engagement and integration into the
ASEAN region.The benefits for New Zealand exporters include the phased elimination of tariff
barriers, greater certainty and transparency and reductions in associated transaction costs.
Tariffs on goods are reduced over a period of up to 12 years (MFAT and NZ Economic and
Financial Overview, 2015). Like the New Zealand-China FTA, both economies are allowed to
have adjustments in their import-sensitive sectors. There are also new GATS-plus
commitments in services sectors in areas of interest to New Zealand.
Figure 4apresents ASEAN trade flows over time. It shows that exports and imports of ASEAN
with the worldhave increased eight-fold from US$162 billion in 1990 to US$1,200 billion in
2014. The difference between exports and imports is negligible, hence trade is almost balanced.
GDP per capita in ASEAN reached around US$4,000 dollars in 2013 and 2014, placing
majority of its members (of over 600 million) in the lower-middle income category (US$1,046US$4,125). However, given ASEAN‘s relatively rapid growth, it could graduate to the
uppermiddle-income category in the near future. But even before members of ASEAN reach
upper middle-income status, the potential market offered by the relatively well-off ASEAN
members such as Singapore, Brunei, Malaysia and Thailand cannot be ignored.
Figure 4b shows that ASEAN has more inward than outward FDI during the period 1990-2014,
with a very significant increase in FDI inflows from US$46 billion in 2009 to US$133 billion in
2014. During the same period, outflows from ASEAN increased to US$80 billion.
According to the latest statistics of UNCTAD, ASEAN as a group accounted for 10.1 percent
and 15.8 percent of New Zealand‘s total exports and imports in 2014. Compared to the 1990s,
bilateral trade between New Zealand and ASEAN in the 2000s has grown significantly, with the
share of imports reaching its highest level of 16.5 percent in 2012. The geographical proximity
of ASEAN to New Zealand should make integration easier compared to other trading partners.
141
1400
Figure 4a: ASEAN trade (in US$
Billions) and GDP per capita (US$
dollars) over time
4500
Exports
Imports
GDP per capita
1200
1000
4000
3500
3000
800
2500
600
2000
1500
400
1000
200
500
0
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
0
Figure 4b: ASEAN FDI flows over
time (in US$ Billions)
140
Outflows
120
Inflows
100
80
60
40
20
2014
2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
0
Note: Due to the large difference in magnitude, there are two vertical axes- the left for trade
flows (export and import), the right for GDP per capita
There are studies on the nature and prospects of the trade relations between New Zealand and
ASEAN.Shakur and Nees (2011) applied the natural trading partner hypothesis to assess the
AANZFTA from New Zealand‘s perspective. Their results show that there is no strong evidence
that New Zealand and ASEAN-5countries6 are natural trading partner, given the low level of
trade intensity indices and trade complementarity indices. Using trade intensity indices and
the trade potential method, Bano et al.(2013) estimated trade relations between New Zealand
and ASEAN. Their study shows that trade relations between the two intensified from 1980 to
2010 and that there is a large potential for trade between Indonesia, Malaysia, Singapore and
142
Thailand, on one hand, and New Zealand, on the other, given their geographical advantage. In
terms of further trade relations, Capie (2015) believes that there will be two main challenges for
New Zealand even as ASEAN integration continues. The first challenge is how to maintain the
quality of the relationship when countries such as China and Japan have been investing
heavily in ASEAN countries. The second challenge is ―to build a greater understanding inside
New Zealand about ASEAN, and indeed about Southeast Asia more generally‖ (Capie, 2015).
The reason for the latter challenge is that New Zealanders‘ perception when they think about
Asia‘s importance to New Zealand is dominated by China.
d. The New Zealand-Gulf Cooperation Council Free Trade Agreement
The New Zealand Government concluded negotiations towards an FTA with the Gulf
Cooperation Council (hereafter GCC) in 2009.The Government has been looking to complete
the legal verification process (which involves reviewing and agreeing on the technical legal
framework of the FTA) as soon as possible. Once verification is completed, the FTA can be put
before Ministers for their signature and can then be subject to the respective domestic approval
processes of each party (NZ Economic and Financial Overview, 2015). Before an FTA with the
GCC is finalised, it may be useful to identify the trends in the GCC‘s trade.
As shown in Figure 5a, trade flows and GDP per capita of GCC member countries have been
increasing gradually, the exception being 2009. As a group, the GCC countries exported more
than they imported from the world over the period 1990-2014. This is unsurprising because
the establishment of GCC greatly stimulated their export of oil and natural gas to the world.
Indeed, the overall trend in trade flows shows that exports increased substantially from less
than US$47 billion in early 1990s to nearly US$1,000 billion in 2014. During the same period,
GDP per capita of GCC member countries increased more than 4-fold from US$9,100 dollars to
more than US$33,000.Revenues from oil and natural gas enabled the GCC member countries
to attain their high-income status.
Figure 5b shows the FDI flows of GCC over the period 1990-2014. There was a significant
increase in the FDI inflows to GCC from 2002 to 2008, after which inflows decreased
substantially from US$62 billion in 2008 to US$22 billion in 2014. Outward flows, though
fluctuating, have increased in recent years from US$13.8 billion in 2012 to US$29.4 billion in
2014, an increase of nearly US$16 billion.
143
Figure 5a: GCC trade flows (in US$
Billions) and GDP per capita (US$
Dollars) over time
1200
1000
Exports
Imports
GDP per capita
800
40000
35000
30000
25000
600
20000
15000
400
10000
200
5000
0
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
0
70
60
50
Figure 5b: GCC FDI flows over time (US$
Billions)
Outflows
Inflows
40
30
20
10
0
-10
Source: UNCTAD Database, 2015
Note: Due to the large difference in magnitude, there is a need for two vertical axis- the left for
trade flows (export and import), the right for GDP per capita
The GCC countries together accounted for 4 percent and 5.4 percent, respectively, of New
Zealand‘s exports and imports in 2014. These percentages have increased gradually since the
1990s.
According to MFAT (2015), the objective of an FTA with the GCC is to underpin and enhance
deeper economic integration between the two economies. Integration, when finalized, is
expected to bring three broad benefits to New Zealand. Firstly, it would remove tariff barriers
and thus reinforce New Zealand‘s competitive edge. Secondly, it would provide a platform from
which to develop trade in services and investment. Lastly, it would also provide a basis for
consultation to deal with a range of non-tariff issues affecting trade, such as Sanitary and
Phyto-sanitary (SPS) measures and Technical Barriers to Trade (TBT) (MFAT, 2015).An FTA
144
with GCC will be a significant milestone in New Zealand‘s integration with the Arab states of
the Persian Gulf.
e. The Pacific Islands Forum (PIF)
New Zealand has a long history of political, cultural and economic ties with the Pacific Island
nations. Aid has been an important part of the special relationship, with New Zealand
providing significant support to PIF countries, such as assistance after the Vanuatu cyclone7
and the tsunami that affected Tonga and Samoa8 (Sopoaga et al, 2015). But trade with New
Zealand has also significantly contributed to the globalization of PIF nations, and vice-versa.
The Pacific Islands Forum (hereafter the PIF) was founded in 1971 as the South Pacific Islands
Forum. It is a political organization composed of 16 independent member countries9(Pacific
Islands Forum Secretariat, 2015). PIF‘s mission is ―to improve the economic and social wellbeing of the people of the South Pacific by encouraging cooperation between governments and
between international agencies, and by representing the interests of forum members in ways
agreed (upon) by the Forum‖ (Pacific Island Forum, n.d.).
Figure 6a presents the PIF nations‘ trade with the world over 1995-2014. It shows both export
and import of PIF nations to have increased fourfold from US$60 billion in 1995 to US$240
billion in 2014.
Figure 6b shows the proportion of New Zealand‘s trade with each nation of PIF in 2014. It
shows that Niue has relied heavily on bilateral trade with New Zealand, with a share of nearly
60 percent, while the Marshall Islands, Micronesia and Palau have relied less on trade with
New Zealand; their percentage share was less than three percent in 2014.
Figure 6a: Pacific Islands Forum Trade with the World over
time (in US$ Billions)
600
Export
500
Import
Trade
400
300
200
100
145
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
0
New Zealand‘s integration with the PIF nations is also reflectedinother forms of financial
assistance. For instance, New Zealand‘s Aid Programme provides aid aimed at ―supporting
sustainable development in developing countries to reduce and contribute to a more secure,
equitable and prosperous world‖ (New Zealand Aid Programme, 2015). Figure 6c shows the
allocation of New Zealand Indicative Programme among the nations in PIF. The Solomon
Islands received most of the funds,of nearly NZD$70,000 million from 2012 to 2015. Papua
New Guinea and Tokelau received NZD$54,000 million and NZD$54,600 million, respectively,
during the same period. On the other hand, Fiji, Nauru and Tuvalu received the least amount
of funds: NZD$12,000 million, NZD$6,000 million and NZD$11,000 million, respectively. The
nations of PIF received a total of NZD$462,100 million from New Zealand in 2012-2015.
Figure 6b: The Share of NZ trade in the nations of Pacific Islands
Forum in 2014
60
50
40
30
20
10
Vanuatu
Tuvalu
Tonga
Solomn Ids
Samoa
Papua N. G.
Palau
Niue
Nauru
Micronesia
Marshall Ids
Kiribati
Fiji
Cook Ids
Australia
0
Figure 6c: NZ Indicative Programme Allocations in the nations of
PIF: 2012-2015 (in NZD$ millions)
80,000
70,000
2012-2013
2013-2014
2014-2015
60,000
50,000
40,000
30,000
20,000
10,000
Afghanistan
Niue
Tokelau
Vanuatu
Tuvalu
Tonga
Solomon
Islands
Samoa
Papua New
Guinea
Nauru
Kiribati
Fiji
Cook
Islands
0
Source: New Zealand Aid Programme, 2015.
Remittances from New Zealand have also greatly augmented the resources of the PIF nations.
While there are no reliable data on the amount of funds remitted to PIF nations from Pacific
146
people living in New Zealand, due mainly to the difficulties of estimating amounts sent through
informal channels or in the form of goods (e.g. telephone cards), it is clear that remittances
from New Zealand make a significant contribution to the Pacific island economies (The House
of Representatives, 2010). But one estimate, by the Asian Development Bank, placed the
amount received as remittances by the PIF economies at US$627 million in 2014. These
remittances accounted for 17 percent of Papua New Guinea‘s GDP, and 26 percent of Tonga‘s
in 201410(ADB, 2015).
The foregoing facts, especially on trade, may not be very attractive to a country that is looking
for large economies to trade with. But the PIF nations, with theirrelative proximity to New
Zealand, may offer some ―low-hanging fruits‖ to a country that wishes to diversify its foreign
market.
New Zealand’s participation in multilateral organisations
Multilateralism is a central pillar of New Zealand‘s foreign policy (MFAT, 2015). New Zealand
has been involved in six international organisations so far: APEC, Commonwealth, OECD
(Organisation for Economic Cooperation and Development), the UN and WTO. New Zealand‘s
participation in these organisations has provided enormous benefits to New Zealand in the
form of enhanced trade, investment and goodwill.In this section, New Zealand‘s membership
and participation in the OECD, UN and the WTO will be discussed.
New Zealand joined the OECD in 1973. The aim of OECD is to maximise member countries‘
economic growth. Over the decades, OECD has provided ―a valuable forum through which New
Zealand can make its voice heard on key economic and social issues such as economic best
practice, tradeliberalisation and sustainable development‖ (MFAT, 2015). Through the OECD,
New Zealand can build cooperative networks with other member countries and share its
experience and analysis with the Secretariat. According to the statistics provided by OECD
(2015), New Zealand has provided more than US$50 million of net official development
assistance (hereafter ODA) to developing countries since 2000. In 2013, New Zealand
contributed nearly US$90 million net ODA in total.
In addition to monetary assistance, New Zealanders spend on average 13 minutes per day in
volunteer activities, the highest among OECD countries. New Zealand has collaborated closely
with the OECD in recent years. For example,in 2012 New Zealand signed the multilateral
Convention on Mutual Administrative Assistance in Tax Matters in order to prevent tax
evasion; Phil O‘Reilly, a New Zealander (Business NZ) became Chairman of the OECD-focused
Business and Industry Advisory Council in 2013; and New Zealand took on the presidency of
the International Transport Forum in 201411.
The United Nations (UN) was established in 1945, with New Zealand as one of the founding
members. According to MFAT (2015), New Zealand‘s key interest in the UN include
―international security and disarmament, environment, human rights and targeted
development programmes‖. New Zealand has been heavily involved in key UN agencies,
providing personnel and financial assistance to organisations such as the World Health
Organisation (WHO), Food and Agriculture Organisation (FAO), United Nations Educational,
Scientific and Cultural Organisation (UNESCO) and United Nations Relief and Works Agency
(UNRWA). New Zealand has contributed to the six principal organs of the UN to help achieve
the primary aims of the organisation12. According to MFAT (2015), New Zealand‘s contribution
to the UN‘s regular budget for 2011 was around NZD$8.3 million, which was 0.27 percent of
147
the total UN budget. New Zealand also contributed NZD$1.1 million in 2011 to finance
theCapital Master Plan for the phased renovation of the UN Headquarters. As a small country,
New Zealand often participates in certain activities or as part of a larger group.
New Zealand has been a member of the World Trade Organisation (hereafter WTO) since
January 1995. The WTO is an international organisation that deals with global rules of trade.
As the role of multilateralism in trade policy becomes more crucial, New Zealand stands to
benefit from the trade rules set by the WTO. Without the multilateral forum provided by the
WTO, New Zealand would have to negotiate separate trade agreements with every country that
it wants to trade with. Individual negotiations lead to extra costs for domestic
exporters.Without the WTO, New Zealand would also lose many opportunities to trade with the
larger economies who are also members of the WTO.
Multicultural New Zealand
In the 1960s, most immigrants to New Zealand were British. However, more immigrants from a
wide range of cultures have made New Zealand their home since the 1990s. As the number of
non-British immigrants increased, New Zealand has become multicultural. According to
StatisticsNew Zealand (2015), New Zealanders of overseas birth are mainly from Asia, Britain
and the Pacific islands, with the number of Asia-born and Britain-born New Zealanders in
2013 reaching 316,473 and 265,206, respectively.Immigrants have played animportant role in
sports, art,cooking and other fields.Prominent figures such as rugby players Tana Umaga and
Jonah Lomu, Silver Fern netballer Bernice Mene, discus champion Beatrice Faumuina, and hip
hop artists Che Fu and Scribe have become national heroes. Cambodian bakeries are now
making a classic New Zealand dish, the meat pie, and winning national awards (Teara, n.d.).
Multiculturalism not only formed New Zealand‘s modern society but also helped make New
Zealand more inclusive.The experience in multiculturalism would serve New Zealand in good
stead in its bid for regional and multilateral integration.
Conclusions
This paper has explored some key aspects of New Zealand‘s role in regional integration. It is by
no means exhaustive as it focused on just five regional groupings of which New Zealand is a
member: APEC, TPPA, GCC, PIF, and AANZFTA.Although mainly illustrative, the discussion of
New Zealand‘s role in and relationship with each of these regional groupings strongly suggests
that there are net benefits, tangible (e.g., trade creation) as well as intangible (e.g., goodwill),
from such participation in regional integration, both to New Zealand and the other membercountries.The benefits (and costs) of integration to New Zealand no doubt vary from one region
to another according to certain criteria put forward in the literature on regional integration (for
instance, by Viner), but, on the whole, they are positive, perhaps even substantial. Studies
have shown that regional integration is especially beneficial for small economies, like New
Zealand, when they have larger economies, such as the US and Australia, as trade
partners/members. This is probably why, especially with the Doha round of negotiations
stalled since 2003, regional, plurilateral and bilateral FTAs have proliferated, with more of
them currently under negotiation.
This is not to say that the costs of New Zealand‘s (or, for that matter, other members‘)
participation in regional integration agreements/FTAs are insignificant. They are not. Indeed,
there are serious concerns, for instance, on employment, on workers‘ unions, on sectors or
industries that face greater competition due to the removal of barriers to trade and investment,
148
maybe even on domestic income distribution.These issues are serious enough, but they become
especially problematic during economic downturns, such as most of the developed countries
have experienced since 2008, and so ought to be managed carefully.
This paper has been essentially an overview. Further research could include the determinants
of trade flows between New Zealand on one hand and the GCC and PIF countries on the other.
The logical next step, is to assess the feasibility of further deepening the existing economic (as
well as political, social and cultural) relationship with a New Zealand-PIF and a New ZealandGCC FTA. Because of the geographical proximity of PIF and thehigh incomes of GCC member
countries, there should be some relatively easy opportunities that New Zealand can readily
achieve in both regions. Since trade is a win-win and not a zero-sum game, the prospective
regional partners should benefit likewise.
Table 1: NZ Total Trade with Partners over time (in US$Billions)
Year
World
APE
C
ASEAN
TPP
GC
C
PIF
Austral
ia
Chin
a
US
1995
27.7
19.9
1.9
15.7
0.5
6.2
5.8
0.8
4.0
1996
29.1
20.9
2.1
16.5
0.5
6.9
6.5
0.9
3.8
1997
28.6
20.6
2.1
16.2
0.6
6.9
6.5
1.1
4.1
1998
23.4
16.6
1.6
13.3
0.5
5.3
5.0
0.9
3.8
1999
26.8
19.2
2.0
15.4
0.5
6.5
6.2
1.1
4.1
2000
27.2
19.7
2.1
15.4
1.0
6.1
5.8
1.3
4.3
2001
27.0
19.6
2.4
15.0
0.8
5.8
5.5
1.5
4.2
2002
29.4
21.2
2.4
16.1
0.8
6.7
6.3
1.9
4.3
2003
35.1
25.2
2.9
18.9
1.0
8.2
7.8
2.5
4.6
2004
43.5
31.3
3.8
23.2
1.0
10.0
9.4
3.4
5.6
2005
48.0
34.3
4.5
24.8
1.4
10.7
10.1
3.9
6.0
2006
48.8
35.2
5.5
25.2
1.8
10.6
10.0
4.4
6.0
2007
57.8
41.7
6.9
29.2
2.1
13.0
12.3
5.6
6.1
2008
64.9
45.9
8.7
31.5
3.1
14.1
13.3
6.4
6.4
2009
50.5
36.0
6.0
23.9
1.9
11.0
10.4
6.1
5.2
2010
61.1
44.5
7.5
28.6
2.7
13.3
12.6
8.2
5.8
2011
73.7
52.8
8.8
33.0
3.9
15.2
14.3
10.4
6.9
2012
75.5
54.8
9.8
33.9
3.9
14.7
13.8
11.8
7.0
2013
79.1
57.6
10.3
32.6
4.0
13.7
12.7
14.9
7.1
2014
84.1
61.2
10.9
35.0
3.9
13.3
12.5
15.5
8.8
Source: UNCTAD Database, 2015. Author's calculations.
Table 2: New Zealand's top 10 destinations of export
Exports (fob) NZ$(million)
2013
Country/ group
Goods
China
Australia
7,715
9,531
2014
Rank
Services
Total
Rank
Goods
Rank
Services
Total
Rank
2
1,490
9,205
2
11,572
1
1,667
13,239
1
1
4,289
13,820
1
8,931
2
4,121
13,052
2
149
European Union
4,510
3
2,311
6,821
3
5,033
3
2,481
7,514
3
United Kingdom
1,388
…
1,044
2,432
…
1,538
…
1,080
2,618
…
Germany
716
…
407
1,123
…
781
…
546
1,327
…
Netherlands
605
…
117
722
…
663
…
124
787
…
U.S.
4,116
4
2,206
6,322
4
4,225
4
2,506
6,731
4
Japan
2,945
5
746
3,691
5
2,900
5
697
3,597
5
Korea, Republic of
1,585
6
456
2,041
6
1,654
6
465
2,119
6
Singapore
888
7
332
1,220
7
1,092
7
320
1,412
7
Malaysia
836
10
157
993
10
977
9
169
1,146
8
Taiwan
865
8
122
987
11
986
8
109
1,095
9
India
724
12
409
1,133
9
632
16
410
1,042
10
Total of top 10
36,424
…
14,088
50,512
…
40,984
…
14,696
55,680
…
Total export
45,704
…
16,290
61,994
…
51,161
…
16,893
68,054
…
Source: Statistics New Zealand, 2015.
Note: Returns of previously exported New Zealand goods are excluded.
Table 3: New Zealand top 10 sources of import
Imports (vfd) NZ$(million)
Country/ group
2013
2014
Goods
Rank
Services
Total
Rank
Goods
Rank
Services
Total
Rank
European Union
7,017
2
2,558
9,575
2
8,375
1
2,615
10,990
1
Germany
1,961
…
444
2,405
…
2,275
…
380
2,655
…
United Kingdom
1,178
…
851
2,029
…
1,207
…
889
2,096
…
932
…
192
1,124
…
1,316
…
210
1,526
…
Australia
6,612
3
5,069
11,681
1
5,858
3
5,083
10,941
2
China
7,376
1
382
7,758
3
8,062
2
478
8,540
3
U.S.
3,966
4
1,779
5,745
4
4,691
4
1,925
6,616
4
Singapore
1,668
8
1,024
2,692
6
2,225
7
1,069
3,294
5
Japan
2,763
5
158
2,921
5
2,960
5
153
3,113
6
Malaysia
1,968
6
169
2,137
7
2,229
6
159
2,388
7
Korea, Republic of
1,815
7
162
1,977
8
2,016
8
152
2,168
8
Thailand
France
1,537
9
238
1,775
9
1,582
9
233
1,815
9
United Arab Emirates
677
14
189
866
11
1,053
10
185
1,238
10
India
398
18
137
535
18
429
18
149
578
16
Total of top 10 + India
39,470
…
13,215
52,685
…
43,849
…
13,531
57,380
…
Total Import(5)
44,159
…
15,234
59,393
…
47,469
…
15,516
62,985
…
Source: Statistics New Zealand, 2015
150
Table 4: Indicative programme allocations 2012/13 - 2014/15
12/13
Indicative
Country Programmes
Allocation
NZ$ million
Cook Islands
14,000
Fiji
4,000
Kiribati
15,000
Nauru
2,000
Papua New Guinea
18,000
Samoa
13,000
Solomon Islands
25,000
Tonga
12,000
Tuvalu
4,000
Vanuatu
14,000
Tokelau
20,300
Niue
14,000
Afghanistan
20,000
Total
175,300
Source: New Zealand Aid Programme, 2015.
13/14
Indicative
Allocation
NZ$million
14,000
4,000
12,000
2,000
18,000
13,000
25,000
12,000
3,500
12,000
20,300
13,500
5,000
154,300
14/15
Indicative
Allocation
NZ$million
14,000
4,000
10,000
2,000
18,000
12,000
20,000
12,000
3,500
12,000
14,000
13,000
4,000
138,500
Total three year
indicative
allocation
NZ$million
42,000
12,000
37,000
6,000
54,000
38,000
70,000
36,000
11,000
38,000
54,600
40,500
29,000
462,100
Table 5: NZ Flow of direct investment by country
2013
Economic group/country
2014
NZ $(million)
A: New Zealand's direct investment abroad
APEC
OECD
ASEAN
EU
Australia
Bermuda
Canada
China, People's Republic of
Hong Kong (SAR)
Japan
Netherlands
Singapore
United Kingdom
U.S.
-315
-282
139
258
-524
17
12
-38
127
-23
132
36
96
-25
848
275
291
-9
54
…
40
26
223
…
…
…
15
216
Total Direct investment abroad
-92
802
B: Foreign direct investment in New Zealand
APEC
OECD
EU
ASEAN
Australia
Bermuda
Canada
China, People's Republic of
Germany
Hong Kong (SAR)
Japan
1,308
952
1,422
1,066
1,102
-88
945
…
-1,160
344
-81
151
2,468
740
635
135
338
-130
-149
…
172
2,016
134
Netherlands
Singapore
United Kingdom
U.S.
Total Direct investment in New
Zealand
-1,110
1,091
3,656
-2,264
339
133
43
-191
2,229
2,766
Source: Statistics New Zealand, 2015
Table6: Country's/Region's Total FDI Inflows over time (in US$ Billions)
Table6: Country's/Region's Total FDI Inflows over time (in US$ Billions)
Austra
lia
China
NZ
APEC
ASEA
N
GCC
TPP
World
1990
7.9
3.5
1.7
92.6
12.8
0.2
79.1
204.9
1991
4.1
4.4
1.7
59.9
13.6
1.0
47.6
154.1
1992
5.5
11.0
1.1
69.1
12.7
1.4
46.3
163.0
1993
4.1
27.5
2.2
121.9
16.6
0.5
79.4
220.1
1994
4.8
33.8
2.6
143.5
20.5
1.2
93.5
254.9
1995
11.7
37.5
2.8
176.0
28.6
1.6
117.8
341.5
1996
5.6
41.7
3.9
212.7
32.9
3.2
143.1
388.7
1997
7.8
45.3
1.9
249.9
35.9
1.7
173.0
481.2
1998
5.5
45.5
1.8
315.3
20.9
0.6
237.7
692.3
YEAR
1999
1.8
40.3
0.9
461.6
31.0
-0.2
373.2
1076.3
2000
14.2
40.7
1.3
565.4
22.5
0.4
449.8
1363.2
2001
7.8
46.9
-0.3
347.4
21.9
2.0
255.7
684.1
2002
14.2
52.7
1.8
234.2
17.0
1.5
162.4
591.4
2003
6.3
53.5
-2.8
211.3
31.3
6.1
119.3
552.0
2004
39.6
60.6
1.4
377.9
40.2
14.1
249.0
682.7
2005
-28.3
72.4
1.2
320.5
43.2
28.3
165.0
927.4
2006
26.3
72.7
3.7
584.7
64.5
39.2
398.6
1393.0
2007
41.5
83.5
3.6
750.0
86.0
47.6
514.3
1871.7
2008
46.9
108.3
3.2
800.1
50.3
62.5
522.8
1489.7
2009
31.7
95.0
0.8
491.0
46.1
51.4
279.9
1186.5
2010
36.4
114.7
1.0
651.3
105.1
42.1
386.6
1328.2
2011
57.1
124.0
4.0
750.7
93.5
29.8
445.2
1564.9
2012
55.8
121.1
3.4
685.8
108.1
27.0
400.9
1403.1
2013
54.2
123.9
1.6
836.9
126.0
22.6
516.5
1467.1
2014
51.9
128.5
3.4
651.8
132.8
21.7
345.0
1228.3
Table7: Country's/Region's Total FDI Outflows over time (in US$
Billions)
Australi
a
China
NZ
APEC
ASEAN
GCC
TPP
1990
0.2
0.8
2.4
101.8
2.3
-0.9
92.0
243.9
1991
0.4
0.9
1.5
80.7
0.9
-0.3
73.1
198.9
YEAR
152
World
1992
4.6
4.0
89.4
2.5
-0.9
71.1
203.8
4.4
0.4
1.4
1993
1.4
128.7
4.3
0.8
100.4
236.3
1994
1995
2.2
2.0
2.0
146.8
11.0
-0.4
113.8
285.4
2.5
2.0
177.6
12.2
-0.9
140.8
356.7
1996
6.2
2.1
180.2
14.8
2.5
140.2
392.3
1997
5.8
2.6
1.8
1.2
1.6
207.5
15.9
-0.3
166.7
467.4
1998
2.5
2.6
0.4
228.7
4.8
-1.6
199.8
681.0
1999
-0.0
1.8
1.1
299.7
10.1
0.6
264.6
1077.1
2000
2.9
0.9
305.2
8.8
1.7
235.4
1166.1
2001
10.5
6.9
0.6
1.1
271.0
20.6
0.3
235.0
584.0
2002
6.6
2.5
0.3
231.6
1.9
2.6
203.8
491.4
2003
15.0
2.9
240.7
5.4
-2.6
204.5
532.0
2004
7.4
5.5
477.5
17.1
6.4
396.2
887.6
2005
-35.8
12.3
0.9
0.0
1.3
150.2
18.5
10.3
74.9
795.9
2006
20.0
21.2
0.4
493.5
28.6
20.4
373.9
1344.6
2007
11.9
26.5
3.2
788.3
59.6
31.0
608.4
2129.6
2008
30.4
55.9
780.3
32.2
34.3
580.2
1694.0
2009
16.4
56.5
1.1
1.0
657.7
41.5
15.0
468.6
1101.3
2010
19.8
68.8
0.7
718.1
55.4
15.5
462.8
1366.2
2011
1.7
74.7
922.2
54.9
28.6
627.7
1587.6
2012
5.6
87.8
2.5
0.5
847.2
50.7
17.3
565.7
1283.7
2013
-3.1
101.0
911.1
67.2
35.0
577.7
1305.9
2014
-0.4
116.0
0.5
0.0
959.5
80.0
29.4
579.4
1354.3
References
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Gleeson, D., Lopert, R., & Reid, P. (2013). How the Trans Pacific Partnership Agreement could undermine
PHARMAC and threaten access to affordable medicines and health equity in New Zealand. Health
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Wellington, NZ: 1995, 21(7), 25
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from http://www.treasury.govt.nz/economy/overview/2015/03.htm
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New Zealand Treasury. (2015). Retrieved from http://www.treasury.govt.nz/
Nixon, C., & John, Y. (2003). New Zealand‟s trade policy odyssey. Wellington: New Zealand Institute of
Economic Research, 2002.
Pacific Islands Forum - CRW Flags. (n.d.). Retrieved from http://www.crwflags.com/fotw/flags/intpif.html
Shakur, S., & Nees, C. (2011). An application of the natural trading partner hypothesis to New ZealandASEAN trade. Economics Bulletin, 31(4), 3077-3088.
Sopoaga, F., Crampton, P., Ekeroma, A., Perez, D., Maoate, K., Watson, B., ... & Blattner, K. (2015). The
role of New Zealand health professional training institutions in capacity building in the Pacific
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UNCTAD Database. (2015). Retrieved from
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______________
1.The other member economies of APEC are Australia, Brunei Darussalam, Canada, Chile, China
(PRC), Indonesia, Japan, Korea, Malaysia, Mexico, Papua New Guinea, Peru, Philippines, Russia,
Singapore, Chinese Taipei, Thailand, the United States and Viet Nam.
2. Figure 2a
3. The 12 member countries include Australia, Brunei D, Canada, Chile, Japan, Malaysia,
Mexico, New Zealand, Peru, Singapore, United States and Viet Nam. TPP was signed in October
2015.
4.Available at the official website of the New Zealand government:
http://beehive.govt.nz/feature/tpp?utm_source=feedburner&utm_medium=feed&utm_campaign
=Feed%3A+beehive-govt-nz%2Fportfolio%2Ftrade+%28Trade+-+beehive.govt.nz%29.
5. Member economies including Australia, Brunei D., Cambodia, Indonesia, Lao PDR, Malaysia,
Myanmar, New Zealand, Philippines, Singapore, Thailand and Viet Nam. The FTA entered into
force on 1 January 2010for(andbetween) the following countries: Australia, Brunei, Myanmar,
Malaysia, New Zealand, Singapore, the Philippines, and Viet Nam. The agreement entered into
force for Thailand on 12 March 2010 and Lao PDR and Cambodia on 1 and 4 January 2011
respectively, and entered into force for Indonesia on 10 January 2012.
6. ASEAN5 countries include Singapore, Indonesia, Malaysia, Thailand and Philippines, which
were the original members of ASEAN.
7. Red Cross aid in Vanuatu: The New Zealand Red Cross. Available from: https://www.redcross.
org.nz/what-we-do/ around-the-world/stories/ red-cross-aid-in-vanuatu/.
8. 2009 Samoa earthquake and Tsunami: Wikipaedia. Available from: https:// en.wikipedia.org/
wiki/2009_Samoa_earthquake_and_tsunami.
9. Members of the PIF include Australia, Cook Islands, Federated States of Micronesia, Fiji,
Kiribati, Nauru, New Zealand, Niue, Palau, Papua New Guinea, Republic of Marshall Islands,
Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu.
10. Further details of data and information are available at http://www.adb.org/publications/keyindicators-asia-and-pacific-2015.
11. For more information visit www.mfat.govt.nz/Trade-and-Economic-Relations/OECD/ and
www.oecd.org/newzealand
12. The six principal organs of UN are: The General Assembly; The Security Council; The
Economic and Social Council; The Trusteeship Council; The International Court of Justice and
The Secretariat.
*****
154
10.
India and the South Pacific:
Fiji, PIF, IPIC and the China connection
David Scott
(David Scott ([email protected]) has been a lecturer at Brunel University from 1992-2015, where his
interests and teaching focussed on various aspects of Asia-Pacific international relations and the impact of China and
India in the international system. He is recently retired from teaching, but is still actively researching and undertaking
consultancy. A prolific author, Scott has written three books on China’s international relations, edited one book on
India’s international relations, and has written many articles on Chinese and Indian foreign policy, and also on the
geopolitics of the Pacific Ocean and the Indian Ocean.)
Introduction
In recent years a ―strategic imperative‖ has drawn India into closer involvement with the South
Pacific.1 This represents an extension of India‘s Look East policy which was originally aimed in
the 1990s at Southeast Asia, via the Association of Southeast Asian Nations (ASEAN); but
which then developed a wider geographic orbit in a so-called Look East Phase-2 evident since
2003. This new phase was described in 2003 by the External Affairs Minister Yashwant Sinha
as ―characterised by an expanded definition of ‗East‘, extending from Australia to East Asia‖, 2
though at the time it was still felt by some Indian observer that ―the potential with Australia
and the South Pacific remains to be tapped fully‖.3 India‘s push into East Asia has brought it
into the Western Pacific.4 Having been thereby extended into Australasia and the West Pacific,
a further extension, in effect a Look East Phase-3, has seen India‘s sense of strategic ‗East‘
pushed across still further into the South Pacific. India‘s Ministry for External Affairs
highlighted such wider South Pacific arenas in its 2003–04 Annual Report, It noted that ―India
continued to pursue closer relations with South East Asia in keeping with its Look East Policy‖,
but went on to flag an ―expansion of its Look East Policy ... beyond South East Asia to the
Pacific region‖.5
India‘s involvement in the South Pacific has been primarily economics-orientated and
development aid focussed. In 2006 at the Pacific Island Forum (PIF), India‘s representative the
Minister for State for External Affairs, E. Ahamed, unveiled India's Pacific Island Country
Assistance Initiative, to be made up of an annual grant of US$ 100,000 to each of the 14 island
155
nations. This was subsequently increased to US$ 125,000 in 2009. Between 2005 and 2012,
Indian development assistance to this region totalled over US$ 50 million in the form of Lines
of Credit and over US$ 11 million in grants. This expansion of concerns for India was also
reflected in naval outreach in August 2006 when INS Tabar carrying out cooperative naval
exercises in Australia, New Zealand, Papua New Guinea, Tonga, and Fiji.
This Indian outreach has received further impetus with Narendra Modi‘s Act East drive,
in which he announced ―since entering office six months ago, my government has moved with a
great sense of priority and speed to turn our ‗Look East Policy‘ into ‗Act East Policy‘‖.6 Having
delivered this address at the East Asia Summit meeting in Myanmar, Modi illustrated this
eastwards focus by going on to visit Australia and then Fiji.
This all increasingly reflects an increasing adoption of an Indo-Pacific frame of reference
for Indian strategic discussions, which involves treating the eastern Indian Ocean and the
West/South Pacific as one strategic focus for India. 7 Such an eastern outreach means that the
South Pacific has come to be talked of by Indian governments as an area of interest, ―when in
the context of India, we talk of our extended neighborhood, it includes all the countries in the
Pacific region‖.8 Such an incorporation of the South Pacific under India‘s extended
neighbourhood, framework means that there are strategic interests there to be gained,
maintained and ultimately defended. 9
Consequently, three things are argued in this paper concerning this stronger Indian
drive into the South Pacific. Firstly it argues that bilaterally Fiji is the main entry point for
Indian efforts. Secondly, it argues that multilaterally the Forum for India-Pacific Islands
Cooperation (FIPIC) represents a significant new Indian initiative for steering its regional
presence in the South Pacific. Thirdly it argues there is there is a China connection in play that
helps to explain, in part, why India is now more actively pushing into the South Pacific.
Fiji
Fiji has been the most important focus point for India in the South Pacific. 10 Indeed, India has
no official diplomatic presence in the South Pacific region except in Fiji, where it has a High
Commission, which covers the other smaller island states.
156
India-Fiji relations have been primarily shaped through demographic politics in play
through the relative role of the overseas Indian community versus the indigenous Polynesian
Fijians, or iTaukei.11 Table-1 census returns tell a dramatic story for the period 1881 to 2007.
As a British colony, Indian immigration from British India, to work the sugar plantations,
resulted in the Indian population going up each decade. Various turning points are evident.
The 1936 census showed the native Fijians at less than half of the population (49.2%) while the
Indian population had surged up to a 42.8%. John Coulter‘s 1942 book Fiji: Little India of the
Pacific accurately summed up this ongoing process of these dynamics, by the 1946 census the
Indian community at 46.4% having overtaken the Fijian community which had slipped back to
45.5%. Fiji‘s gaining of independence in 1970 had left it in a strange position whereby the
1966 census showed the Fijians to be a clear minority, at 42.4% in their own country, and the
Indian community had become the majority community at 50.8%.
Indira Gandhi‘s visit to Fiji in 1981 came to an independent state, whose 1976 census
had shown an Indian community at 49.8 larger than the Fijian community at 44.2. Hence her
comment that ―I feel somewhat like a mother concerned about the welfare of a married
daughter who has set up home far away‖.12 The 1986 census still showed the Fijians‘ 46.0%
share behind the Indian community‘s greater 48.7% share.
Table-1 Census Population of Fiji by Ethnicity
Source: Fiji Bureau of Statistics
Fijian (1Taukei)
Indian
No.
No.
%
%
1881
114,748
90.0
588
0.5
1891
105,800
87.3
7,468
0.9
1901
94,397
78.6
17,105
14.2
1911
87,096
62.4
40,286
28.9
1921
84,475
53.7
60,634
38.6
157
1936
97,651
49.2
85,002
42.8
1946
118,070
45.5
120,414
46.4
1956
148,134
42.8
169,403
49.0
1966
202,176
42.4
240,960
50.5
1976
259,932
44.2
292,896
49.8
1986
329,305
46.0
348,704
48.7
1996
393,575
50.8
338,818
43.7
2007
475,739
56.8
313,797
37.5
As this growing Indian electorate threatened to translate its numbers into political power, the
next two decades saw repeated military interventions, two in 1987 and a further one in 2000.
Not unsurprisingly, the Indian government responded extremely negatively to these particular
coups. Economic sanctions were put in place, and India led moves to expel Fiji from the
Commonwealth in 1987. The Indian High Commission was closed down in May 1990 and
remained closed for the rest of the decade, amid Indian criticisms of these coups. 13
India-Fiji relations improved again in 1999 as Mahendra Chaudhry from the Indian
community was elected as Prime Minister in 1999, with the Indian High Commission promptly
being reopened. However another coup, with Chaudry led away at gunpoint, saw relations cool
and with further trade sanctions imposed by India during 2000-2001.
Continuing Indian migration continued to reduce the Indian population. By the 1996
census the Fijian community (393,575 at 50.8%) had overtaken the Indian community
(338,818 at 43.7%), with the gap widening by the 2007 census,with a Fijian community of
475,739 (56.8%) facing a still diminishing Indian community of 313,798 (37.5%). During those
two previous decades many of the Indian community in Fiji left behind their properties and
emigrated to Australia and New Zealand.
158
2005 saw diplomatic breakthroughs with the setting up of a joint mechanism in the
shape of the Fiji-India Foreign Office Consultations (FOC), the announcement by India in August
of loans for upgrading Fiji‘s sugar mills, and the Fijian Prime Minister Qarase and Foreign
Minister Tavola making a week-long state visit to India in October. Ahamed‘s visit to Fiji in
October 2006 brought the signing of a Development Cooperation Agreement between the two
countries. Ironically, a further coup in December 2006 was not greeted with similar criticisms
from India, as the new Bainimarama regime assured New Delhi that the coup was not aimed
against the Indian community, but instead was aimed at internal corruption.
Nevertheless, faced with continuing criticism from the West (i.e. the US, Australia, and
New Zealand), India was caught in-between; neither joining in the strong criticisms from the
Western bloc, but neither involving itself in the marked economic assistance that China was
able to provide. India was left in the middle with domestic criticisms over not strongly pushing
for democratisation.14
By 2012 the Indian community had shrunk still from its peak of 348,704 in the 1986
census down to an estimated 290,129 in 2012, facing a naturally increased Fijian community
of 511,838. Demographically more reassured, Fiji was able to move towards restoring civilian
government, and with it better links with an India that was shifting in the early 2000s to a
Look East Policy 2 which had moved from the focus on Southeast Asia in the late 1990s to
further outreach to Australasia and the South Pacific.
During 2014, India-Fiji relations improved as Fiji moved back to prepare general
elections. The visit of Fiji‘s Foreign Minister Kubuabola to India in February 2014 brought
comments from the Indian government that it ―welcomed the positive developments initiated by
the Fiji authorities for the population of Indian origin in recent times‖, as well as the
compliment that ―Fiji is an important partner for India in the region and our Look East
Policy‖.15 Quiet Indian pressure for a return to civilian government meant that India also
participated in the Multilateral Observer Group (MOG) for the Fiji elections in September 2014
159
as co-Chair (with Australia and Indonesia). This successful return to civilian democracy opened
the way for the new Indian government to engage in dramatic Pacific island diplomacy, as
Narendra Modi made an official state visit in November 2014. This was part of a quickening of
the pace of the previous Look East policy, what the Modi government now called an Act East
focus. Raja Mohan‘s sense of the ―strategic foray‖ was that Modi‘s ―decision to visit Fiji and the
warm welcome he received there are likely to put India into the geopolitical fray among the
major powers in the South Pacific‖.16
In his trip to Fiji, Modi brought out the wider regional implications, whereby ―Fiji could
serve as a hub for stronger Indian engagement with Pacific Islands‖. 17 Modi was measured in
his bilateral analysis, ―our bilateral relations and international partnership has been strong.
But, we are also aware that the relationship has at times been adrift; and that our cooperation
should be much stronger than it is‖, so ―I see this visit as an opportunity to renew an old
relationship and lay the foundation for a strong partnership in the future‖. 18 Security
developments were alluded to, with his view that ―we will also expand our defence and security
cooperation, including assistance in defence training and capacity building‖.19 Modi‘s address
to the Fijian Parliament was warm.20 He complimented ―Fiji as a leader‖ among South Pacific
island nations, and included this South Pacific outreach as part of an Indo-Pacific mental map,
―an ocean of opportunity that stretches from the Indian Ocean to the Pacific Ocean ...
Stretching from the Indian Ocean ... into Pacific, this is a region of enormous dynamism and
opportunities, but also a region with many challenges‖.21 Amid talk of economic cooperation he
also made a point for thanking Fiji for providing facilities and hospitality for Indian scientists
working on India‘s successful space missions.
Institutional links (PIF to FIPIC)
Fiji‘s further importance for India is that the Secretariat of the Pacific Islands Forum (PIF) is
based in Suva, an organization with whom India has been an official Dialogue Partner since
2003.22 PIF is the main Pacific umbrella linking the micro-island states (Cook Islands,
160
Federated States of Micronesia, Fiji, Kiribati, Marshall Islands, Nauru, Niue, Palau, Papua New
Guinea, Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu) together with Australia and
New Zealand. Alongside India are 11 other dialogue partners namely the EU, Britain, France,
the United States, Canada, China, South Korea, Japan, Malaysia, Indonesia and the
Philippines.
India‘s outreach was well illustrated by the External Affairs Minister Somanahalli
Krishna‘s attendance at the Post-Forum Dialogue of Pacific Island Forum (PIF) in 2009, where
―today, we are witnessing a rapid expansion of our engagement with Australia, New Zealand
and the smaller Pacific Island States‖.23 The island states may have been small in size, but
their Exclusive Economic Zones (EEZs) held out the promise of sea resources that India could
tap into.
India sees its engagement with the Pacific region as an extension of its Look East
Policy, which was originally conceptualized in the early 1990s to boost our
engagement with our South East Asian neighborhood, the ASEAN. We are confident
that the ‗Look North‘ policy of the Pacific countries and the ‗Look East‘ policy of India
will dovetail to create new synergies as Pacific Island countries are rich in natural
resources and there is vast potential for cooperation in diverse spheres. 24
However, India is but one of many, thirteen in all, Dialogue Partners for PIF. A significant
development has been India‘s setting up of its own unique mechanism, the Forum for IndiaPacific Islands Cooperation (FIPIC), which represents a link between India and the Pacific
Island countries of Cook Islands, Fiji, Kiribati, Marshall Islands, Micronesia, Nauru, Niue,
Palau, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu. The Ministry
of External Affairs was keen to stress how ―India‘s relations with the Pacific islands received a
major boost ... A new chapter in our relations with the Pacific region has begun with the
launch of the FIPIC initiative‖.25
161
The spur to FIPIC‘s formation was Modi‘s above visit to Fiji in November 2014.
Consequently, the first summit of FIPIC was held at the time of Modi‘s visit to Fiji. Amid
general training programmes, Modi announced a $1 million Special Adaptation Fund to provide
technical assistance to Pacific islands, and announced an increase in Grant-in-Aid to each
Pacific island country from $125,000 to 2000, 000 per country.
This was no flash in the pan as a second FIPIC summit was held in Jaipur in August
2015.26 The Indian President Pranab Mukherjee explained it as reflecting how ―we believe our
economic linkages and cooperation with your countries are a key factor in India‘s extended ‗Act
East‘ Policy‖.27 Pacific island leaders were clear on welcoming a greater Indian role, the Fijian
leader telling his Indian audience that ―tonight, we look to the future and the role India is
destined to play in forging a better world for all mankind. And especially the role it can play in
the Pacific ... we in the Pacific look to India to take a greater lead in resolving the great
challenges of our time‖.28 Fiji is strongly supporting India‘s bid to become a Permanent Member
of the United Nations Security Council.
Modi‘s welcome stressed ―promoting trade and investment opportunities between India
and Pacific Island countries‖.29 He went on to note of the Pacific micro-states that ―some of you
have Exclusive Economic Zones that are larger than the landmass and Exclusive Economic
Zone of India taken together‖.30 It was significant that Modi acknowledged that climate change
and space collaboration were further agenda items for cooperation. The geopolitical backdrop
for him was Indo-Pacific in orientation:
In particular, the centre of gravity of global opportunities and challenges are
shifting to the Pacific and Indian Ocean Region. The fortunes of nations in and
around the two oceans are inter-linked. For this reason, the tides that bear hopes
and bring challenges to the shores in India and the Pacific Islands are the same.
That is why some call the region the Indo-Pacific Region.31
162
On the diplomatic front, support was sought and gained for India‘s quest for a Permanent
Member seat on the Security Council, while India set up a training programme for diplomats
from the Pacific island micro-states. The prime minister‘s offer for the Indian Navy‘s support to
Pacific Island nations for coastal surveillance was a significant widening of India‘s readiness to
expand its ―strategic footprint‖ in a region, where the US, Japan and Australia are already
competing with China for geopolitical influence.32
The China Connection
India‘s appearance in the South Pacific has got its own India-derived reasons. Nevertheless,
there is a further element of muted competition with China who has been entering the South
Pacific ahead of India.33 T.P. Sreenivasan, India‘s High Commissioner to Fiji and other South
Pacific island states from 1986-89 argued in 2014 that ―China appears to have plans to build
another ‗string of pearls‘ in its favour in the South Pacific, mainly through trade and economic
cooperation‖, but that ―India can effectively counter these [Chinese] moves if it makes use of its
assets in the region‖.34
China‘s diplomacy in the South Pacific predates India‘s, and to some extent means that
India is now engaged in a catch-up attempt there with China. The diplomacy by the People‘s
Republic of China is multi-driven. In part it has been a so called ―cheque-book diplomacy‖
driven by a need to achieve recognition as the legitimate Chinese government from the varied
micro-states of the Pacific, rather than such recognition being given to Taiwan. Like India, the
PRC has also sought economic advantages in the large Exclusive Economic Zones of the Pacific
states, and has also space advantages through tracking station facilities at Kiribati that it
enjoyed during the 1990s. This echoes India‘s tracking facilities recently gained in Fiji. Finally
there is a degree of strategic competition for the PRC with Japan, Australia and above all the
United States for influence amongst the Pacific microstates. In contrast to China, India has
significantly strengthened closer bilateral and trilateral military cooperation in the Pacific with
Japan, Australia and the United States.
163
Parallel implicit competition has been the order of the day. India was admitted as a
Dialogue Partner of the PIF in 2002, with effect from 2003, but with the PRC having been a
Dialogue Partner since 1989. India‘s inauguration of the Forum for India-Pacific Islands
Cooperation (FIPIC) in 2014 was predated by China‘s establishment of the China-Pacific
Islands Countries Economic Development and Cooperation Forum (CPICEDCF) in 2006. 35
Narendra Modi‘s visit to Fiji in 2014 not only was predated by Wen Jiabao‘s visit in 2006, but
was also immediately followed three days later by President Xi Jinping‘s own visit. 36 Finally,
Modi‘s announcement at the Jaipur FIPIC Summit that ―we also look forward to goodwill visits
by Indian Navy to Pacific Islands‖ was predated by two Chinese warships visiting Papua New
Guinea, Vanuatu, and Tonga in September 2010, and the Harmony Mission 2014 deployment
which saw China‘s hospital ship Peace Ark visiting Tonga, Fiji, Vanuatu, and Papua New
Guinea on its way back from the RIMPAC 2014 exercises held off Hawaii. 37
India may have been spurred on by China‘s previous outreach into the Pacific, but
China in turn is sensitive to India‘s appearance in the Pacific. Modi‘s 10 day trip from
Myanmar to Australia to Fiji drew veiled cautions in the Chinese media about how ―India's
current active diplomacy suggests the country‘s leaders are well aware it cannot afford to be
left behind as a major player in the Pacific‖, and that ―it has even reached out to small
countries like Fiji because of their geopolitical positioning‖.38 Though ―India is not a direct
Pacific nation‖ such Chinese media sources argued that ―some Indian strategists tried to create
a new identity through advocating the geopolitical concept of the "Indo-Pacific‖.39
Conclusions: the future
India‘s outreach to the South Pacific micro-states is likely to be maintained with increased
momentum under Modi‘s Act East/Indo-Pacific focus, as further facilitated by strategic
convergence with Australia and New Zealand. New Zealand acts as a particularly useful bridge
for India between Australasia and the South Pacific. Whereas the established powers like the
US, Japan and Australia have tangible worries over a greater Chinese appearance in the South
164
Pacific, in contrast these particular Pacific powers welcome India‘s arrival in the Pacific. It is
significant that bilateral and trilateral naval cooperation by India with these similarly Chinaconcerned countries in the Western Pacific, could lead to similar cooperation by them in South
Pacific waters. India‘s decision in July 2014 to send its new stealth guided-missile frigate INS
Sahyadri to join in the RIMPAC naval exercises held by the US at Hawaii was not only a
decision by India taken in competition with China‘s similar participation, but also a further
sign of India naval operational capability in the Pacific basin
Modi‘s initiative in setting up the Forum for India-Pacific Islands Cooperation (FIPIC) is
likely to become a key plank in India‘s push into closer relations with the South Pacific microstates, and will enable India to get away from just having a South Pacific focus shaped by its
bilateral relations with Fiji. The sub-regional groups represented by the Melanesian Spearhead
Group (MSG), the Micronesian Challenge (MC), and the Polynesian Leaders Group (PLG)
present further opportunities for India. In particular, the Melanesian Spearhead Group (made
up of Fiji, Papua New Guinea, Solomon Islands, Vanuatu, and the Kanak and Socialist
National Liberation Front of New Caledonia) represents the nearest sub-regional grouping for
India, but where China has already established close relations, including building the MSG
secretariat in Vanuatu. India will need to increase its overall level of economic help and
financial investment in the South Pacific, in order to match China‘s greater level.
____________
1.
2.
3.
4.
5.
6.
7.
Tevita Motulalo, ‗India‘s strategic imperative in the South Pacific‘, Gateway House Report, October
2013; Kailash Prasad, ‗India looks Far East. A growing presence in the Pacific Islands could have
significant benefits for India‘, The Diplomat, April 28, 2014,
http://thediplomat.com/2014/04/india-looks-far-east/.
Yashwant Sinha, ‗Resurgent India in Asia‘ (Speech at Harvard University), September 29, 2003,
http://www.mea.gov.in/Speeches-Statements.htm?dtl/4744/.
C. Raja Mohan, ‗Look East Policy: Phase Two‘, The Hindu, October 29, 2003. Also Kumar Sunil,
‗India‘s Look East policy: In its second phase‘, Academicia, 3.9, 2013, pp. 209–221.
Raja Mohan, ‗Is India an East Asian power? Explaining New Delhi‘s security politics in the
Western Pacific, ISAS Working Papers, 81, August 11, 2009.
Ministry of External Affairs, Annual Report. 1 January 2003–31 March 2004 (New Delhi: Ministry
of External Affairs, 2004), p. 38.
Narendra Modi, ‗Prime Minister‘s remarks at the 9th East Asia Summit‘, November 13, 2014,
http://mea.gov.in/Speeches-Statements.htm?dtl/24238/. Also Rahul Mishra, ‗From Look East to
Act East: Transitions in India‘s eastward engagement‘, Special Forum (ASAN Forum), December 1,
2014.
Patrick Cronin and Darshana Baruah, ‗The Modi Doctrine for the Indo-Pacific maritime region‘,
165
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
The Diplomat, December 2, 2014 http://thediplomat.com/2014/12/the-modi-doctrine-for-theindo-pacific-maritime-region/.
Somanahalli Krishna, ‗Statement by EAM at Post-Forum Dialogue of Pacific Island Forum‘,
August 7, 2009, http://www.mea.gov.in/Speeches-Statements.htm?dtl/1191/.
David Scott, India‘s ―Extended Neighborhood‖ Concept: Power projection for a rising power‘, India
Review, 8.2, pp. 107–143.
Shankari Sundaraman, ‗Fiji in Asia: India‘s ―New‖ Look East Policy - Looking beyond Southeast
Asia at the South Pacific, Fijian Studies, 4.2, 2006, pp. 96-110; Balaji Chandramohan, ‗ChinaIndia Relations: New Delhi needs to reach into South Pacific through Fiji‘, Future Directions, June
13, 2012, http://www.futuredirections.org.au/publications/indian-ocean/29-indian-oceanswa/570; Manish Chand, ‗India & Fiji: A Pacific bonding‘, In Focus (Ministry of External Affairs),
November 18, 2014, http://www.mea.gov.in/in-focus-article.htm?24270/.
Carmen Voigt-Graf, ‗Transnationalism and the Indo-Fijian diaspora: The relationship of IndoFijians to India and its people‖, Journal of Intercultural Studies, Vol. 29, No. 1, February 2008, pp.
81–109; Amba Pande, ‗India and its diaspora in Fiji‘, Diaspora Studies, 4.2, 2011, pp. 125–138.
Indira Gandhi, September 1981, cited in R. Thakur, ‗India and Overseas Indians: The case of Fiji‘,
Asian Survey, 25.3, 1985, p. 356.
Ganeshwar Chand, ‗Race and Regionalism in Fiji, Pacific and India‘, Economic and Political
Weekly, 25.3, January 20, 1990, pp. 167–174.
Balaji Chandramohan, ‗Political Crisis in Fiji and India‘s Concerns‘, IDSA Comment, August 19,
2010,
http://www.idsa.in/idsacomments/PoliticalCrisisinFijiandIndiasConcerns_bchandramohan_190
810.html.
Salman Khurshid, ‗Media Statement by External Affairs Minister during the visit of Minister of
Foreign Affairs and International Cooperation of Fiji to India‘, February 12, 2014,
http://www.mea.gov.in/incoming-visit-detail.htm?22866/.
Raja Mohan, ‗PM Modi in Fiji: India‘s strategic foray in the South Pacific‘, RSIS Commentary, 233,
November 24, 2014. Also Shubha Singh, ‗Why PM Modi‘s voyage to Fiji matters‘, India Writes,
October 27, 2014, http://www.indiawrites.org/diplomacy/why-pm-modis-voyage-to-fiji-matters/.
Modi, ‗Remarks by Prime Minister to the Media after meeting with Prime Minister of Fiji‘,
November 19, 2014, http://www.mea.gov.in/Speeches-Statements.htm?dtl/24277/.
Ibid.
Ibid.
Modi, ‗Text of Prime Minister‘s Address to the Fiji Parliament‘, November 19, 2014,
http://pib.nic.in/newsite/PrintRelease.aspx?relid=111545.
Ibid.
Shubha Singh, ‗Reaching out to the South Pacific‘, Frontline, 19.20, October 12-25, 2002,
http://www.frontline.in/static/html/fl1920/stories/20021011008305900.htm; ‗India and Pacific
Island Forum—Economic linkages build strong ties‘, Business Line (The Hindu), February 10,
2003; idem., ‗Pacific Connection‘, Frontline, 22.25, November 19-December 2, 2005,
http://www.frontline.in/navigation/?type=static&page=flonnet&rdurl=fl2224/stories/200512020
01205600.htm.
Krishna, ‗Statement by EAM at Post-Forum Dialogue of Pacific Island Forum‘.
Ibid.
Annual Report 2014-15, New Delhi: Ministry of External Affairs, p. 34.
Karan Nagpal, ‗A Pacific beyond Fiji‘, Indian Express, August 26, 2015,
http://indianexpress.com/article/opinion/columns/a-pacific-beyond-fiji/.
Pranab Mukherjee, ‗Address by the President of India‘, Press Information Bureau, August 20,
2015, http://pib.nic.in/newsite/PrintRelease.aspx?relid=126188
Josaia Bainimarama, ‗Speech at the Forum for India-Pacific Island Cooperation‘, August 31,
2015, http://bainimarama.org/speech-hon-prime-minister-josaia-voreqe-bainimaramas-speechforum-india-pacific-island-cooperation-fipic/.
Modi, ‗Opening Remarks‘ (Summit of Forum for India Pacific Island Countries), August 21, 2015,
2015, http://www.mea.gov.in/Speeches-Statements.htm?dtl/25746.
Modi, ‗Opening Remarks‘.
Modi, ‗Opening Remarks‘. Also Aniket Bhavthankar, ‗India broadens strategic canvas, establishes
role in Indo-Pacific‘, South Asia Monitor, August 27, 2015,
http://southasiamonitor.org/detail.php?type=sl&nid=13237; ‗Second FIPIC and the Indo-Pacific:
a successful Kautilyan exercise‘, Tonga Herald, September 23, http://tongaherald.com/secondfipic-and-realization-of-the-indo-pacific-a-successful-kautilyan-exercise/.
Anirban Bhaumik, ‗Modi offers Navy help to Pacific Island nations‘, Deccan Herald, August 22,
166
2014.
33. Tamara Shie, ‗China woos the South Pacific‘, PacNet (CSIS), 10A, March 17, 2006; Jian Yang,
‗China in the South Pacific: Hegemon on the horizon‘, Pacific Review, 22.2, May 2009, pp. 139-58.
34. T.P. Srinivasan, ‗Countering another string of pearls, The Hindu, November 19, 2014.
35. Aditi Phadnis, ‗India reaches out to small Pacific island nations to counter China‘, Business
Standard, August 21, 2015.
36. PM Modi woos Fiji days ahead of Xi‘s visit‘, Times of India, November 20, 2014; Monika
Chansoria, ‗India-China chase now extends to Fiji with Modi and Xi‘s Visits‘, CLAWS (Centre for
Land Warfare Studies), 1288, November 21, 2014, http://www.claws.in/1288.
37. Modi, ‗Text of PM‘s closing remarks at Forum for India Pacific Island Countries (FIPIC) Summit,
Jaipur‘, August 21, 2015, http://pib.nic.in/newsite/PrintRelease.aspx?relid=126259.
38. Liu Siwei, ‗India seeks clear role in future Asia-Pacific‘, Global Times, December 18, 2014.
39. Ibid.
*****
167
11.
India and the PICs
Cleo Paskal
Associate Fellow, Chatham House, London;
Visiting Trudeau Fellow,
Université de Montréal’s Center for International Studies, Canada;
Adjunct Faculty, Manipal University, India.
(Cleo Paskal is an Associate Fellow in the Energy, Environment and Resources department at the Royal Institute of
International Affairs, Chatham House, London and the 2015 Trudeau Visiting Fellow at the Centre d'études et de
recherches internationales de l'Université de Montréal (CERIUM), Her research examines the increasingly strategic
confluence of geopolitical, geoeconomic, and geophysical changes.
She has consulted or briefed for a wide range of stakeholders, including the National Defence College (India), Royal
College of Defence Studies (UK), US. Army War College, National Defence College (Oman), heads of major corporations,
and security professionals from over 30 countries. Her book, Global Warring: How Environmental, Economic, and Political
Crises Will Redraw the World Map (Macmillan, 2010) won multiple awards. Her most recent book is the
bestselling Spielball Erde (Random House, 2012), co-authored with German TV news anchor Claus Kleber.
- See more at: https://www.chathamhouse.org/expert/cleo-paskal#sthash.Kg8IQIQr.dpuf
______
In November 2014, Indian Prime Minister Narendra Modi became the first Indian Prime
Minister to visit Fiji in over three decades. In Fiji, he met with leaders from the fourteen Pacific
Island Countries (PICs), pledging to build a stronger relationship between India and the region.
From an Indian strategic perspective, the engagement has the potential to ease India‘s entry
into the Pacific sector of the increasingly important Indo-Pacific in a relatively low cost, low
profile, highly efficient way. So, what have been the results? First, a bit of background.
What Are The PICs And Why Are They Important?
The fourteen Pacific Island Countries (PICs) are the Cook Islands, Federated States of
Micronesia, Fiji, Kiribati, Marshall Islands, Nauru, Niue, Palau, Papua New Guinea, Samoa,
Solomon Islands, Kingdom of Tonga, Tuvalu, and Vanuatu. Some are in free association with
other countries, for example the Cook Islands and Niue are part of what is modestly called the
Realm of New Zealand. However all have votes in international fora, placing them amongst the
lowest population number-to-votes ratio in the international community. The Federated States
of Micronesia, and its population of 103,000, has the same voting power in the United Nations
as India. This is an important consideration for a country that wants votes, for example for a
seat on the UN Security Council.
Additionally, while the land mass and population of most PICs may be small, every inhabited
island qualifies to claim a minimum 200 nautical mile exclusive economic zone (EEZ). Given
168
many of the PICs consist of vast archipelagoes of islands, this means that to give just one
example, Kiribati, with a population of just over 100,000, and a combined land mass around
the size of Manhattan, claims a maritime footprint about the size of all of India.
The combined zone covered by the PICs is vast - around one-sixth of the planet‘s surface. The
area is increasingly strategic, and includes vital trade routes between the Americas and Asia,
large fisheries, and existing and potential ports and bases that would be crucial in case of
growing tensions between and within the Indo-Pacific, including the Americas.
India isn‘t the only major nation to ‗discover‘ the importance of the PICs. Two days after Modi
visited Fiji, Chinese President Xi Jinping also visited. Over the past decade, China has
established deep ties with the eight PICs with which it has diplomatic relations, including
loans, grants, scholarships, military-to-military cooperation and much more. China‘s
engagement has been controversial, but has been facilitated by a growing local discontent with
relations with ‗traditional‘ partners Australia and New Zealand.
India and the PICs
As with many parts of the world, including sections of Africa, South America and Asia, many
PICs would welcome an Indian ‗third way‘. Western economic models are perceived as costly
and damaging to local economies, and Chinese engagement is perceived as potentially
overwhelming and containing unknown risks. In a small but typical example, currently in
Tonga, the choice for a simple paracetamol tablet is Chinese supply of dubious origin, or a
Western pill that is eight times what the same thing would cost in India. Low cost, reliable
products, especially ones that are socially and climate appropriate would be welcome.
The same is true for educational options. Many of the PICs have very high literacy and are
education-focused societies, but tertiary education is often high cost and can involve taking
loans to attend university in Fiji, Australia or New Zealand. China offers scholarships, but
they involved language challenges (most of the PICs have English as a second language).
Access to affordable Indian tertiary education, perhaps through satellite campuses, would be
very welcome. There are myriad examples of how affordable, reliable Indian partnerships would
be welcome in almost every other sector as well, including transport, telecoms, etc.
This ‗third way‘ is the role India is now exploring. It would not complete with the West or
China, it would complement them by working with the PICs to enhance their options and so
contribute to their security and prosperity – something that would contribute to overall
stability in the Indo-Pacific. Tonga, for example, is only considering allowing China to build a
port because it is financially constrained and looking for any options available to help its
people. Were it in a better economic position, it would have more options, including ones that
didn‘t have such enormous strategic implications.
So, what have been the results of India‘s outreach to date? Modi‘s first major move, announced
in Fiji, showed his respect and trust for PIC citizens by granting them e-visas on arrival for
visits to India. This was extremely well received.
The next major initiative took place in August 2015. Modi hosted fourteen PIC leaders in India.
A number of initiatives were announced, including PICs access to free Indian television and
radio content, training for journalists, the setting up of India Centers (with books on India,
etc.), renewable energy training and technical cooperation, the setting up of IT labs to facilitate
169
e-education and e-medicine, cooperation with coastal surveillance, hydrology, coastal studies,
disaster management, disaster early warning systems, fisheries, health camps, military-tomilitary cooperation, SME business support, diplomatic training, generic drug manufacturing,
and more.
Challenges to India-PICs Engagement
It was during the Jaipur meeting that the cracks in implementation started to show. First, the
meeting was held in landlocked Jaipur, an unusual choice if the goal was to engage the PICs at
a practical with India. For example, had it been held in a coastal town, leaders could have met
with potential partners who faced similar issues with erosion, fisheries, ports, shipping, etc.
Additionally, while there was a long list of potential collaborations (see above), how to
implement them was left vague. There are serious challenges to following through on both the
Indian and the PICs side. On the Indian side, there is only Indian diplomatic representation in
two of the 14 PICs, Papua New Guinea and Fiji. There is no permanent Indian point of contact
in the dozen other PICs. Their points of contact are spread over around half-a-dozen different
Indian missions, making coordination very difficult. At the same time, the PICs have seriously
overstretched bureaucracies. In Tonga for example, around a dozen government legal officials
are responsible for all national laws and international treaties, etc. These are complex,
overworked, tightly knit societies and just dropping in for a visit every six month or so will not
gain traction.
Another challenge is that India‘s engagement with many of the PICs via Fiji has the potential to
be viewed as ethnicity-based. While the special relationship with Diaspora is understandable,
basing bilateral engagement on one community can be counter-productive. For example, there
are growing concerns in the region about potential radicalization of some within the Indo-Fijian
population. Does India want to carry that baggage by proxy?
Additionally, while the Indian government‘s approach may be new, if it is working through all
the same Indo-Fijians/Indian-Pacific islanders previous Indian governments worked though,
why would people in the region think anything has changed? And if the Indian government
funnels its relations in the region primarily along ethnicity-based lines, non-ethnic IndianPacific islanders may feel that they are being marginalized, exacerbating social divisions that in
the long run could be harmful for Indian-Pacific Islanders. Imagine if, rather than dealing with
Indian government and society as a whole, China dealt primarily with Sino-Indians in India,
including potentially radicalized Uyghurs. How warmly would that be received?
Indian diplomats should ensure they engage with those who share their view and priorities, not
just their external appearances.
Also, relying primarily on Wellington and Canberra for guidance in the PICs can mean carrying
their baggage into what should be bilateral relationships.
Ways Forward
There is enormous scope for India-PICs engagement. Increased partnership would benefit both,
and contribute to overall Indo-Pacific security. However, for a stable, healthy relationship, there
are no short cuts though third countries or predetermined populations. Relationships have to
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be built bilaterally, and trust earned. This can mean broadening engagement to include the
business sector, civil society, the states, and even the cities.
For example, for many PICs, ‗India‘ can be overwhelming, especially when their bureaucracies
are already overstretched. One option may be to engage sectors and/or PICs with cities or
states, such as Kerala or Tamil Nadu, that have climates and economies that are similar to the
PICs.
Also, a business council could be set up in India that specializes in engagement with smaller
economies, acting as an import/export contact point to facilitate trade. This would benefit not
only the PICs, but smaller Indian Ocean and Caribbean nations as well.
Finally, it will be imperative to have some sort of Indian representation, if only staffing the IT or
India Center, in each of the PICs if lasting relationships are to develop. These engagements
can‘t be built via proxies. These are countries, like India, that value family and social
interactions. If you are not physically there, you are quickly forgotten.
Too much focus on Fiji will mean missing deeper important currents in the region. For
example, the Kingdom of Tonga, as the never-colonized one time center of a vast Polynesian
empire, still holds enormous ‗soft power‘ sway across the region, including in Fiji, Samoa,
French Polynesia, and elsewhere. Even after democratization (2010), the Royals and Nobles of
Tonga have a vast influence network in the region and beyond. As one small example, in 2015,
the Crown Prince and Princess of Japan flew to Tonga to attend the Coronation of King Tupou
VI. No other leaders in the region, including those in New Zealand, are in as regular contact as
the Royals of Tonga are with their Royal counterparts (the deep establishment) of countries as
diverse as Japan, Bhutan, Thailand and even the UK. If India just focuses on the Indo-Fijians,
it is missing the big story and risking not just a false start, but a dead end in for its PICs reset.
India has enormous advantages when it comes to finding good friends and partners in the
PICs. Because of the Taiwan issue, China can only engage with eight of the 14 PICs. India can
engage with all. Unlike Australia and New Zealand, India has no ‗baggage‘ in the PICs. The
economies and cultures are highly compatible. The environment is similar to parts of India.
And the list goes on.
What it will need is concerted focus, not only showpiece events, based on true bilateral
relationships, benefitting all parties. The rewards are high. If it succeeds, it has the potential to
reshape Indo-Pacific futures, making all more secure.
*****
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12.
New Zealand’s role in regional cooperation
Balaji Chandramohan
(Balaji Chandramohan is a Visiting Fellow with Future Directions International, a policy think tank based
in Perth. He alternatives his life between New Zealand and India. )
Introduction
Geographically isolated and having a friendly neighbor in Australia, New Zealand has a geostrategic advantage compared to other countries.
The geo-strategic advantage is further buttressed as New Zealand for almost full of the 20th
century didn‘t have to fight a land war within its own borders. It faced a threat from the
Imperial Japanese forces after the Pearl Harbor in December 1941, there was a slight chance
then that the Japanese army aided by its navy was ready to carry out an amphibious attack on
New Zealand, however the threat diminished after the ―Battle of Midway‖ in June 1942 when
the United States Forces defeated the any further ambitions of Tokyo in South Pacific.
Other than that brief period between the late 1941 till 1943, there wasn‘t much of chance of
New Zealand fighting any ―land wars‖ in its territory. This geographical isolation helped New
Zealand to participate on Allied Side during the two World Wars, Korean War and the Vietnam
War. Besides that New Zealand had sent its troops to Peace-Building efforts in Afghanistan,
Solomon Islands, East Timor and Tonga.
The above back ground gives an understanding that New Zealand Defence Policy in the eventful
20th century has been based on two important aspects. First, New Zealand is ready to send its
troops in ‗troubled areas‘ as a part of its commitment to overall international peace and
security. Second, as a tradition New Zealand will commit its troops if the United States or the
United Kingdom or both have a legitimate concern over their security.
The aspect of protecting its sovereignty which‘s security and playing the role of internationalist
comes as a part of New Zealand‘s strategy even in the 21st century.
New Zealand‘s sovereignty is not threatened by any invasion at present or the fact it‘s
immediate neighbourhood in both Australia and South Pacific is not faced by any serious
invasions. However, with the changed geo-politics with the emergence of Asia-Pacific
importance in international system rivalling the traditional European Powers has posed
challenges to New Zealand‘s strategy.
This aspect was articulated by the New Zealand‘s Defence White Paper released in November
2010.
New Zealand Defence White Paper 2010
The Defence White Paper 2010 was the first one released in the last decade and It envisaged
the world security scenario in the next 25 years till 2035 with an understanding that the
United States will remain a pre-eminent force. The White Paper also called for an increase in
the New Zealand Defence Forces without comprising on its traditional quality and also called
for increase in the budgetary allocation. These two aspects cover New Zealand‘s strategic
capabilities and resources.
As far as New Zealand‘s strategic objectives are concerned, four main aspects could be culled
out as the scenarios in which New Zealand should resort to the use of its armed forces in
following circumstances
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In response to a direct threat to New Zealand and its territories;
In response to a direct threat to Australia;
As part of collective action in support of a member of the Pacific Islands
For its International commitments
The aspect of use of force for the protection of its sovereignty, defence of Australia and a
collective action for the support of countries of the Pacific Islands makes an interesting
reading. Though the Defence White Paper has listed the strategic objectives the question arises
whether New Zealand has the necessary capabilities and the budgetary allocation to carry out
an action which means it doesn‘t have the strategic autonomy of its own which naturally leads
to a Security Dilemma1.
New Zealand’s Security Dilemma in the 21st century
New Zealand‘s security dilemma has increased with the emergence of China as an eminent
power in the Asia-Pacific. As an extension of China‘s increased power it has increased its
influence in the South Pacific.
New Zealand Defence White Paper didn‘t explicitly state the China threat unlike the Australian
Defence White Paper released in 2010 there are reasons why China‘s rise could pose security
challenges to New Zealand‘s neighbourhood.
Countries in the South Pacific such as Fiji, The Cook Islands, the Federated States of
Micronesia, Kiribati, the Marshall Islands, Nauru, Niue, Palau, Papua New Guinea, Samoa, the
Solomon Islands, Tonga, Tuvalu and Vanuatu are in transition path to democracy or the fact
had benefited out of the third waves of democracy from the mid 1960‘s. Almost all the
countries are struggling economically and it‘s here that China offers a good package with its
economy.
Therefore, the South Pacific countries are more attracted to China and have might no qualms
in having hypothetically its naval or even military bases in the years to come. High-level visits
of Chinese military and naval officers to the South Pacific Islands have become a feature while
chances of establishing a Chinese Naval Base in Vanuatu are under consideration.
The New Zealand Defence White Paper rightly recognized that the country isn‘t anymore living
in benign strategic environment and predicted possibilities for greater challenges in the South
Pacific in the upcoming 25 years.
The second threat comes in an indirect. The rise of Indonesia as an eminent power in SouthEast Asia and extending up to South-West Pacific will put a question mark on the New
Zealand‘s commitment to Five Power Defense Arrangements. Even in the New Zealand Defense
White Paper released in November 2010 hasn‘t mentioned anything specific on Indonesia.
Indonesia‘s Great Power rivalry with Australia keeping aside, it has always viewed with
suspicion on New Zealand‘s Five Power Defense Arrangements and role played by New Zealand
Defense Force in Timor.
Further, the relations between Australia and Indonesia can turn more volatile if the selfdetermination movement in the West Papua and Aceh provinces gains more significance with
increased violence. In that scenario, Australia under aegis of International Peace Keeping Force
might commit its troops in these regions much to the discomfort of Indonesia. The question
that comes to New Zealand will it also commit its troops for its friend in Australia in a conflict
scenario with Indonesia. So far, the stated policy of New Zealand is that it will commit its
troops and it‘s better that its starts its policy focus on that eventual scenario.
Interestingly, the New Zealand Defence White Paper 2010 was released a year and half after the
Australian Defence White Paper in May 2009. The Australian Defence White Paper called up on
an increase Australian Defence Force‘s capability and analysed the rise of China as an eminent
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power in the Asia-Pacific. The Australian Defence White Paper was more China centric and
called upon the increase in the capabilities of the Australian Defence Force.
The challenge for the New Zealand policy-makers is that unlike many countries it has no direct
control for the Security challenges it faces. In that direction, first it‘s clear that New Zealand
doesn‘t have a strategic autonomy of its own. It‘s quite dependent on the path that Australia
had to take for its security concerns. It‘s because of this particular reason that the aspect of
―Defence Diplomacy‖ coupled with enhancing the existing capabilities of the New Zealand
Defence Forces become important.
As with New Zealand government is to release the Defence White Paper in December this year,
the debates on the contents and the scope have started.
Secondly, New Zealand‘s Defence White Paper will also be influenced by Australian Defence
White Paper 2015. For New Zealand defence-strategic planers the primary aim will be to see
first how the international environment has changed in the last five years and the situation
which is near to New Zealand.
It‘s true that there has been a shift in geo-politics in the Asia Pacific region with the rise of
China as an eminent power and the United States has articulated its forward policy or pivot in
the region and has included New Zealand as a strategic partner if not an alliance.
Therefore, New Zealand‘s strategic orientation will be towards increasing the existing knots in
the threads which means aligning with Australia and the United States as a part of its existing
strategic priorities.
In the above includes the glitch, if New Zealand extensively commits itself towards the USAustralia strategic umbrella to which other than it has no choice then it needs to also
contribute troops in troubled regions in the Middle-East much like what its neighbour
Australia is doing.
The above could have serious domestic influences which may include pressure within New
Zealand of not to send its troops in the Middle-East until it‘s mandated by the United Nations.
Such a posture was something that has been campaigned by the New Zealand Labour Party
from the time the National party decided to send the New Zealand troops for logistic purposes
in Iraq and not for combat purposes.
On the above note, it‘s to be noted that the New Zealand Labour Party opposed the 2003 Iraq
War staged by the United States on grounds of lack of proper UN mandate and so because of
the domestic constituency in New Zealand which was opposed to such venture. On the other
hand, there were sections within the National party in New Zealand which wanted to send the
troops which was one of the reasons for National party‘s poor electoral performance in the first
decade of the 21st century.
In the above context, the release of the Defence White Paper will be seen with increased interest
both at the political level and so as the military-strategic level in the upcoming months
especially after the release of the Australian Defence White Paper.
New Zealand Prime Minister John Key raised a major debate in New Zealand following his
announcement in Parliament on February 23 2014 that 143 military personnel will be
deployed in the troubled parts of Iraq to fight Islamic State of Iraq and the Levant (ISIL).Up to
143 New Zealand personnel will be sent although the deployment will not be a badged mission.
It will be reviewed after nine months and last no more than two years. The deployments will be
for logistics support to the other coalition partners including USA, Australia and the North
Atlantic Treaty Organisation (NATO) countries.
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New Zealand’s internal debate on security
New Zealand Prime Minister John Key has said that ISIL posed security threats beyond the
Middle East and as a responsible international player, New Zealand had an obligation to
commit its troops in the Middle-East.
Besides, the Wellington Declaration (November 2010) called for a closer Washington-Wellington
security partnership and as a member of the ‗Five Eyes Intelligence Framework' New Zealand
should stand up as a support to the coalition.
Further as a Non-Permanent member of the United Nations Security Council, the country has
pulled its weight behind the ‗Responsibility to Protect Doctrine.'
National Security and issues related to foreign and defence policy has found minimal
occurrence in the New Zealand elections Campaign. Political parties are focused primarily on
the state of economy, jobs and the exodus of Kiwis to other countries, especially Australia.
However, an effective National Security Policy should be discussed on priority by the National
and the Labour think-tanks.
National had started to pursue some changed stance on national security in its first term of
this century (2008) with the release of a Defence White Paper and Capability Plan in
2010.However, continuance is lacking.
The Labour Party on the other hand has concentrated on the welfare of New Zealanders rather
than abstract and complicated issues related to national security.
Even if the issues are not addressed until after the election, New Zealand has to recognise the
changed geo-political situation with the rise of China as a prominent power in the Asia-Pacific
or in the newly coined geo-political term Indo-Pacific. New Zealand is primarily a Pacific
country with a strong emphasis on exports and hence should be more concerned about the
developments in the South-West Pacific and the Indian Ocean than with just domestic issues.
There was also the view expressed that when it comes to security, NZ has traditionally looked
to Australia, the US and the UK (in the current order) for strategic guidance rather than
develop a distinctive strategic culture of its own. This is believed to be a result of NZ
dependence on these countries (and others, such as France) for military equipment and
training and intelligence flows. But NZ has a distinctive approach to things like nuclear
disarmament, non-proliferation and peace-keeping, so surely that is reflected in a unique
perspective on the external security environment and the role that NZ should play in it 2.
New Zealand’s trade posture in the South Pacific
New Zealand being primarily an export based economy has looked upon the immediate region
of South Pacific to be politically stable to expand its economy. The South Pacific Regional Trade
and Economic Co-operation Agreement (SPARTECA) is a nonreciprocal trade agreement in
which Australia and New Zealand offer duty-free and unrestricted access for specified products
originating from the developing island member countries of the Pacific Islands Forum. The
SPARTECA was signed in 1980 in Tarawa and subject to Rules of Origin regulations, the
agreement was designed to address the unequal trade relationships between the two groups.[
New Zealand is a small country with a small population, accounting for only 0.24 per cent of
the world population and 0.27 per cent of global trade and it understands that both politically
and economically, it‘s destiny lies in Asia. Six of New Zealand‘s ten most important trading
partners are in the region. It has several offshore territories and a large exclusive economic
zone. It also has defence and security responsibilities of three independent or semiindependent territories – the Cook Islands, Niue and Tokelau. New Zealand‘s concerns over
fulfilling this responsibility will be reflected in the to be released Defense White Paper.
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In conclusion,
New Zealand despite being geographically away from the Eurasian theatres or the rimlands of
Asia where most of the politico-military and economic future of the 21st century lies, Wellington
understands that for it to have a stable economy and polity, the regional integration of the
South Pacific is an important task.
Notes
1)Robert Ayson Force and Statecraft: Strategic Objectives and Relationships in New Zealand‘s 2010
Defense White Paper- Volume 7, Number 1 (Autumn 2011), pp. 11-29.
http://www.securitychallenges.org.au/ArticlePages/vol7no1Ayson.html
2)Paul G Buchanan Foreign Policy Realignment, Issue Linkage and Institutional lag – 36th Parallel
Assessments- July 15, 2015
http://36th-parallel.com/2015/07/15/analytic-brief-foreign-policy-realignment-issue-linkage-andinstitutional-lag/
*****
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13.
Countries of South Pacific-their foreign policy outlook
Balaji Chandramohan
Introduction
Australia, New Zealand and Fiji are the prominent countries in the South Pacific and this essay
will envisage the foreign policies of these three countries.
Fiji’s foreign policy
Fiji compared to Australia and New Zealand carries little weight in International Politics but
has geo-political significance because of it‘s presence in the South Pacific which in many ways
directs it‘s foreign policy objective.
The present government under Prime Minister Frank Bainimarama has done most of the
societal disciplining internally to focus on the much broader problem of economic investments
in Fiji which in a way will reflect Fiji‘s foreign policy orientation.
Fiji also has significant strategic location in its favor, as it is the hub of Southwestern Pacific
transshipment routes, which include a way station for the Southern Cross fiber optic cable
connecting the US to Australia and New Zealand as well as financial and telecommunications
providers from around the Pacific basin and beyond.
Besides, Fiji, The Cook Islands, the Federated States of Micronesia, Kiribati, the Marshall
Islands, Nauru, Niue, Palau, Papua New Guinea, Samoa, the Solomon Islands, Tonga, are the
countries in the South Pacific.
Fiji’s foreign policy orientation historically: From the time of its Independence from 1970
till 1987 when the first coup occurred, Fiji followed relatively an active foreign policy
championing the cause of the South Pacific countries during the hey days of the Cold War.
However, following the coup of 1987 Fiji started to look inwards till the turn of the century and
after till the time Frank Bainimarama introduced the Look North policy in 2006 of having
active economic and diplomatic relations with India and China in an effort to thwart the
influence of Australia and New Zealand in the region.
Fiji and India‘s relations date back to 1879 when Indian indentured laborers were sent to Fiji to
work on sugarcane plantations by the colonial British after subjugating the islands as a colony
in 1874
From Fiji‘s point of view at present, it needs India‘s continued support in various fields ranging
from skilled manpower to information technology.
Incidentally, the cultural ties between South Pacific and India goes back to the age of trade link
between the Cholas kings in Tamil Nadu and the Polynesians as pointed out by the famous
Indian Historian V R Ramachandra Dikshitar in his book ‗Origin and Spread of the Tamils.
New Zealand’s foreign policy
New Zealand is very much within the U.S. "Sphere of Influence" and with 2010 Wellington
177
declaration, Wellington has looked up to the United States for closer strategic alliance. This is
the first step in the right direction towards annual security talks of the type that take place
between Australia and the U.S. and which underpin the decades-old Australia, New Zealand,
United States Security Treaty (ANZUS) alliance of which New Zealand was a member until the
break-up in the mid-1980s.
The ANZUS treaty-a military alliance which binds Australia and New Zealand and, separately
Australia and the U.S. to cooperate on defense matters in the Pacific Ocean area-was
previously a three-way defense pact. Following a dispute between New Zealand and the United
States in 1984 over visiting rights for nuclear-armed or nuclear-powered ships of the U.S. Navy
to New Zealand ports, the treaty lapsed between the United States and New Zealand, although
it remains separately in force between Australia and New Zealand and between U.S and
Australia.
Surprisingly, the Wellington Declaration has got a bi-partisan support with the New Zealand
Labour Party (NZLP) clearly supporting it. There are three reasons for this. First, the NZLP is
trying to move "center". Second, it has political ties with Fiji's Labour Party, which spearheads
the movement against Fiji's military dictator. Third, the NZLP get its patronage from Australia's
Labour Party and the latter has recently ejected Chinese speaking Kevin Rudd with more
Anglophone oriented Jullia Gillard as Premier. Though Kevin Rudd is the Foreign Minister, he
lost to Gillard on important policy matters, including on whether Australia needs to move right
towards Washington or left towards Beijing.
Though in recent times Australia has been a stable ally, New Zealand has withered away from
its traditional path.
Australia is a stable ally to Washington as it has to play a more pro-active role in the South
Pacific and it needs the backing of Washington, including its veto in the UN Security Council as
leverage against countries such as Fiji.
There is also a chance that China could use any of Fiji's islands a military or naval base much
to the irritation of the United States and nearby Australia. This has brought the alliance
between the U.S. and Australia even closer.
New Zealand, on the other hand, has no such compulsion geo-politically. It was happy to play
the role of younger brother to Australia in its affairs with Fiji. New Zealand was one of the
strongest anti-nuclear weapons state and opposed to any nuclear tests being conducted by the
U.S., France, and Britain in the South Pacific. The anti-nuclear posture increased when the
New Zealand Labour Party came to power. This is was the reason why New Zealand severed
defense ties with the U.S. in the mid 1980's with an anti-nuclear legislation banning all nuclear
armed ships near its water shores.1
New Zealand had a compulsion to ban all nuclear submarine ships near its shores after the
incident of the Sinking of the Rainbow Warrior took place in New Zealand's Auckland Harbour
on July 10, 1985. It was an attack carried out by French General Directorate for External
Security Agents aimed at sinking the flagship craft of Greenpeace, an environmental
organization stationed in Auckland, port city of New Zealand. Members of Greenpeace were
trying to stop a nuclear test by the French Government at Mururoa Atoll in the South Pacific.
New Zealand considered this an act of aggression and the NZLP banned all ships carrying
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nuclear weapons near its shore including American ones.Another key reason why Wellington
and Washington differed in their paths in the 1980's was because of the two different world
views that then leaders of the two nations held. The U.S. had a Republican President, Ronald
Reagan and New Zealand was headed by left-center Labour Party's Prime Minister David Lange.
Now, times have changed with New Zealand having a right-center government headed by John
Key and the U.S. having Obama's center-left administration.
The Obama administration has understood the need to contain the influence of China in Asia
Pacific. The administration's paradigm shift occurred this year when China decided to behave
in a more aggressive way in South China Sea and East Asia. The South Pacific is no exception
as China is courting Fiji's military dictator for the same reason; to gain a foothold in the region.
As a result, the U.S. is strengthening old alliances in New Zealand and Australia by revisiting
the ANZUS treaty. Could this be the start of a "Cold War" in the South Pacific is something to
be looked about.
In June 2012, New Zealand and US signed the ‗Washington Declaration‘ to expand defence
cooperation. The Declaration, signed by New Zealand Defence Minister Jonathan Coleman and
the US Defence Secretary Leon Panetta, envisages regular strategic dialogue and information
sharing, and emphasizes on ―building maritime security presence and capabilities.‖
New Zealand‘s participation in the world‘s largest naval exercise, namely the RIM Pacific in
Hawaii has boosted the defence relationship between the two countries. Defence cooperation
has a prickly thorn between the two countries for 28 years, after New Zealand banned nucleararmed and nuclear-powered ships visiting its ports.The US has always refused to declare if its
ships are nuclear-armed.
Despite RIM Pacific 2012 and the ‗Washington Declaration,‘ the New Zealand‘s reluctance in
allowing US warships near its ports is still a bone of contention.However, New Zealand is trying
to shed its past reservations in promoting closer defence relations with the National Party now
in power.
The John Key Government has focused its foreign policy on pragmatism rather than on
ideology. New Zealand has understood the importance of the rise of Asia-Pacific and has
increased defence cooperation with these countries, especially India, which is a closer strategic
partner of the US.
Closer relations between Wellington and Washington began with the visit of US Secretary of
State Hillary Clinton in November 2010, culminating in the ‗Washington Declaration.‘
This was a paradigm shift in the US-New Zealand relationship with support from Labour, the
main opposition party .Following Wellington Declaration, New Zealand released its ‗White
Paper,‘ which buttressed closer strategic relationship with Washington, especially in South
Pacific.
From New Zealand‘s point of view, its security is not threatened in anyway.But the situation
has changed in the South Pacific, with countries such as Fiji seeking better ties with China,
which would be in New Zealand‘s interests. New Zealand does not have autonomy on this issue
because it does not have a large defence force or resources to protect its sovereignty.
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But its objectives have been to have an open sea route to help sustain its export-oriented sea
route. New Zealand has, since World War I, committed its troops as a part of the Allied Nations.
Despite the lapse of the ANZUS Treaty, the country has sided with the US in committing its
troops for international peace and security as a part of International Security Assistance Force
(as done in Afghanistan).
From the US point of view, New Zealand‘s cultural and political affinity with energy-rich South
Pacific and its commitment to encourage democratically elected governments could be useful. 2
The scheduled release of the New Zealand Defence White Paper 2016 will set out priorities for
New Zealand strategy which will provide impetus to it‘s foreign policy directions.
Australia’s foreign policy
Australia‘s foreign policy involves the dilemma of fulfilling the expectations of its alliance with
the United States under the Australia, New Zealand, and United States Security Treaty by
contributing forces to support the United States in any armed clash with China over maritime
issues in the South China Sea or over the disputed island of Taiwan? Or would it protect its
links with Beijing by staying on the sidelines? As U.S.-China tensions grow, these questions
are no longer merely hypothetical for Canberra. And Turnbull might be the Australian prime
minister finally willing to articulate answers for them especially with the release of the
scheduled Defense White Paper.
Australia’s foreign policy after Guam Doctrine for the 21st century
When Richard Nixon was the President of the United States, his trip to China in 1971 attracted
media attention and now it‘s a part of the history annals forever, however his trip to Guam
Island near Indonesia is often forgotten.
It‘s Richard Nixon trip to Guam and his announcement of Guam which defined the US military
role in Asia Pacific for the next successive Presidents until the present Barack Obama
administration.
Richard Nixon’s Doctrine or the popular so called Guam Doctrine envisaged
* First, the United States will keep all of its treaty commitments.
* it will provide a shield if a nuclear power threatens the freedom of a
nation allied with us or of a nation whose survival we consider vital to our security.
* Third, in cases involving other types of aggression, it shall furnish military and
economic assistance when requested in accordance with our treaty commitments. But it shall
look to the nation directly threatened to assume the primary responsibility of providing the
manpower for its defence.
If the Guam Doctrine could be defined in one sentence it envisaged the US wont‘ send the
armed men for land wars in Asia unless the situation direly demanded as was in the case with
the Gulf War 1991.The doctrine was a paradigm shift in the US strategy towards Asia as it
came in the wake of the failures in the Vietnam War.
However, with the end of the Cold War and with the Wars in Afghanistan and Iraq coming to a
closure, the US strategic thinking is undergoing a paradigm shift towards Asia Pacific keeping
in view of China‘s rise as both a land power and a maritime power.
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The US has envisaged a policy towards Asia Pacific through military diplomacy. The Australian
case assumes more significance as the US plans to rotate 2000 US Marines a year through a
naval base in Darwin, Australia.
The paradigm shift in the US strategic thinking towards Asia Pacific could be called the Guam
Doctrine in the 21st century. Australia had absolved the Guam Doctrine of Nixon and ready to
absolve the same from here on from the Obama administration. It‘s because the Nixon‘s version
of Guam Doctrine influenced the Australian strategic thinking. The Nixon Doctrine in a way
gave Australia the ―strategic autonomy‖ to deal with adverse situations unless threatened by a
nuclear power.
The Guam Doctrine assumed more significance when the US decided to pull its troops out of
Vietnam which meant every Australian Defence White Paper since 1976 had been a part of the
Post-Guam doctrine. The case of Australia assumes significance related to the new Guam
doctrine as other than India and Japan, no country has assumed the tag of an aspiring Great
Power which can check China‘s Spheres of Influence in the Asia Pacific. That‘s precisely is the
reason why the US has decided to court Australia by assuring conventional support to its
deterrence in the Guam Doctrine II a marked departure from the Guam Doctrine I.
On the other hand, Australia‘s emergence as a regional power in the Asia Pacific with an
aspiring Great Power status is beyond doubt. Part of the credit has to go to the Guam Doctrine.
When Australia understood that it has to defend its own conventional interest after the Guam
Doctrine and more so after the withdrawal of forces from east of the Suez Canal by the Great
Britain which meant that strategic self-reliance in conventional terms with an extension of
alliance if threatened by a nuclear power became the norm of the Australian strategic
thinking3.
The ability of Australia to undertake operations in the East Timor even under a multi-lateral
umbrella was possible because of strategic self-reliance. This self-reliance‘s power was
understood by the United States in proposing the new Guam Doctrine which meant that the
US will form a new alliance partners in the Asia Pacific with it being the cog with the spokes
such as Australia, India, Thailand, Vietnam, South Korea, Japan and Indonesia. This policy
posture of the United States is Guam Doctrine II and Australia subscribes to it 4.
In conclusion,
Though Fiji, Australia and New Zealand have divergent foreign policy objectives and priorities,
it‘s true that they are significant players in the South Pacific geo-political arena. As and when
the whole of Asia Pacific assumes significance and with increased attention that will be given to
the Latin American countries by their Asia Counterparts, the strategic and foreign policy paths
of Fiji, New Zealand and Australia will be under more scrutiny by both the academicians and
policy-makers.
Notes
1)Colin James: Distilling an ethic for the jungle that‘s Foreign Policy New Zealand Herald June 30,2013
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=3510152
2)Ian McGibbon, The Greatest Gift, New Zealand‘s Alliance with the United States July 2009
http://www.unc.edu/depts/diplomat/item/2009/0709/comm/mcgibbon_newzealand.html
3)Balaji Chandramohan Australia‘s Defence White Paper – A View from India, Future Directions International
June 7, 2013 http://www.futuredirections.org.au/publications/indian-ocean/1085-australia-s-defence-whitepaper-a-view-from-india.html
4)Huge White Australia‘s Mr. China, Foreign Policy September 25, 2015
http://foreignpolicy.com/2015/09/25/australias-mr-china-united-states-turnbull-abbott/
*****
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India and the PICs - FPRC (Foreign Policy Research Centre)

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