India has included provisions in its free trade agreement with New Zealand allowing it to suspend tariff reductions on apples, kiwifruit, and honey exports if cooperation commitments are not met.
Under Annex 2B of the Trade in Goods chapter, tariff concessions can be reversed following consultations between joint committees of both countries. "If no resolution is reached, India may notify NZ of its intention to rebalance the concessions offered by it and may suspend the market access," the clause states.
A related provision allows India to suspend market access gains if New Zealand does not meet investment targets, including increasing investment to US$20 billion over 15 years. Any suspension of tariff benefits is expected to be temporary and would be restored once obligations are fulfilled or a "mutually agreed solution" is reached.
In its National Interest Analysis, the Ministry of Foreign Affairs and Trade stated it is "confident" the cooperation agreements will be implemented and described the risk of tariff reversals as "negligible." The analysis also notes that New Zealand has secured access conditions for apples, kiwifruit, and honey compared with other exporting countries under agreements with India.
For apples, the current 50 per cent tariff will be reduced by half immediately for up to 32,500 tons of exports, increasing to 45,000 tons after six years.
Mike Petersen, chair of Scales Corporation, said the cooperation agreements will be managed by NZ Apples and Pears Inc and include technical exchange with Indian growers. "The cooperation agreements have been drawn up to help the Indian apple sector alongside the opportunities we will have in India as a result of the tariff relief."
He added, "We are fully aware of the opportunities and the consequences of this not working," noting that yields in Indian orchards are lower compared with New Zealand.
Source: Farmers Weekly
