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South Asian and South Pacific Diplomacy: New Zealand’s growing trade ties with India and Sri Lanka

20 September 2018

By Srimal Fernando and Pooja Singh

New Zealand continues to be on India and Sri Lanka’s foreign policy priorities. Perhaps, the most significant foreign policy agenda focusing on South Pacific for India and Sri Lanka will be this geopolitically important region of 17,000 flourishing islands which is dominated by the two large developed nations; Australia and New Zealand playing an important role in APEC (Asia Pacific Economic Cooperation).

To strengthen the Indo-Pacific foreign policy, New Zealand is one of the most important bilateral partners for these countries to work around. For New Zealand, India is the tenth largest trading partner and Sri Lanka is the fifth largest buyer of milk powder.

Hence, these were the two main reasons that the New Zealand foreign policy interest was fundamentally based on the South Asian regional context. When Prime Minister of New Zealand, Mr. John Key visited India and Sri Lanka in the year 2016 with a business delegation, the key focus was on trade and investment in the Indian sub-continent and its neighbouring island country.

Currently, New Zealand’s trade with India is estimated around US$1.2bn and also the volume of economic exchange between the south pacific and south Asian island nations had increased from $117 million in 2000 to $239 million in 2016(Ministry of Trade, New Zealand 2017). In fact, India and the south pacific island nation are negotiating a bilateral and a multilateral Free Trade Agreements (FTA).

On the other hand, this multilateral FTA will be beneficial for the New Zealanders to gain access to the sixth largest economy in the world and India too will give entry to a South Pacific regional market.  Culturally and historically, the diplomatic links between India and New Zealand goes back to several decades and also New Zealand identified India as a priority country in its “Opening Doors to India” policy.

Over the past several years, the number of Indian students following courses in New Zealand have increased significantly to over 32,000. Hence, India is placed second largest source for International students after China. On the other hand, annually over 61,000 Indian tourists visit North and South islands of New Zealand. In addition to this, as discussed by the two leaders during their bilateral dialogue emphasized on people to people level exchanges and about the significant diaspora population living in New Zealand. Today, over 200,000 Indians are estimated to be domiciles of this South Pacific island country and half of them are holding the status of People of Indian Origins(PIOs) and significant proportion of this diasporic population are holders of Indian Passports.

South Pacific island nation’s ties with Sri Lanka go back to several decades and Prime Minister Mr. John Key’s visit to Sri Lanka was a historic moment celebrating the diplomatic endeavors between the island nations. In fact, Sri Lanka is New Zealand's fifth-largest market for milk powder products (nzherald 2013) and to increase the productivity of the Dairy sector in the South Asian island nation, two new initiatives have unraveled under the Dairy Cooperation Arrangement to be funded by the New Zealand Government. Fonterra group, the main milk brand behind the New Zealand’s “Anchor Milk powder products” has trained over 5,000 Sri Lankan dairy farmers to match up with the current demand for dairy which is growing at 13 percent a year.

The nation is aiming to be sufficient in milk industry within the next five years and New Zealand’s scientific expertise had helped the local industries to meet up with the current milk production demand that is growing rapidly. One of the major initiatives was a NZ$2.6million to train and support smallholder dairy farmers to improve productivity and profitability. Further, to make Sri Lanka self-sufficient in milk production, a second grant of NZ$3.3million was extended for the northern province to generate sustainable agricultural income. In the recent past, Sri Lanka’s diaspora population mainly comprising of skilled professionals have exceeded to 12,000. This also has contributed to the travel industry between both countries where more than 8,000 New Zealanders visit the Indian Ocean island nation annually.

Present day, India’s economy is showcasing a very robust and consistent growth and India is planning its double its economy of 2.5trillion by 2022. While Sri Lanka is trying to reach out to upper middle income status within in the next five years. These progressive developments goals are creating a competitive market demand for developed nations such as New Zealand to invest, increase and grow their cultural and economic capital through diplomatic ties. This reciprocal strategic friendship between New Zealand with India and Sri Lanka is bound to take Indo-Pacific foreign policy to a new epoch altogether.  

Srimal Fernando a research scholar at Jindal School of International Affairs, India and an editor of Diplomatic Society for South Africa and Pooja Singh, a scholar of Masters in Diplomacy, Law, Business at Jindal School of International Affairs, India.



September/October 2019










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