Domestic Politics Impact New Zealand–India Dairy Trade Agreement

New Zealand's efforts to ratify a free trade agreement with India have encountered significant domestic political challenges. The agreement, which was negotiated to enhance trade relations between the two countries, is now under scrutiny from New Zealand's political spheres.

Trade Minister Todd McClay emphasized the strategic importance of concluding the agreement before India's 2026 elections to secure market access. However, NZ First, a coalition partner, exercised a 'agree to disagree' clause, opposing the FTA's passage in Parliament due to concerns about its benefits for New Zealand's dairy sector.

Winston Peters, leader of NZ First, criticized the agreement, arguing that the deal did not adequately address New Zealand's agricultural interests, especially in dairy. He pointed to the lack of sufficient concessions from India regarding its protected dairy market.

Despite these criticisms, McClay defended the timing and content of the agreement, highlighting that the provisions for a US$20 billion investment promotion pledge were non-binding and aimed at strengthening commercial ties.

The Labour Party's undecided stance on the agreement adds another layer of uncertainty, as their support could be pivotal for securing a parliamentary majority. The situation underscores the complex interplay of trade policy, domestic politics, and sector interests in negotiations involving significant agricultural exports like dairy products.