Officials are expected to meet Labour Leader Chris Hipkins on Monday to brief him in a last-minute attempt to convince him to ask Labour’s Caucus on Tuesday to support the India Free Trade Agreement.
Hipkins has been asking for the Government’s legal advice on what a commitment on New Zealand’s behalf to facilitate investment of $33 billion in India over the next 15 years actually means.
But interestingly, Labour appears to have dropped any concerns it might have had about the Agreement’s proposal to increase work visas and also opportunities for Indians to take up tertiary study here, with work rights allowed while they are studying.
New Zealand First has said it will campaign against what it calls “mass migration”, and leader Winston Peters says that is why it will not support the Free Trade Agreement.
With the loss of the coalition partner, Trade Minister Todd McClay needs Labour’s support for the Agreement.
There is now some urgency about the matter.
Ideally, National would want this signed as soon as possible because it might turn out to be one of the very few bits of economic good news it will be able to present this year.
Conversely, it is not in Labour’s interests to enable a political win like this for National so close to an election.
Indian media have reported within the last fortnight that the Agreement is to be signed in India on April 24.
POLITIK understands that this is not so; however, the Indians want to sign as soon as possible.
Thus the decision to brief Hipkins on Monday.
At the heart of Labour’s concerns is a provision in the Agreement for New Zealand to “facilitate” or “promote” the investment by New Zealand entities of $33 billion in India over the next 15 years.
Hipkins argues that without seeing the text of the Agreement or being briefed on the Ministry of Foreign Affairs and Trade’s legal advice, he has no way of knowing the full implications of this.
Indian media reported in December that the country would set up a Committee to monitor New Zealand’s progress towards the $33 billion target.
“In case FDI commitments fail to materialise during the 15-year time frame, the committee will have the authority to decide an appropriate penalty or consider granting a grace period, depending on the extent of investments made or any other critical factor,” a government official told the Indian Business Standard.
“These decisions will be taken by the committee that will be headed by a senior commerce department official.”
“We want to understand the legal position around that,” Hipkins told POLITIK last night.
“Because if you look at Piyush Goyal, the Indian Minister of Commerce and the comments that he’s made publicly, he’s been very clear that if New Zealand doesn’t meet those targets, that they will claw back the concessions that they’ve been giving us,” said Hipkins.
“The Agreement itself is hard for us to interpret.
“We’ve read it carefully, and certainly, on one interpretation of it, they would be entitled to claw back the concessions that they’ve given us.
On Todd McClay and Christopher Luxon’s interpretation of it, which I don’t think is supported by the written text of the Agreement, they can’t.
“And the fact that they have set up a committee in India that is going to be overseeing this Agreement, reviewing progress every two years on whether or not New Zealand is meeting its obligations under the investment clause, that would suggest that they very much see this as something that we are obliged to do.
“And I can’t see it. It’s just in no way a credible figure. You know, $33 billion New Zealand dollars, that would basically mean about a third of all KiwiSaver funds would have to be invested in India.
“Where is this money going to come from?”
But although the Indians have set up the monitoring committee, all the statements from India have said New Zealand would “facilitate” or “promote” the investment.
There is no public absolute commitment that New Zealand would invest that much.
McClay is clearly very keen to get Labour on board.
And he is quick to defend the level of consultation that has already taken place.
“We’ve had more engagement than any other trade agreement ever in history,” he told POLITIK.
“There are 26 contacts and growing, and it’s from phone calls to Hopkins. Or (Trade spokesperson Damien) O’Connor, officials available when O’ Connor’s been phoning them, to formal meetings in person, Erica Stanford and I with Hipkins and O’ Connor, the Thursday before Easter where they sat down with all of the advice; there was a phone conference with their foreign affairs spokesperson and one staff member and officials for four and a half hours and they went through it all, plus backwards and forwards and letters and so on,” he said.
In February, Labour outlined the four conditions it said National must meet before Labour would consider supporting the free trade agreement.
One called for clarity on the investment agreement and a second for the provision to Labour of unredacted advice on the whole Agreement.
But two of the four are related to migration.
Labour wanted stronger protections for migrant workers, and an assurance that New Zealand’s reputation for quality education would be safeguarded.
“Any students coming into New Zealand under this agreement must be attending a legitimate education course,” the Labour statement said.
It seems they are now satisfied on these issues, or alternatively that they no longer want to raise them publicly lest they be seen to be following New Zealand First as an anti-migration party.
McClay pointed out that the former Labour Government, “to their credit,” tightened up restrictions on foreign students coming to New Zealand, and it was open to National to do the same thing; to vary the conditions under which all students can come here.
They cannot implement restrictions for only Indian students; what they do must apply to all students.
But when Labour clamped down, Indian numbers dropped.
The Free Trade Agreement will give some work rights to Indian students. They may work for up to 20 hours a week, and those doing bachelor’s degrees or above will have the right to work full-time here for three years on the completion of their degree. Ph D students will get four years.
McClay told POLITIK the whole focus would beon STEM (Science, technology, engineering and mathematics) subjects, Master’s and PhDs, not bachelor’s degrees.
“Although you’re still able to come for one of those, but it’s got to be at one of the universities,” he said.
Those students would be able to apply for a conventional work visa once they had graduated, as they would if they were still in India.
Indian students make up only about 10 per cent of all foreign students at New Zealand universities. Chinese make up 50 per cent.
So even a doubling in numbers (which would seem unlikely) is not going to lead to a noticeably larger Indian student population.
So far, Labour has committed to either supporting or opposing the Agreement, but its Caucus will meet on Tuesday to discuss taking a position.
The Agreement then goes to a Select Committee, and any legislation that it needs can then be debated in the House.
But that legislation is likely to only reduce tariffs on Indian imports.
The investment proposal and immigration rules changes will not require legislation and will therefore not require a vote in Parliament.
If Labour decides to oppose the Agreement, the debate over those matters will take place on the election hustings, not the debating Chamber.
That could easily turn into a populist anti-immigration campaign.
National won’t want that, nor will Labour, as both parties have already been campaigning in the Auckland migrant communities.
The issue is clearly big in the Indian community, with the front page of Auckland’s largest Indian newspaper, the Indian Weekender, currently dominated by a report on Hipkins and the Agreement.
National has placed a lot of political weight on getting this Agreement in place.
The Prime Minister promised before the election that he would do it.
Now it’s up to Chris Hipkins.
