Despite great pushes over the last forty years this remains in modern form to the present day and is seen by NZ farmers as an essential part of their success, as this has allowed them to pool resources and invest in the vertical integration (transport, factories, shipping) to compete overseas. A similar structure also exists in other countries (US with DFA milk, Denmark & Sweden with Arla are also in the top ten global dairy companies)
Until the early 1980s, NZ also operated a very protectionist trade policy dependent on access to traditional markets which ultimately failed badly. This experience and the (painful) resulting changes is a major reason why NZ is such a proponent of trade agreements and multilaterality more generally on the global stage.
If NZ produces dairy products more efficiently then they deserve the benefits. At the same time in India where manufacturing is far more efficient they have the opportunity to export as many manufactured goods to NZ as they want.
If the Indian government wants to tax their manufacturers to provide support to their now unemployed dairy farmers they are free to do so but ultimately both countries are better off with India paying overall less for dairy and NZ paying less for manufactured goods.
One example is US ITAR restrictions, which prevent certain technologies being exported.
Another is looking to protect local food supplies against foreign competition — eg, dairy co-ops from foreign mega farms.
There’s lots of empirical evidence that a mixed system is more stable with little to no loss to innovation.
Most recently, COVID demonstrated the problem with foreign supply chains.
The more immediate concern is that making millions of families dependent on government hand outs would be disastrous.
You are severely under estimating the cost efficiency of modern mass manufacturing vs a country with very little to no infrastructure in the segment.
India's strength lies in its size and its ability to pool resources and technology.
Compared to China, India is way more open market, it's institutions are transparent.
Where India has failed vis-a-vis China is its unwillingness to use its market size and pooling ability and play its strengths. India's past economics has been driven by too many western educated economists who fail to see India as a unique case instead have always attempted to use a European or American template for economic development.
I think most assessment of the Indian economy put the blame on incredible amounts of bureaucracy as one of the main constraints on growth. The same ("we have to protect their jobs") argument is used to protect that.
Granted it is not nice to have corruption and it introduces gross inefficiencies. But that isn't the primary reason India is lagging behind China, nor is it entirely because of a lack of free markets.
One excellent example would be solar power, India could pool its market capacity, technological ability and finance to have built up a huge ecosystem, but instead it went the route of importing everything, even as it goes about building some of the largest solar projects in the world.
The Chinese are wealthy because they would never let go of such a golden opportunity.
So the strategy as a whole feeds a cycle of decrepitude, decay, and corruption. Since it's unsustainable, eventually the house of cards collapses and everyone at the bottom of the economic pyramid starves anyway.
It's a particularly nasty case of a policy measure harming the people it was supposed to help. There's an adage in economics, "trade favours the poor"⁽¹⁾. Mark it well.
As a rather extreme example, the so-called "Great Depression" of the 1930s was significantly exacerbated by protectionist trade policies, ostensibly rushed in to shore up local industries with tariffs; in practice this caused the already-declining global levels of trade to collapse entirely.
Protectionism is the opposite of investment and renewal, and an enemy of prosperity.
⁽¹⁾ there's a related saying in political science; "trade stops wars".
I agree with you in your assessment that protectionism breeds inefficiency, but you are imposing your strictly one sided take on 'what should be' without stopping to consider 'why it is',
it's an answer fit for a class of undergrads, quotes and all, but has little to no real world value as its so generalist in its assumption.
Economics is a black art, and subjectivity matters more than the principles.
This isn't some abstract argument. If you want to talk about India, notwithstanding that India is so vast and complex a nation that only the unwary say "India this" or "India that" broadly, the country had a decades-long history of protectionism since independence, trying to get by with very low levels of international trade, and this being a crucial factor in the 1991 economic crisis: the government had no foreign currency reserves at time when the balance of trade was catastrophic due to rising global oil prices and the demand for modern goods from abroad.
Liberalization of trade is not without its problems - in particular, increasing wealth inequities, and cultural imperialism by economic means. Nevertheless, the subsequent lowering of barriers corrected the crises and has defined India's catapult to the top levels of international manufacturing and service provision.
(No value judgement on your position though, I generally think that this treaty is a bad thing due to its role in expanding China's power and influence, when it should be contained.)
Yes this policy helps some rural families, but it also condemns all the other rural families to getting only variable quality, intermittently available, expensive dairy products. Every protectionist support for a local industry imposes a cost on everyone else, to the point where everyone benefits a bit from protection, but also pays costs on all the goods and services they themselves consume. It may even be sustainable, but only at the price of sacrificing the chance of a better future.
Change is painful, no doubt about it, but opening up to international markets can also mean opening up to international investment, technical skills and partnerships. It needs to be coordinated and there should also be transition plans to mitigate some of the pain. I do believe it’s for the best though.
The diary sector in India is largely unorganized , these are managed as daily livelihood for poor income families who have at best a few cows that provide them with livelihood. The co-operative sector in India mentioned how imports from NZ will wreck the system , for example the largest co-operative AMUL in India was against RCEP and imports from NZ (https://www.nationalheraldindia.com/india/rcep-amul-warns-mo...)
The exact trade rules and local content are in many cases impossible to vet and verify and are in many cases not transparent. And given the sentiment in India , no one will take chances with China