The Hindu | 18 April 2007

China seeks market economy status

Pallavi Aiyar

Kamal Nath calls for greater transparency

– India’s trade balance with China turns negative
– Need to improve market access for farm products

BEIJING: India and China together represent the "new global economic architecture’’ Indian Commerce Minister Kamal Nath said in an interview to The Hindu here on Tuesday. He was commenting on the joint statement India and China released on Monday, reiterating their common commitment to placing "the development dimension at the heart’’ of the World Trade Organization’s (WTO) ongoing Doha Round of negotiations.

Powerful message

"It (the statement) sends a powerful message to the world, given that we (India and China) account for 1.5 billion of the world’s farmers and two billion of the world’s poor in addition to representing a substantial mass in GDP terms,’’ Mr. Kamal Nath said.

But although the joint statement is one of the clearest indications yet of an effort on the part of the two countries to harmonise a common position at the WTO, India and China themselves are often embroiled in fractious trade disputes.

Thus, India continues to file a large number of anti-dumping cases against China, while Beijing chafes at New Delhi’s reluctance to grant China the market economy status. It is fear of cheap Chinese goods flooding Indian markets that is often used to justify continuing high tariffs on imports of products like textiles and leather goods.

Moreover, some analysts have pointed to the fact that while India does all the heavy lifting on behalf of the developing countries when it comes to the Doha negotiations, China prefers to remain in the background. Beijing is, thus, able to benefit from India’s efforts but avoids the heat New Delhi comes in for from the developed countries.

The price of WTO entry

In response Mr. Kamal Nath said he gathered from his meetings with Chinese Commerce Minister Bo Xi Lai and Agricultural Minister Sun Zhengcai, that China did want to "seriously engage with looking at consolidating a position with developing countries."

Mr. Kamal Nath said the WTO accession treaty the Chinese signed in 2001 required the country to pay a price, the cost of which was only now being fully felt. "They (the Chinese) thus want to make corrections (to the treaty) and as long as this has no adverse impact on India, we support them,’’ concluded Mr. Kamal Nath.

The Commerce Minister further revealed that he would look into expediting the process of India’s granting China the market economy status, since the matter had "much symbolic significance’’ for the Chinese side. He cautioned, however, that China needed to work on securing "greater transparency" on certain matters.

Mr. Kamal Nath also admitted that while bilateral trade was growing steadily and had, in fact, crossed $25 billion in 2006, India was for the first time experiencing a trade deficit with China, a trend that would have to be redressed. He said that he believed Indian agricultural products to have a strong potential market in China and that adding new agricultural products could help to diversify the bilateral trade basket. At present Indian exports to China are overwhelmingly dominated by iron ore.

But despite the Minister’s optimism, India has not found the Chinese market easy to access for its agricultural produce.

Thus, for example, even though under a bilateral agreement signed on China’s accession to the WTO. Beijing had agreed to the import of 17 types of Indian fruits and vegetables, more than five years down the line only three items - mangoes, grapes and bitter gourd - have, in fact, been approved for import from India.

Political process

Mr. Kamal Nath, however, remained bullish on a growing India-China economic partnership which, he said, would help "provide the thrust to the political process’’ between the two countries.

The tenth round of talks at the special representative level aimed at resolving the boundary issue will in fact take place later this week in India.

The Indian Ambassador to China, Ms. Nirupama Rao, left Beijing for India on Tuesday afternoon to prepare the ground for the talks.