The Hindu : Front Page : Kamal Nath asks China to address trade imbalance

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Sunday, Jan 13, 2008
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Kamal Nath asks China to address trade imbalance

Pallavi Aiyar

Lift non-trade and technical barriers, he says

“The world takes notice of India and China together”
Cooperate in a big way in hydro-power, says Chen Deming

Beijing: Commerce Minister Kamal Nath talked tough at his meeting with the newly appointed Chinese Commerce Minister Chen Deming, a day ahead of Prime Minister Manmohan Singh’s visit to Beijing. “I told the [Chinese] Minister that we [India and China] have substantial trade but that this is sustainable only if there is no large deficit,” Mr. Nath said after the one-and-a-half-hour-long meeting on Saturday afternoon.

The Minister said that Mr. Chen was sympathetic to Indian concerns and gave an assurance that the Chinese intended to send several buying missions to India over the coming months in an attempt to redress the trade imbalance. He added, however, that Indian companies should also come to China and attempt to sell their products more aggressively.

Even as the two Ministers talked, the latest figures for Sino-Indian trade were released by the Chinese Ministry of Commerce, putting bilateral trade for 2007 at $38.6 billion, a large increase from the $25 billion-odd trade volume of the previous year. India’s trade deficit however has also ballooned from $4.12 billion in 2006, to around $10 billion.

Mr. Kamal Nath said he proposed to the Chinese side that they begin to look into lifting non-trade barriers and technical barriers to trade against India, as a matter of priority. In particular he asked that Indian fruits and vegetables be given access to Chinese markets.

As part of a bilateral agreement signed on China’s accession to the World Trade Organisation (WTO) in 2001, Beijing had agreed to the import of 17 types of Indian fruits and vegetables. During the former Prime Minister Atal Bihari Vajpayee’s 2003 China visit, a protocol on mangoes was signed. However, since then only two more of the 17-item list, grapes and bitter gourd have been given the go-ahead for import into China. In response to Mr. Nath’s concerns, Mr. Chen promised to expedite the process but also raised some issues of his own.

He pressed the Indian side for a positive response to the proposed Regional Trade Agreement (RTA) in addition to asking for India’s recognition of China as a market economy. To this Mr. Nath said that “further discussions were needed” and that the issues (of an RTA and market economy status) would be “studied constructively.”

Energy concerns

Mr. Chen suggested that India and China cooperate in a big way in developing hydro-power. Faced with the combination of soaring energy needs and endemic air pollution, China had made it a priority to aggressively develop renewable energy technologies. It was the country’s stated aim to ensure that by 2020, 10-12 per cent of the total energy mix came from renewable resources.

Mr. Chen said that since China was a leading developer of hydro-power, Chinese investments in India in this sector had huge potential. Mr. Nath agreed.

Both Ministers talked about the potential for the Himalayan neighbours to cooperate on economic issues in multilateral forums like the WTO. “Trade cooperation is an important part of our strategic partnership,” Mr. Chen said.

Mr. Nath said India and China needed to ensure they were united, as they had been in the past, at the WTO negotiations “since the world takes notice of India and China together.”

Mr. Nath was accompanied at the meeting by telecom czar Sunil Bharti Mittal, Naresh Goyal of Jet Airways, Zee’s Subhash Chandra and Pawan Munjal of Hero Honda.

Specific issues of concern to some of these businessmen were also raised at the meeting. These included Zee Entertainment’s desire to win TV landing rights in China, Ispat Steel’s worry that India was being discriminated against by the Chinese when it came to exports of coke, and Jet Airway’s plans to launch flights between Mumbai and San Francisco via Shanghai.

It is possible that breakthroughs on any one or all of these requests and concerns may be announced during Manmohan Singh’s visit. But one deal that is already assured is the signing of a protocol that would enable the export of Indian tobacco to the Chinese market, home to 350 million smokers.

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