India-China Free Trade Agreement – not on the cards

statesman

Even as India and China ready to ink at least half a dozen trade agreements during Chinese President Hu Jintao's visit, there is no Free Trade Agreement (FTA) on the cards. And rightly so.

I feel we should at least for the time being look at an economic cooperation agreement in the long run which will be much wider in scope. Today, trade volume between the two nations stands at $20 billion annually which is definitely satisfactory.

Despite the fact that the Chinese markets have shown openness in the past few years, Indian industry is still skeptical about granting market economy status to China which will also see the number of anti dumping cases fall drastically. The primary concern that the two nations have and perhaps in the future will encounter is of granting market economy status to China which will be the precursor to any FTA.

Many from the Exim community have told me that lack of information and the closed environment in which the Chinese industry operates is the main concern that they feel will come in the way of a FTA. Without doubt, for a FTA to be successful a certain degree of transparency has to be insured and currently that is missing.

Under such circumstances I strongly feel that instead of FTA with China we should be looking at other options to strengthen trade ties. Both the governments have to reduce transaction costs, better banking links and provision of dedicated terminals and ports for boosting trade flows between the two countries. As such it will be a win-win situation for both the neighbours.
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STATESMAN

kumars · Telugu Kavi Joined: 14 Dec 2005 Posts: 828

India-china trade relation seems to be strengthened now and it is one of the fetching reform to our economy.

With a right understanding & reforms both countries will definetely emerge as power nations in our Globe.
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Kumars

ved · Telugu Veera Joined: 26 Feb 2006 Posts: 2003

The open trade pact with China should be done case by case. We are not yet ready to open the flood gates.

First, in spite of their per capita income being double, they have no labor laws comparable to that of India giving unfair advantage over companies here. Second, China, being a supplier of goods for the whole world, has tremendous economy of scale. We are not yet there. Third, in China, the infrastructure is provided by the Govt on a massive scale. They can build freeways and dams in months, and in some cases in days. In a way companies got subsidized power, roads and other amenities. We are many years away from that. Therefore as long as we don't have level playing field, some of our sectors need to be protected. The best example is agriculture and some electronic components. We are fine with steel, automobiles and some durable goods.

Stalinist · Posted: Sat Nov 25, 2006 8:28 am Post subject:

Why are you bothering so much about China? Chinese had occupied Aksai Chin area of Kashmir and now they are claiming that Arunachal was part of China. They are also dangerous to India like Pakistanis.
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