Toying with protectionism

Toying with protectionism
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First Published: Tue, Mar 24 2009. 09 38 PM IST

Illustration: Jayachandran / Mint
Illustration: Jayachandran / Mint
Updated: Tue, Mar 24 2009. 09 38 PM IST
China and India look ready to resolve a row over India’s ban on Chinese toys. In January, India banned toy imports from China under the auspices of safety concerns. To be sure, there was validity in these concerns. But the trade squabble degenerated into much more: Both China and India are guilty of protectionism. And in these tough times, global trade doesn’t need more unnecessary hindrances.
While India initially banned Chinese toys, it tempered the move at the beginning of this month, allowing goods certified by international safety agencies into the country. This begs the question: Why did the government wait three months to allow internationally certified Chinese toys into India? A blanket ban on Chinese toys hardly made sense when India could use regulatory bodies to distinguish between safe and unsafe goods.
Illustration: Jayachandran / Mint
What complicates the toy story is that India is simultaneously pressing China to open up certain markets for fruit and pharmaceuticals. On Friday, India asked a visiting Chinese commerce secretary to curtail these hindrances to bilateral trade. Within this context, it’s no surprise that India had to amend its stance on the toy ban. Last week, India said that domestic and other foreign toy producers—beyond China—will also be subject to regulatory scrutiny. This is clearly a good move: If safety is the actual concern, it doesn’t matter where the toys were made.
But that raises more fundamental questions. If Indian officials were so concerned with health and safety, why didn’t they initially subject domestic —or other foreign—toy producers to similar standards as the Chinese? It’s economically questionable to needlessly subject China to a blanket toy ban. China threatened to take the matter to the World Trade Organization, which surely influenced Indian regulators to amend their stance.
Trade with China stood at a solid $38 billion last year, but Indian officials are likely self-conscious of the trade deficit. Last year India imported around $27 billion from China while its exports were only $11 billion. While the deficit may be cause for worry, trade protectionism won’t solve anything.
The greater problem with these trade tiffs is that they only lead to a back-and-forth positive feedback cycle. India’s request for China to open its fruit and pharmaceutical markets is surely undermined, having banned China’s toys. In this economic climate, trade protectionism should simply not be tolerated.
Was the ban on Chinese toys protectionist? Tell us at views@livemint.com
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First Published: Tue, Mar 24 2009. 09 38 PM IST