India, China fail to break ice on fixing the $51 billion trade deficit

New Delhi: India and China failed to come up with a joint statement after the 11th joint economic group (JEG) meeting on Monday, unable to agree on how to effectively address India’s massive $51 billion trade deficit with its northern neighbour.

In October, India and the US also failed to issue a joint statement under the trade policy forum dialogue owing to unresolved differences.

The India-China JEG is a minister-level dialogue established in 1988 during the visit of prime minister Rajiv Gandhi to China.

Explaining why a joint statement could not be brought out, an Indian official speaking on condition of anonymity said India was expecting a concrete road map to address issues raised by it which the Chinese side failed to provide. “By the end of the discussions, there were not enough common ground to put out a joint statement,” he added.

Instead of a joint statement, the Indian side issued a statement holding that the JEG between is the oldest and most important dialogue mechanism to address the “most important issue” of India’s trade imbalance with China.

The statement said trade minister Suresh Prabhu “exhorted” his Chinese counterpart Zhong Shan to provide greater market access for agricultural products like rapeseed, soybean, basmati and non-basmati rice, fruits, vegetables and sugar.

“Another commodity which could be exported from India to China is high quality pharmaceutical products. Export of India’s IT and IT-enabled Services to China and cooperation in the sectors of tourism and healthcare needs to be focused upon,” the statement said.

The Indian commerce ministry statement said Zhong welcomed Indian investment in China and “promised” to address the trade deficit. “The minister highlighted the important issues discussed in the meeting like two-way trade relations, preparation of an action plan, greater focus on Regional Comprehensive Economic Partnership (RCEP) and e-dialogue,” the statement added.

Zhong said “candid and effective” discussions with India on trade relations can serve as the propeller for the growth not just of the two countries but the entire region.

India has often expressed frustration with the promises made by China, drawing a contrast with Chinese non-tariff barriers that prevent Indian companies accessing the Chinese market.

At the 10th meeting of the India-China JEG four years ago in Beijing both sides had reaffirmed their determination to expand and diversify bilateral trade and economic cooperation. The two sides agreed to take positive steps towards rebalancing bilateral trade and addressing the existing structural imbalance in trade that has a bearing on its sustainability. Both the countries had also signed the Five-Year Development Program for Economic and Trade Cooperation that lays out a road map for comprehensively deepening and balancing bilateral economic engagement.

During the 9th JEG in 2012, the two sides set up three working groups on economic and trade planning cooperation, trade statistical analysis and service trade promotion.