Muted expectations from task force on trade gap
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New Delhi: The decision by India and China to set up a task force to address India’s concerns about lack of market access and mounting trade deficit may not yield much, but their joint mechanism on multilateral trade issues will help both set the agenda at the World Trade Organization (WTO) talks, said Indian trade officials.
During his just-concluded three-day visit to China, Prime Minister Narendra Modi signed three agreements on levelling the skewed trade between the Asian neighbours, including by establishing a high-powered task force to address India’s market access complaints, a memorandum of understanding (MoU) on a consultative mechanism for cooperation in trade negotiations and a protocol on health and safety regulations for import of Indian rapeseed meal.
Modi in his statement to media at a joint press conference with Chinese Premier Li Keqiang in Beijing on Friday said: “President Xi and Premier Li were very receptive to the specific concerns I had raised on our growing trade deficit. We look forward to early impact on the ground. We have agreed to create a high-level task force to develop a strategic road-map to expand economic relations. It will cover a broad range of areas including Infrastructure, IT, pharma, agriculture and manufacturing.”
The trade deficit between India and China widened about 34% to $48.43 billion in 2014-15, trade minister Nirmala Sitharaman informed Parliament earlier this month.
While both sides are yet to decide at what level the task force will be set up, an Indian trade ministry official said expectations are muted because of India’s past experience with China.
“We had given a non-paper on IT and pharmaceuticals in 2012 when the Chinese trade minister visited India. There is zero progress on that so far. In March this year, during the preparatory meetings with the Chinese for the prime minister’s visit, we again gave a non-paper. Buffalo meat, non-basmati rice, fruits and vegetables, pharmaceuticals, reduction in tariffs under Asia-Pacific Trade Agreement, IT and IT-enabled services (ITeS) were some of our focus areas. But not much progress has been achieved,” the official added.
Non-papers are discussion documents submitted by a government to unofficially convey its views on a matter. Since non-papers don’t have an official status, they help in avoiding diplomatic conflicts and still convey the relevant message to the other side.
Last month, commerce secretary Rajeev Kher told Mint that India is getting frustrated with the lack of response from China on India’s market access demands.
In comments made at that time, Kher said: “When it comes to market access in China, we have tried several permutations and combinations. There has been a lot of conversation with China. There has been a lot of paperwork, MoUs. But when it comes to our exports, it is not happening. We want that when prime minister (Narendra Modi) will be visiting China next month, we should be in a position to show some concrete results, not just one more MoU. So, we are hoping for the best.”
However, the official cited above, who spoke on condition of anonymity, said the formal institutional bilateral mechanism for consultation on WTO matters and for coordinating the positions of the two countries will serve two purposes.
“On defensive aspects, China cannot decide on anything which is against our interest. Two, most of our interests are common which will help us cooperate in setting the agenda at the WTO talks,” he added.
“For example, both countries are not part of the plurilateral Trade in Services Agreement but they can coordinate to push a multilateral services agreement at the WTO. Both of us have also been demanding reduction in subsidy by developed countries,” the official added.
Plurilateral platforms involve fewer countries than multilateral ones.
The first signs of the cooperation is expected to be seen during the preparation of the post-Bali work programme of WTO, the deadline for which ends on 31 July.
WTO director-general Roberto Azevêdo said on 27 April that though countries are making progress towards building the work programme, “we still have a long way to go”.
The Indian official said, “Unlike the bilateral trade mechanism, we are hopeful that this will work, since this is a matter of mutual interest. And China is under more pressure at WTO than us.”
T.S. Vishwanath, principal advisor on trade policy at APJ-SLG Law Offices, said that since India and China are part of the Regional Comprehensive Economic Partnership agreement but not the other two mega regional trade pacts, the Trans Pacific Partnership and Transatlantic Trade and Investment Partnership, they seem to have realized the importance of coordinating their position for mutual benefit. “They can also set the agenda at WTO if they work together,” he added.