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Dragon gives hot chase on debut run

New Delhi, Jan. 2: One year after China’s accession to the World Trade Organisation (WTO), the dragon economy is proving to be a tough trade competitor and India has a number of lessons to learn from it.

China has used its entry into WTO as a running board to initiate sweeping domestic reforms — an area where India has appeared to dawdle too long inviting harsh criticism from overseas investors.

“They (the Chinese) are not only seeing it as an economic but also a political instrument to clean up their legal, judicial, administrative and fiscal system,” said Jairam Ramesh, secretary in the economic affairs department of the Congress.

Addressing a CII-organised seminar here today, Ramesh said China has taken a number of legal measures to open up its services sector — an area that has been traditionally closed. “Unlike India, China has spent time and energy on renewing its laws and regulations,” he added.

In the first year since joining the WTO, China has reduced tariffs in information technology, agriculture, chemicals, automobile and paper which now average 10-11 per cent as against 28-30 per cent in India.

The result: India has received foreign direct investment worth $ 7 billion while China has received $ 28 billion. Ramesh said that though there were several worrying factors for India with China’s entry into WTO, especially regarding the stance they would be taking in the Doha round, India should accept the existence of China as a reality.

The Chinese had to make far greater commitments before joining the WTO in December 2001 in areas like agriculture and services than what India has had to. One year after China’s accession to the multilateral trade forum, it has emerged as a consumption centre for the global trading world. He suggested that India should, therefore, utilise this opportunity to seek greater market access for its goods in China.

Trade experts today warned that despite being a WTO member, China is likely to lay greater emphasis on bilateralism over multilateralism, thereby aligning more closely with the US and the European Union on issues being discussed under the post-Doha WTO trade negotiations.

Ramesh said, “China is unlikely to put all its eggs in the WTO basket and this has been made evident by its announcement of a free trade agreement (FTA) with the Asean. It is now talking of an FTA with Japan; it won’t be long before it initiates talks on a similar agreement with the US.”

T.K. Bhaumik, advisor to CII on WTO-related issues, said China was likely to support India on WTO issues such as TRIPS, public health, Mode 4 services and non-tariff barriers but it would not be supportive on market access, agriculture and Singapore issues like investment, competition, government procurement and trade facilitation.

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