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India has doubts about a successful FTA with China

Economic Times, India

India has doubts about a successful FTA with China


15 July 15 2005

DALIAN: India feels that a free trade agreement with China will not work as it is not a market economy. But India wants its relations with China to shift from the political to the commercial domain and has suggested both sides should ensure that they are not played against each other by the rest of the world.

“For a free trade agreement with China, both countries should have market economies. India will be ready with China for an economic co-operation agreement as China moves to become a market economy,” commerce minister Kamal Nath said.

Asked about the possibility of establishing a Free Trade Area (FTA) between India and China, he said that since China was not a ‘market economy,’ it will not work.

Nath, who was here to attend the WTO informal ministerial meeting said China wants ties with India to flourish for which the relations must move from the political to the commercial domain.

“This is the century of Asia and the partnership of India and China must flourish,” he said. “As China slowly moves towards a market economy, both countries will have to strengthen their relations to ensure that one is not played off against the other by the rest of the world,” the minister said.

Nath, who had a successful meeting with Chinese commerce minister Bo Xilai here, noted that Sino-Indian bilateral trade had touched an all-time record at $13.6bn in ’04-05.

“Our bilateral trade has moved up from $1bn per annum to $1bn per month,” he said, adding that the synergy between both countries need to be harnessed.

He noted that during Chinese premier Wen Jiabao’s visit to India in April, the two governments had agreed to appoint a joint task force to study in detail the feasibility and the benefits that may derive from a Sino-Indian Regional Trading Arrangement (RTA).

The RTA was recommended by the joint study group (JSG) that was set up to examine the potential synegies between the two countries in expanded trade and economic co-operation following the visit to China by the then prime minister Atal Bihari Vajpayee.

The JSG had recommended a Sino-Indian RTA, comprising trade in goods and services, investments, identified understandings for trade and investment promotion and facilitation, and measures for promotion of economic co-operation in identified sectors.

The JSG in its report has also identified a series of measures related to trade in goods, trade in services, investments and other areas of economic co-operation, and recommended their expeditious implementation to remove impediments and facilitate enhanced economic engagement between India And China.