The mother of all FTAs
Asia Pulse/PTI
Mar 31, 2005
The mother of all FTAs
NEW DELHI - Riding on a 79% growth in bilateral trade in 2004 at US$14 billion, China has expressed an interest in formulating a free-trade agreement (FTA) with India, saying that closer trade relations could make it easier to solve political differences. If the FTA is achieved, it would result in the biggest free-trade region in the world.
"We have received support from all relevant departments for an FTA with India. We want to start discussions ... It is for India to take a decision," Sun Yuxi, China’s ambassador to India, said on the sidelines of a Federation of Indian Export Organizations meeting recently. "There is still a lot for us to do to further enhance bilateral trade and economic cooperation. I believe closer trade relations will make things easier for solving some political issues ... Trade between India and China has increased seven times in five years. It can increase to $35 billion by 2010, even if a modest 20% growth is maintained."
Sun said the FTA issue is likely to be raised by Chinese Premier Wen Jiabao when he visits India next month. During the recent meeting of the joint study group on closer economic cooperation between India and China in New Delhi, Sun said the Chinese representatives in the group had advocated going for an FTA. The study group was constituted on the basis of the first India-China Joint Declaration signed during former prime minister Atal Bihari Vajpayee’s historic visit to Beijing last June. The joint study group comprises officials and economic experts from the two countries mandated to study ways to expand bilateral trade and economic cooperation and draw up a five-year plan for Sino-Indian trade and economic development. According to the Chinese envoy, the two governments aim to finalize the five-year plan by the end of the month. It will be announced during the Chinese premier’s forthcoming visit.
Upbeat over the growth in bilateral trade in the last five years, Sun said it could even reach as high as $50 billion if all barriers to trade are removed. Sun said he would like India to provide business visas more swiftly, besides granting China market economy status. "At present, about 37 countries have granted China the status of market economy country, and I hope the Indian government will take action early in this aspect and recognize China as such." Sun also advocated an investment protection agreement between the two nations.
China edged past the United Arab Emirates to become India’s second-largest trading partner in 2004, when bilateral trade shot up by 79% over the total trade volume of 2003. For China, India has emerged among its top 10 Asian trading partners for the first time. India was China’s ninth-largest trading partner in Asia in 2004. An FTA will add steam to this spurt in bilateral trade. It’s widely estimated that India and China will emerge as the top economies of the world by 2050. Predicted to have the largest gross domestic products (GDPs) in another four decades, they could dramatically change international trade equations now dominated by the United States and Europe.
The Chinese ambassador said health care, industry and services are the fields where the two countries can focus initially, apart from agriculture. India and China have already reached an agreement to "revitalize" and "diversify" their cooperation in agricultural and allied sectors, including dairy and fisheries, to strengthen overall bilateral ties. Announcing this here on Wednesday, officials said the agreement was reached after Indian Agriculture Minister Sharad Pawar met his Chinese counterpart, Du Qingling, here on Tuesday, during which the two sides discussed ways to promote bilateral cooperation in the agricultural sector.
"The two ministers assessed the existing state of bilateral cooperation in the field of agriculture and agreed to revitalize various aspects of cooperation in this sector through mutually agreed mechanisms," an official said. They agreed that diversified and broad-based cooperation between the two countries in the field of agriculture and allied sectors, including animal husbandry, dairy, fisheries and trade in agricultural products, would make an important contribution to the expansion of overall India-China trade and economic linkages.
The two sides agreed that the agriculture sector in India and China have many common characteristics and both countries share the common objective of ensuring rapid and sustainable development of their respective agricultural and rural economies. Officials from the two sides stressed that the discussions were successful and were held in a cordial, positive and friendly atmosphere.
