A Project Report

On
“Overcoming Challenges faced by India against US
& China’s Influence in International Trade”

Submitted By:
Sameer S Gavhane
Roll No: 08
Garware Institute of Career Education and
Development,
University of Mumbai
PGDCC&FF 2018 – 2019

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 Certificate

This is to certify that the project work titled “Overcoming Challenges faced
by India against US & China‟s influence in International Trade” is a
bonafide work carried out by “ Sameer Shaliwan Gavhane” Roll no : 08 a
candidate for Post Graduate Diploma in Custom Clearance and Freight
Forwarding academic year (2018-2019) course of GICED,Mumbai
University under my guidance and direction

Signature of Guide :
Name : Ms Della Crasta
Designation : Course Cordinator
Address : GICED , Mumbai
Date & Place : 01/06/2019 Mumbai

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 ACKNOWLEDGEMENT

I take this opportunity to express my profound gratitude and

indebtedness to our project guides Mrs. Della Crasta for giving me the
opportunity to accomplish this project.

I’m also grateful to Mrs. Della Crasta, Course Co-ordinator for being
very much resourceful, kind and helpful. Their positive attitude,
unassailable optimism and unwavering faith in me assured that I come
out of the words whenever I encountered difficulties.

Finally, I wish to thank all my friends and the teaching faculty who
directly or indirectly helped me in the completion of this project. Last
but not the least I would thank my family without whose support and
encouragement this would have not been possible.

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 INDEX

SR.NO TOPICS PAGE NO

1 Introduction to Indian Trade 5

2 Ancient Trade practice in India 7

3 Development in Indian international trade 7-8

4 An Insight into Indian Trade Agreements 8

5 Involvement of US & China in Indian Trade 12

6 Relation of US & China Trade Relations with India 32

6 Role of WTO & Relation of WTO with India, US & China 63

7 Influence of US and China in WTO 68

8 Challenges faced by India due to trade policies by US & 70

China

9 Indirect involvement of US & China in Indian Trade 72

10 Pro’s & Con’s for India due to US & China Trade war 74

11 Suggestions to overcome trade challenges & become 75

developed country ( Follower to Leader )
12 Conclusion 77

13 References And Bibliography 81

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Introduction to Indian Trade Market
India is a great trading community. Flourishing during the Mughal rule and then
dwindling to non-existence by the end of the eighteenth century,

Trade—the exchange of something for something else—was an important part of

Anglo-Indian relations from the earliest days of European settlement in the New
World. The Jamestown colonists traded glass beads and copper to the Powhatan
Indians in exchange for desperately needed corn. Later, the Indian trade broadened to
include trading English-made goods such as axes, cloth, guns and domestic items in
exchange for shell beads. Fur traders like John Hollis in the Chesapeake traded the
beads to other Indian tribes for beaver pelts, which were then sold for tobacco bound
for the English market.

This trade network often resulted in great wealth for the European traders but also
resulted in American Indians becoming dependent on English-made goods. A telling
example is a 1783 letter written by Scottish merchant Thomas Forbes. Forbes was a
member of Panton, Leslie, and Company which traded with the Indians in the
southeastern United States after the American Revolution. Forbes‘ September 28, 1783,
letter to London lists ―Articles of British Manufacture absolutely necessary for the
Indians inhabiting the Western frontier of East and West Florida in North America.‖
The letter enumerates woolen, cotton and linen goods (including broadcloth, thread,
blankets and garters), as well as saddles, shoes, hats, ―riffles and smooth bored
musketry; very cheap,‖ gunpowder, flints and bullets; iron items such as pots, axes,
hoes and hatchets; and other domestic items such as scissors, razors and ―dressing
glasses‖ (mirrors).

The Indians in Florida also required other specific items that were made exclusively for
the Indian trade. Items such as ―silver trinkets for the ears, arms, and necks‖ were
collectively known as trade silver, and were often produced by British or North
American tradesmen specifically for the Indian trade. Articles of trade silver were
important parts of Indian dress and adornment and can be seen in many existing
portraits of important chiefs and leaders from the 18th and 19th centuries.

A gorget made by a New York silversmith for the Indian trade, probably for a member
of the Iroquois.

The Indian trade also included ceremonial gift-giving, often accompanying

negotiations or diplomatic treaties between the colonial, British or, later, United States
government and a powerful tribe or individual. During the American Revolution, when
Patriots and British representatives sought the support of Indian allies, both sides used
trade goods to influence the chiefs‘ decisions. When delegates from the First
Continental Congress met with members of the Six Nation tribes in 1775, they brought
with them rum and other gifts to persuade the powerful chiefs to remain neutral in the
―family quarrel‖ between colonists and England. Similarly, when British agents visited

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members of the Seneca in 1777, Mary Jemison (a captive who married a Seneca
warrior) remembered that the British agents ―made a present to each Indian of a suit of
clothes, a brass kettle, a gun, and tomahawk, a scalping-knife, a quantity of powder and
lead, a piece of gold, and promised a bounty on every scalp that should be brought in.‖

In addition to being powerful diplomatic gifts, the Indian trade had another direct
impact on the American Revolution. As the 18th century progressed, items of British
manufacture such as guns and gunpowder, hatchets and axes, and broadcloth and
thread replaced more traditional tools, weapons and other aspects of Indian life. As
each Indian nation weighed the choice of whether to remain neutral in the conflict or
take the side of the American Patriots or the British, they had to consider how their
choice would impact their access to the gifts and trade goods upon which they were
now dependent

India is fast emerging as a global leader, what with its vast, natural resources, and huge
base of skilled manpower. Combined with cutting edge technology, Indian trade market
is making its presence felt all across the world. Indian products and services are seen as
of international standards and globally competitive. Trade in India has made good
progress on liberalizing trade regimes and cutting tariffs since the recent times, when
most of the countries started with reforms. Get ready for your introduction to Indian
trade market.

Until quite recently, considerable protection levels reflected in the significant tariff
peaks and dispersed protection levels were seen in India. Serious constraints to private
activity in infrastructure, economic governance, financial impeded export
competitiveness too. Insufficient and unreliable power supply, inhibiting red tape is a
few of the many examples of these constraints.

Undertaking considerable industrial deregulation and other structural reforms, trade in

India recognizes that strong exports are critical for overall economic growth and
poverty reduction. Export-led growth has thus become a key thrust for the trade in
India.

Integrating with the global economy, India has recorded strong export growth to the
United States and the European Union markets. Getting on with your intro to Indian
trade, it is important to note that Indian government recognizes the need to implement
additional reforms and address significant constraints to ensure that Indian trade
supports growth and benefits the poor. Continuing with trade reforms has become more
complex because of concerns of how these reforms will affect employment, income
distribution, poverty and vulnerability. India is focused on WTO negotiations on
agricultural trade policies, and there is strong interest in services trade.

Indian trade market has made significant progress in integrating with the rest of the
world. But it is interesting to note that intra-regional trade remains very low. The
reasons behind these low levels of trade could be attributed to protectionist trade
regimes, which discriminated against trade among larger neighbors. The continued
conflict between India and Pakistan including transport and trade facilitation
constraints has also contributed to these lower intra-regional trades. Seeking to increase
cooperation in the areas of harmonization of product standards and customs

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procedures, travel rules and facilities are a must to ensure an increase in intra-regional
trade in goods and services.

The World Bank too has responded to the recent acceleration in Indian trade reforms
and complementary structural reforms by settling its country assistance strategies
(CASs) and regional programs. Increasing and diversifying its trade-related support
activities for the reform initiatives, the World Bank supports India‘ initiative in
boosting regional cooperation and intra-regional trade through analytical work and
technical assistance. Trade reports and policy notes, technical assistance in capacity
building and training are other area where the World Bank is paying attention to in
order to support and boost the trade market in India.

Your introduction to trade market in India won‘t be complete without mentioning that
how today, Indian trade has been consolidating with the global economy, as evidenced
by the noticeable increases in the merchandise trade.

History Of Indian Trade

India is looked upon as a country with immense resources available through its length
and breadth. The objective of this brief paper is to go through the timeline of history of
Indian Trade right from ancient times till today, when it has a foothold in the major and
the not so major economies of the world.

India was famed for her fabulous wealth ever since the ancient times till the
establishment of the British Empire. Indian trade history reflects that despite the
frequent political upheavals during the 12th to the 16th centuries, the country was still
prosperous. The political and economic policies followed by the Muslim rulers
propagated the growth of towns in various parts of the country. These towns grew into
trade and industrial centers which in turn led to the general prosperity. From the 16th to
the 18th centuries, covering the two hundred years of Mughal rule, Indian urbanization
saw further growth.

Descriptions of the wide variety of excellent goods sold in the Indian markets of those
days are found in the records of foreign travelers. India was well known for its textiles
one of the chief items of export. Textiles from Gujarat were sent to the Arab countries
and to South-east Asia. Trade history of India also shows hardwood furniture,
embellished with inlay work was a very popular item for expert. Although the
expensive carvings and inlays were inspired by the ornate Mughal style, the furniture
was modeled on the European design. Carpets were used both in ancient and medieval
India. But the skill of carpet weaving touched new heights only during the Mughal era
in the 16th century. A larger variety of ornamental work in cut stones, ivory, pearl and
tortoise shells were produced in South India. Pearl fishing was a major industry here.
Indian arts and crafts patronized by Indian rulers, were unmatched for their beauty and
skill and were very popular in the European countries.

History of Indian trade has extensive accounts about domestic trade in medieval India
by the foreign travelers. With Delhi as a major trade centre, well-maintained roads

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linking various parts of the country facilitated domestic trade has been mentioned.
River routes also promoted trade between different parts of the country. Different
communities were known to dominate trade in various parts of the country. India‘s
exports were seen to far exceed her imports both in the number of items as well as in
volume. Arab traders shipped Indian goods to European countries through the Red Sea
and the Mediterranean ports.

Foreign trade was in the hands of both local and foreign merchants, as revealed by the
Indian trade history. The magnitude of India‘s foreign trade during the medieval period
can only be imagined. But India was always able to enjoy a favorable balance in her
trade relations with other countries. With huge earnings from her exports of various
commodities, the state coffers were amply stocked with gold and silver.

However in the 18th century, when we peep in the trade history of India, the political
conditions then brought about a drastic change in the situation. This period was marked
by decline of the Mughal Power. The rise of the British power in the mid 18th century
dealt a fatal blow to the prosperity of the country. The British imposed heavy duties on
both imports and exports in order to disrupt the foreign trade relations of India with the
other countries.

By the time India gained Independence from the Britishers in 1947, the economy was
entirely geared to only trade. There were hardly any manufacturing facilities to suffice
the needs of the growing Indian population. The past couple of decades in the history
of Indian Trade have seen the country struggle to create manufacturing capacities
across the board to be self-sufficient. The government has been focusing on the same to
enable broad basing the development to move the economy from an underdeveloped
status to being a developed nation.

India today stands at a over a trillion economy. Darjeeling tea, Indian khadi cotton,
Bombay Duck, Kashmiri carpets, Indian spices and dry fruit are just a few of the
famous gifts India has given to the world. The economic levels have improved in the
urban and semi-urban areas. Literacy is penetrating deep in to even the far reach areas,
thus creating awareness and to higher consumption patterns for all kinds of goods
across all sections of the society. Promoting the availability of goods from different
parts of the world has seen a rise in more trade with other countries.

Indian trade history is remarkable. Indian trade has benefited and so has the world. The
country has realized that at the end of the day, maximizing use of one‘s own resources
is what makes all the difference.

An Insight Into India Trade Agreements

Trade agreements in India are any contractual measures with other state or states
regarding their trade relationships. Trade agreements can be bilateral or multilateral—
that is, the agreement is between two states or it can be between more than two states
or countries. For the majority of countries global trade is synchronized by unilateral
barriers of several types, including tariffs, non-tariff barriers, and outright preventions.

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Trade agreements are one of the approaches to diminish these barriers, thus opening all
parties to the remuneration of increased trade. In most contemporary economies the
possible alliances of interested groups are numerous, and the variety of possible
unilateral barriers is enormous. Further, several trade barricades are created for other,
non-economic grounds, such as national security or the aspiration to preserve or protect
local culture from foreign manipulations.

Therefore, it is not startling that successful trade agreements in India are very
convoluted. Various general features of trade agreements are (1) reciprocity, (2) a
most-favored-nation (MFN) clause, and (3) national treatment of non-tariff barriers.

India views Regional Trading Arrangements (RTA's) as constructive blocks towards

the overall purpose of trade liberalization. Consequently, it is participating in a number
of RTA's which include Free Trade Agreements (FTA's); Preferential Trade
Agreements (PTA's); Comprehensive Economic Cooperation Agreements (CECA's);
etc. These agreements are pierced into either bilaterally or in a regional grouping. Some
of the key trade agreements are as follows:-

Agreement on South Asia Free Trade Area (SAFTA)

The Agreement on South Asian Free Trade Area (SAFTA) was signed by all the
member States of the South Asian Association for Regional Cooperation (SAARC)
during the twelfth 'SAARC Summit' held in Islamabad on 4-6th January, 2004. As a
result, SAFTA came into force from 1st January, 2006.

SAARC was recognized in Dhaka on December 7-8, 1985 with the intentions of:-
promoting the profit of people of South Asia; hastening economic growth and social
progress; promoting active collaboration in the economic, social, cultural, technical and
scientific fields; increasing cooperation in international forums on matters of common
interest; and cooperating with international and regional organizations with similar
goals and principles.

Its members include Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri
Lanka. The objectives of SAFTA are to endorse and augment mutual trade and
economic cooperation among the 'Contracting States' by inter-alia:-

• Eradicating barriers to trade in, and assisting the cross-border progress of goods
between the territories of the Contracting States;
• Encouraging conditions of fair competition in the free trade area, and ensuring
equitable benefits to all Contracting States, taking into account their respective levels
and pattern of economic development;
• Creating successful methods for the execution and application of this Agreement, for
its joint administration and for the resolution of disputes; and
• Creating a framework for additional regional cooperation to develop and enhance the
common benefits of this Agreement.

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India-Mercosur Preferential Trade Agreement (PTA)

A Framework Agreement was signed between India and MERCOSUR on 17 th June

2003 . The aim of this Framework Agreement is to generate conditions and methods for
negotiations in the first stage, by granting reciprocal tariff inclinations and in the
second stage, to negotiate a free trade area between the two parties in conventionality
with the rules of the World Trade Organization. As a follow up to the Framework
Agreement, a Preferential Trade Agreement (PTA) was signed in New Delhi on
January 25, 2004.

The aim of this Preferential Trade Agreement is to enlarge and reinforce the existing
relations between MERCOSUR and India and endorse the extension of trade by
granting reciprocal fixed tariff preferences with the ultimate objective of creating a free
trade area between the parties. MERCOSUR is a trading bloc in Latin America formed
in 1991 and comprising Brazil, Argentina, Uruguay and Paraguay. It was formed with
the objective of making possible the free movement of goods, services, capital and
people among the four member countries.

The India trade agreements as included in the above international or worldwide

agreements allow more expansion of trading business in India as well as across the
globe. There are many similar worldwide agreements including the trade agreements in
India and following up the legal consortiums of trade.

Asia-Pacific Trade Agreement (APTA)

The Asia-Pacific Trade Agreement (APTA), formerly known as the Bangkok

Agreement, the trade was signed on 31st of July 1975 as a proposal of the United
Nations Economic and Social Commission for Asia and the Pacific (ESCAP). The
United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) is
the provincial expansion arm of the United Nations for the Asia-Pacific region. It
emphasize on issues that are most successfully addressed through regional cooperation.

BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation)

BIMSTEC (Bangladesh India Myanmar Sri Lanka and Thailand Technical and
Economic Cooperation), a sub-regional economic collaboration consortium was formed
in Bangkok in June 1997. Myanmar connected to the alliance later in December 1997.
Bhutan and Nepal too united with the alliance in February 2004. Its membership
involves 5 members of SAARC (India, Bangladesh, Bhutan, Nepal & Sri Lanka) and 2
members of ASEAN (Thailand, Myanmar). Thus, it is pictured as a ‗bridging link'
between the two major regional groupings i.e. ASEAN and SAARC. Its chairmanship
of BIMSTEC revolves amongst the member countries in alphabetical array. The
immediate priority of the grouping is combining of its activities and making it striking
for economic cooperation.

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At its first summit held in Bangkok on July 31, 2004, the acronym BIMSTEC was
renamed as ―Bay of Bengal Initiative for Multi Sectoral Technical and Economic
Cooperation.‖

In the beginning, cooperation was planned into 6 sectors. But, throughout the 11th
Senior Official Meeting in New Delhi in August 2006, it was decided that the areas of
cooperation should be prolonged to 13 sectors and each sector will be lead by members
in a deliberate manner.

The India trade agreements as discussed above follow a very concretive approach
making the trade rules and regulations on their place along with the fulfillments of the
requirement of the trade.

History of the multilateral trading system

From the early days of the Silk Road to the creation of the General Agreement on
Tariffs and Trade (GATT) and the birth of the WTO, trade has played an important role
in supporting economic development and promoting peaceful relations among nations.
This page traces the history of trade, from its earliest roots to the present day

The early days of trade

Trade and foreign policy have been intertwined throughout history, with foreign policy
often tailored to promote trade interests. In the 3rd century BC, during the Han
Dynasty, China used its military power to maintain the Silk Road for its value for
trade. In the year 30 BC, Rome conquered Egypt in large part to have a better supply
of grain.

 Trade and foreign policy have always been intertwined — speech delivered by
DDG Wolff

Before the GATT

A single page of text from 1941 is a powerful reminder that the desire for peace and
security drove the creation of today‘s global economic system. The global rules that
underpin our multilateral economic system were a direct reaction to the Second World
War and a desire for it to never be repeated.

 Trade in War‘s Darkest Hour — Churchill and Roosevelt‘s daring 1941 Atlantic
Meeting — article by Hunter Nottage

How the GATT came into being

The lead negotiators for the creation of the GATT profoundly disagreed on the level of
ambition to be achieved but finally overcame their differences.

 Clash of the GATT negotiators article by Roy Santana

 GATT 1947: How Stalin and the Marshall Plan helped to conclude the negotiations
article by Roy Santana

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 GATT 1947 and the gruelling task of signing article by Roy Santana
 1947 press release announcing the signing of the GATT
 PIIE‘s Trade Talks podcast: Happy 70th GATTiversary — The Origins of
Multilateral Trade

The GATT years

From 1948 to 1994, the GATT provided the rules for much of world trade and presided
over periods that saw some of the highest growth rates in international commerce. It
seemed well-established but throughout those 47 years, it was a provisional agreement
and organization.

Foreign Trade Policy Of India

While India has gradually opened up its economy, its tariffs continue to be high when
compared with other countries, and its speculation norms are still restrictive. This leads
some to see India as a ‗rapid globalizer‘ while others still see it as a ‗highly
protectionist‘ economy. The main focus of this page is the foreign trade policy of India.

Foreign trade concerning main legislation in India is the Foreign Trade (Development
and Regulation) Act, 1992. The Act endow with the expansion and regulation of
foreign trade by assisting imports into, and supplementing exports from, India and for
matters associated therewith or incidental thereto. As per the requirements of the Act,
the government:-

(i) may make necessities for assisting and controlling foreign trade;

(ii) may proscribe, confine and regulate exports and imports, in all or particular cases
as well as subject them to exclusion;

(iii) is endorsed to formulate and proclaim an export and import policy and also modify
the same from time to time, by notification in the Official Gazette;

(iv) Is also authoritative to appoint a 'Director General of Foreign Trade' for the
purpose of the Act, including formulation and accomplishment of the export-import
policy.

Nevertheless, in modern years, the government‘s stand on trade and investment policy
has demonstrated a marked shift from protecting ‗producers‘ to benefiting ‗consumers‘.
This is revealed in its foreign trade policy of India for 2004/09 according to which,
"For India to become a major player in world trade we have also to make possible those
imports which are required to stimulate our economy." Along with economic
transformations, globalization of the Indian economy has been the leading factor in

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devising the trade policies. The reform procedures pioneered in the subsequent policies
have focused on liberalization, ingenuousness and lucidity. They have given export
friendly surroundings by simplifying the procedures for trade facilitation.

The declaration of a new Foreign Trade Policy of India for a five year period of 2004-
09, substituting the till now nomenclature of EXIM Policy by Foreign Trade Policy
(FTP) is another step in this course. It takes an incorporated view of the overall
development of India‘s foreign trade and provides a roadmap for the development of
this sector. A dynamic export-led growth strategy of doubling India‘s share in global
commodities trade (in the next five years), with a spotlight on the sectors having
prospects for export expansion and prospective for employment generation, constitute
the main lath of the policy.

All such events are expected to enhance India's international competitiveness and aid in
auxiliary increasing the acceptability of Indian exports. The policy sets out the core
intentions, identifies key strategies, spells out focus initiatives, delineates export
incentives, and also addresses issues relating to institutional support including
simplification of procedures relating to export activities.

India is now belligerently pushing for a more liberal global trade regime, especially in
services. It has implicit a leadership role among developing nations in global trade
debates, and played a critical part in the Doha negotiations. With economic reforms,
globalization of the Indian economy has been the guiding factor in formulating the
Foreign trade policy of India.

In accordance with the provisions of the Act, a "Directorate General of Foreign Trade
(DGFT)" has been set up as an attached office of the Ministry of Commerce and
Industry. It is leaded by the 'Director General of Foreign Trade' and is answerable for
formulating and implementing the Indian Foreign Trade Policy with the main intent of
promoting Indian exports. The DGFT also issues licences to exporters and supervises
their consequent commitments through a network of 32 regional offices located at the
following places:- Ahmedabad; Amritsar; Bangalore; Baroda (Vadodara); Bhopal;
Kolkata; Chandigarh; Chennai; Coimbatore; Cuttack; Ernakulam; Guwahati;
Hyderabad; Jaipur; Kanpur; Ludhiana; Madurai; Moradabad; Mumbai; New Delhi;
Panaji; Panipat; Patna; Pondicherry; Pune; Rajkot; Shillong; Srinagar(Functioning at
Jammu); Surat; Thiruvananthapuram; Varanasi; and Vishakhapatnam.

The coming years are sure to witness a vigorous export-led growth strategy of doubling
India‘s share in global merchandise trade with a focus on the sectors having prospects
for export expansion. The rising potential for employment generation will constitute
the main backbone for the Indian foreign trade policy.

Indian Exim Policy Enlightened

The Ministry of Commerce and Industry, Government of India, pronounces the Indian
exim policy or Export-Import of India. This is an attempt towards the support of
foreign trade and creation of a approving Balance of Payments. The new EXIM policy
of India, renewed yearly on 31st of March, is pursued from 1st April. Exim policy of
India is also known as Foreign Trade Policy, in general, it plans at increasing export

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prospective, improving export routine, encouraging foreign trade and creating
constructive balance of payments position.

Some of the principal highlights of the new exim policy of india are:

• Expansion of the DEPB scheme till May, the next year.

• Refunding of service tax on utmost services
• Expanding Income tax benefit for EOUs.
• Expansion of FMS coverage and addition of ten more countries including Mongolia,
Croatia, Ghana, Colombia, Albania, etc.
• Beginning of split-up facility
• Payment of expurgate duty by export leaning units on monthly basis rather than
consignment basis.

History of export-import policy of India

In the year 1962, the Government of India selected a special Exim Policy Committee to
review the government preceding policies of export import (Indian Exim policy). The
committee was afterward permitted by the Government of India. Mr. V. P. Singh, the
then Commerce Minister and pronounced the new Exim Policy of India on the 12th of
April, 1985. Primarily the Export-Import Policy of India was launched for the period of
three years with main intention to boost the export business in India.

Documents in Indian Exim policy

The description of exim policy of India is given in following documents:

• Interim New Exim Policy 2009 - 2010

• Exim Policy: 2004- 2009
• Handbook of Procedures Volume I
• Handbook of Procedures Volume II
• ITC(HS) Classification of Export- Import Items

New Exim policy of India objectives:

With the help of exim policy of India, the government looks after controlling the
import of unnecessary items. Hence these objectives can be summarized as follows:

• To hasten the economy from low level of economic behavior to high level of
economic activities by making it a worldwide oriented vivacious economy and to
receive utmost benefits from escalating global market opportunities.
• To arouse constant economic growth by providing access to necessary raw materials,
intermediates, components, consumables and capital goods mandatory for enlarging
production.
• To augment the techno local strength and effectiveness of Indian agriculture, industry

14
and services, thus, improving their competitiveness.
• To produce new services, opportunities and support the accomplishment of
internationally accepted standards of quality.
• To offer worth consumer products at rational prices.

Indian exim policy governing body

The Government of India advises the Exim Policy of India for a phase of five years
(1997-2002) under Section 5 of the Foreign Trade (Development and Regulation Act),
1992. The current Export- Import Policy of India covers the period 2009-20014. The
Exim Policy is renewed every year on the 31st of March and the revisions,
improvements and new proposals and designs become effective from 1st April of every
year.

All forms of updating or modifications associated to the Indian Exim Policy is

normally proclaimed by the Union Minister of Commerce and Industry who
synchronizes with the Ministry of Finance, the Directorate General of Foreign Trade
and network of Dgft Regional Offices. However, the central government reserves the
right to alter any of the sections of this new export-import policy of India in public
interest. Some of the focus proposals of the policy are: To have a larger share in the
global trade and produce more employment prospects, a number of focus initiatives
that have been identified for diverse sectors are: agriculture, handloom, handicraft,
gems and jewellery etc.

Import And Export Products In India

Import and export products in India are an immense way to inflate your business and a
best way to participate in the global economy. In reality, companies that do business
worldwide grow more rapidly and fail less frequently than companies that don't. If you
are ready to start import and export products in India and become a part of international
trade, then there are a number of government programs to help you get started. Also,
there are strict set of laws for top import and exports in India.

Top import and export products in India bring new heights to the trade business, and
also contribute in the international trading. However the business of top imports and
exports has become one of the newest commercial trends of this decade. According to a
survey, American companies trade in over 2.5 trillion dollars a year in commodities, of
which small businesses manage over 95 percent. As being the owner of a top import
and export products enterprise, you can work as a dispenser by focusing on exporting
and importing goods and services that cannot be achieved on national soil (e.g.,
Russian caviar and French perfumes) or those that are economical when imported from
other countries (e.g., Chinese electronics). An Export Management Company can focus
in one industry or work with diverse types of import export manufacturers. This is a
good selection for products that are assured to sell because of high demand or an
established brand name. In contrast to other businesses, though, import export
companies have a very small startup cost. The top imports and exports in India have a
growing list depending upon the demand and supply of products in the country.

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While the majority products can be exported without the need for licenses, some
specialized products or high-risk items, such as firearms or pharmaceuticals, may
necessitate special government permits. If that's the case, costs may run significantly
higher. Many top import and export products in India are regulated by centralized
agencies. If you import or export some specific types of products, you may be required
to obtain specific licenses and permits or complete supplementary paperwork.

These top imports and exports in India include products like:

• Agricultural products
• Automobiles
• Chemicals
• Food and beverage products
• Industrial goods
• Pharmaceuticals and biotechnology
• Defense products, etc

Top import and export products in India :

Living animals, milk products, wheat, rice, coffee, tea, spices, cumin seed, tamarind
powder, sesame seed, sugar, henna, herbal extract, medicines, fertilizers, chemicals,
salt, iron ores, minerals, books, leather products, textile, dyes and pigments, home
furnishing, footwear, brass items, Aluminium items, sanitary wear, ceramic, glassware,
flanges, fittings, embroidered and Zari items, pipe and pipe fittings, handicraft, cables,
medical disposables, laboratory equipments, surgical equipments, sports goods,
wooden furniture and various other engineering and electrical products.

The mounting expenditures of the core income sections of the society have resulted in
the imports of the country. The chief items of imports are:

Cereals and preparations, Fertilizers, Edible Oil, Sugar, Pulp and waste paper, Paper,
Newsprint, Crude rubber, Non-ferrous Metals, Metalliferrous ores and metal scrap,
Iron and Steel, Crude Petroleum and petroleum products, Pearls, Precious and Semi-
Precious stones, Machinery, Project Goods, Pulses, Coal and its derivatives, Non-
metallic, Organic & Inorganic chemicals, Dyeing, tanning material, Medicinal products
and Pharma products, Artificial resins, yarn & fabrics(silk, cotton, wool), electronic
goods, wood and wood products, gold and silver, essential oils, computer software, etc

Facts Regarding Trade Integration And Growth

Many of the Asian countries have made fine improvement in loosening trade regimes
and incising tariffs since the beginning of 1990s when nearly all of the countries started
with restructuring. The countries have also embarked on extensive industrial
deregulation and further structural reforms. The governments and the private sector
identify that sturdy exports are grave for overall economic growth and poverty
diminution, and export-led growth has become a chief shove in each country.

16
Each country is making trade integration and growth with the worldwide economy, as
substantiated by the momentous boost in the merchandise trade [(exports plus imports)-
GDP] ratios. In 2005, Bangladesh, India, Pakistan and Sri Lanka traced strong export
growth to the United States and the European Union markets.

Continual of reforms in countries

Asian governments distinguish the need to employ additional reforms and address
considerable constraints to guarantee that trade supports growth and benefits the poor.
The Asian countries lag behind in opening up to foreign antagonism and in drawing
foreign direct investment. It has also the least trade integration and growth in the
region, where intra-regional trade accounts for only 5% of the countries‘ total
merchandise trade.

Fortification levels, imitated in the noteworthy tariff crests and discrete protection
levels are sizeable in India, Pakistan, and particularly in Bangladesh. It is one of the
challenges in trade integration and growth in India. Solemn behind-the-border controls
to private activity in transportation, economic governance, financial sector, labor and
land markets, and trade logistics hinder productivity growth and spoil export
competitiveness in all countries. Examples of these restraints include inadequate and
unpredictable power supply, restraining red tape, limited access to financing by SMEs,
rigid labor market due to inflexible labor laws and regulations, feebly defined property
rights, inefficiencies at society, and narrow inland transport ability.

Slackening of trade has become challenging

Abiding with trade alterations has become more intricate because of apprehensions like
how these modifications will affect employment, income circulation, poverty and
vulnerability. India has emphasized on WTO negotiations on agricultural trade policies,
and there is well-built concern in services trade and it has resulted in growth and
integration in trade. A variety of interest clusters in Bangladesh resist further
transformations, arguing that trade liberalization has been too hasty. The country also
has to adjust to the eradication of the textile and clothing (T&C) export quotas,
introduced in January 1, 2005.

India and Pakistan are healthier sited to deal with the escalating challenges in trade
integration and growth globally in the T&C export markets.

Multilateral and provincial programs

On the worldwide level, India, Bangladesh, and Pakistan have become active in the
multilateral trade conferences associated with the WTO Doha Development Round,
playing leadership roles as speakers for other developing countries. While South Asian
countries have made significant progress in growth and integration in trade with the
rest of the world, still intra-regional trade runs very small comparatively. The causes
for this low level of trade include protectionist trade system, which categorized against
trade amongst larger neighbors; persistent differences between India and Pakistan; and
transport and trade facilitation restraints and hinders the growth and integration in
trade.

17
Since the early 1990s, the countries have attempted to increase trade integration and
growth among themselves, without major results. In 1993, affiliates of the South Asian
Association of Regional Cooperation (SAARC) – Bangladesh, Bhutan, India,
Maldives, Nepal, Pakistan and Sri Lanka – marked the South Asian Preferential Trade
Area (SAPTA) Agreement, which became executable in December 1995. The authentic
swapping of predilections remained inadequate, but the process of negotiation kept the
dialogue among the member countries of SAPTA alive.

One of the challenges in trade integration and growth are ignorance for raising intra-
regional trade in goods and services, investment, and development of supply chains.

Latest worldwide propagation of preferential trade agreements (PTAs) has urged South
Asian countries to do the alike, and they have initiated conferring their own preferential
free trade agreements.

The World Bank’s support policy for trade

The World Bank has retorted to the countries‘ recent hastening in trade reforms and
corresponding structural reforms by amending its country assistance strategies (CASs)
and provincial agendas. The Bank has improved and varied its trade-related support
activities: trade reports and policy notes, technical assistance in capability building and
training, and fiscal support for the reform proposals. The Bank also sustains the
countries‘ idea to enhance regional collaboration and intra-regional trade through
methodical and systematic work and technical assistance to the South Asian
Association of Regional Cooperation (SAARC) Secretariat.

Union Budget Of India Explained

The Union Budget of India, also known as the Annual Financial Statement in Article
112 of the Constitution of India, is the yearly budget of the Republic of India, offered
each year in February by the Finance Minister of India in Parliament. The Indian union
budgets have to be conceded by the House prior to its execution that can come into
effect on April 1, which is called to be the start of India's financial year. Earlier Finance
Minister Morarji Desai offered the budget eight times, the most by any.

The turn of the year and it is time for the ministry to plan out for the annual budget.
The union Finance Minister P. Chidambaram put forward his 5th budget in the
Parliament. The key features of the Indian union budgets this time are; to lead economy
to sky-scraping GDP growth rate of 9 per cent per annum at the earliest and to intensify
and enlarge the agenda for comprehensive development to recover deliverance
mechanisms of the government.

The union budget of India comprises of the following highlights :

The Income Tax threshold previously which was Rs. 1, 10, 000 has been elevated to
Rs. 1,50,000.

• In addition to new tax slabs have been established and the tax limit has been raised for
both women and senior women citizens.

18
• The bar has been raised to 1.80 lakh and 2.25 lakh respectively.
• Tax holidays for construction of hospitals and endorsing cultural tourism have been
introduced.
• It has been anticipated in the union budget that direct tax proposals should be revenue
neutral.
• The target for plan expenditure has been set at Rs. 2, 43,000 crore and that of non
plan at Rs. 5, 74, 000.
• Expurgate duties have been concentrated on pharmaceutical goods, cars, water
purification system, etc.
• At the same time, customs duty on life saving drugs, which was 10% earlier, has been
reduced too as now it has become 5 %.
• Asset managing service provided by mutual funds and stock exchange services will
be focused to Services Tax net.
• An amount of Rs. 624 crore has been owed for the 2010 Commonwealth games
according to the Indian union budgets this year.
• Numerous of schemes have been commenced for the profit of the farmers such as
resolution of loans for a single time for farmers, realization of debt relief and debt
waiver. Moreover, Indebtedness will be tackled by covering the agricultural loans in
the Waiver scheme. The Agriculture Ministry will be funded with Rs. 75 crore to set up
laboratories of mobile soil testing crosswise the country. NREGA scheme will be
pioneered in 596 Indian rural districts.
• The fund for rural infrastructural progress has been heaved to almost Rs. 14,000 crore
under the Indian union budget.
• Foreign investment amounting to as much as 8 billion dollars has been billed for
exploration as well as for advancement of oil blocks in the union budget of India.
• The Ministry of Women and Child Development has been consigned a sum of Rs.
7200 crore.
• Diverse amount of funds have been allocated for the refinement of drinking water. •
Developmental events such as that of border areas have been suitably assisted
financially. The resources for the advancements of the North-East region has been
elevated to Rs.16, 400 crore.
• Monetary support has been lent to SC and ST candidates and students pursuing M.
Phil.
• Minorities‘ expansion has been given a keen eye remaining to which the allowance of
funds for the Ministry of Minority Affairs have been increased to Rs. 1000 crore.
• Moreover as per the Indian union budgets plentiful of funds have been allocated for
the smooth operation of Sarva Shiksha Abhiyan, Mid Day Meal scheme and others.
Many other institutions for higher education, technical education, etc. have been
projected to be set up.
• The bar of funds owed to the Bharat Nirman has been increased to Rs. 31, 280 crore.

The hymn behind introduction of all these plans in the union budget of India is keeping
inflation under complex check.

19
Trade Agreement

October 14, 1954

TRADE AGREEMENT BETWEEN THE REPUBLIC OF INDIA AND THE

PEOPLE'S REPUBLIC OF CHINA

New Delhi, 14 October 1954

The Government of the Republic of India and the Central People's Government of the
People's Republic of China, animated by the common desire to develop trade between
the two countries and to strengthen further the friendship that already exists between
the Governments and the peoples of India and China have, on the basis of equality and
mutual benefit, reached agreement as follows

Article I

The two contracting parties being desirous of adopting all appropriate measures for the
expansion of trade between the two countries agree to give the fullest consideration to
all suggestions for the promotion of such trade.

Article II

The two contracting parties agree that all commercial transactions between the two
countries shall be carried out in accordance with the Import, Export and Foreign
Exchange Regulations in force from time to time in their respective countries.

Article III

The two contracting parties agree to accord, subject to the laws and regulations of the
two countries for the time being in force, facilities for the import and export of the
commodities mentioned in the attached Schedules "A" and "B".

Article IV

The present Agreement will not preclude the two contracting parties from facilitating
trade in commodities not mentioned in attached Schedule'A'and 'B'.

Article V

The Trade between the Republic of India and the Tibet Region of the People's Republic
of China will be conducted in accordance with the provisions of the Agreement
between the Republic of India and the People's Republic of China on Trade and
Intercourse between Indian and the Tibet Region of China signed in Peking on the 29th
April, 1954.

Article VI

20
The Government of the Republic of India agree that on request by the Government of
the People's Republic of China, they will, subject to the regulations in force, accord
reasonable facilities for the entry into the Port of Calcutta, and subsequent movement
to the Tibet Region of the People's Republic of China, of such commercial goods as
cannot be obtained in India. These facilities will be accorded only to goods of Chinese
origin.

Article VII

All commercial and non-commercial payments between the Republic of -India and the
People's Republic of China may be effected in Indian rupees or in pounds sterling as
may be mutually convenient. For the purpose of facilitating such payments, the
People's Bank of China will open one or more account(s) with one or more commercial
bank(s) in India authorised to deal in Foreign Exchange to be called account(s) "A". In
addition, the People's Bank of China will, if necessary, open another account with the
Reserve Bank of India to be called account "B". All payments between the two
countries will be made through account(s) "A". Account "B" will be used only for
replenishing the balance(s) in account(s) "N' whenever necessary. Payments to be made
by residents of India to residents of the People's Republic of China will be effected by
crediting the amounts of such payments to the above-mentioned account(s) "A".
Payments to be made to residents of India by residents of the People's Republic of
China will be effected by debiting the said account(s) "A". The account(s) "A" will be
replenished as and when necessary by one of the following methods, namely

(i) by transfer of funds from another account "A" of the People's Bank of China with
another commercial bank, or from account "B" with the Reserve Bank of India;

(ii) by sale of sterling to the bank concerned. Account "B" will be replenished either by
sale of sterling to the Reserve Bank of India or by transfer of funds from account(s)
"A".

2. Article VII of this Agreement covers the following payments (i) Payments for the
commodities imported or exported under the present Agreement; (ii) Payments
connected with commercial transactions and covering insurance, freight (in case of
shipments of goods by the ships of either country), port charges, storage and
forwarding; (iii) Payments for distribution of films, for incomes and expenses of
cultural performances and other exhibitions (iv) Payments of expenses on account of
tours of delegations of commercial, cultural, social or official nature; (v) Payments for
the maintenance of the Embassy, Consulates and Trade Agencies of the Republic of
India in China and for the maintenance of the Embassy, Consulates and Trade
Agencies of the People's Republic of China in India; (vi) Other non-commercial
payments on which agreement is reached beteen the Reserve Bank of India and the
People's Bank of China.

3. Any balances on the credit side of the account(s) "A" or Account "B" maintained by
the People's Bank of China will be convertible on demand into sterling at any time at
the usual Bank's selling rate for sterling as fixed from time to time by the Indian
Exchange Bank's Association. The above mentioned balances will be convertible into
sterling even after the expiry of this Agreement.

21
L Payments for Border Trade between the Republic of India and the People's Republic
of China, however, will be settled according to the customary practice.

Article VIII

The two contracting parties agree to consult with each other on questions that may arise
in the course of the implementation of the pesent Agreement.

Article IX

This Agreement will come into force from the date of its signature nd will remain valid
for a period of two years. This Agreement can be extended or renewed by negotiation
between the two contracting parties to be commenced three months prior to its expiry.

DONE in duplicate in New Delhi on the fourteenth day of October 1954, in Hindi,
Chinese and English languages, all texts being equally authentic.

(Sd.) KUNG YUAN. (Sd.) H.V.R. IENGAR.

On behalf of the Government

of the People's Republic of China. On behalf of the Government of the Republic of
India.

SCHEDULE A

GOODS AVAILABLE FOR EXPORT FROM CHINA TO INDIA

1. Cereals- (1) Rice. (2) Cereals other than rice. (3) Green beans. (4) Soyabeans--green
and black.

2. Machinery- Including Planning and shaping machines, Drilling Machines, Other

machine tools, inclinable notching press, Steam Engines, Harvester, Road Roller (Road
Marshall), Electric Pump, Air Compressor, Concrete Mixer, Rock Crusher, Printing
Machinery, Moulding Machine, Trandormers, Pump, Motors Electric, Sowers, Gear
Grooving machines, Cotton Textile Machinery, Jute Textile Machinery, Telephone
Exchange Control, Rubber Insulated Wire, Ventilator, Equipments for Steam
Generator, D.C. and A.C. Welder, Medical Apparatus.

3. Minerals-- (1) Antimony, Crude and Regulus. (2) Gypsum. (3) Graphite. (4)
Fluorspar. (6) Sulphur. (6) Realgar (Munsell). (7) Orpiment. (8) Borax. (9)
Naphathalene Refined. (10) Clay. (11) Arsenolite (Arsenic Oxide).

4. Silk and Silk piecegoods- (1) White and Yellow Raw Silk, Steam Filature. (2) Spun
Silk. (3) Tussah Silk (Wild Silk). (4) Douppion Silk. (6) Silk piecegoods. (6) Fuji Silk
piecegoods. (7) Tussah Silk piecegoods.

5. Animal Products- (1) Wool. (2) Skins and Hides, (3) Duck Feathers, Goose Feathers.
(4) Woollen Yam. (5) White Wax. (6) Honey.

22
6. Paper and Stationery. (1) Newsprint. (2) Mechanical Pulp free printing paper. (3)
Packing paper. (4) Stencil paper. (5) Blotting paper. (6) Fountain pen. (7) Pencil. (8)
Ink. (9) Printing ink. (10) Numbering machine.

7. Chemicals- (1) DinitrochlorD-Benzene. (2) Sodium Phosphate. (3) Carbolic Acid

(Phenol). (4) Potassium Carbonate. (5) Mono-chloro@benzene. (6) 666 Insecticide. (7)
Bleaching Powder.

8. Oils- (1) Tung Oil (Wood oil). (2) Cinnamon Oil (3) Peppermint Oil. 9.
Miscellaneous- (1) Camphor. (2) Cassia Laignea. (3) Musk. (4) Nutgall. (5) Aniseed
start (start anise). (6) Menthol Crystal. (7) Apricot Kernel. (8) Galangal. (9) Resin. (10)
Vegetable Medicinal substances. (11) Hair not. (12) Fluorescent tubes. (13) Paint. (14)
Bicycles. (15) Sports goods. (16) Porcelain. (17) Glass and glassware. (18) Printed
matter and books. (19) Canned goods. (20) Torch lights. (21) Vacuum flasks. (22)
Buttons. (23) Lacquer ware. (24) Fire crackers. (25) Hosiery needles. (26) Stitching
needles. (27) Fish and sea products. (28) Dried fruits. (29) Vegetables and vegetable
products. (30) Garlic. (31) Vern-deelli. (32)Chinese film (exposed).

SCHEDULE B

Part I

GOODS AVAILABLE FOR EXPORT FROM INDIA TO CHINA INCLUDING

TIBET FOOD PRODUCTS AND TOBACCO

(1) Grams, Rice and Pulses. (2) Kyanite Ore.

(3) Tobacco unmanufactured.

Raw materials and articles mainly unmanufactured Ores and Concentrates- (1) Chrome
Ore. (2) Kyanite Ore. (3) Manganese Ore. (4) Tin and Zinc concentrates. Oils,
Vegetable- (1) Grouncinut oil. Oils, Essential-- (1) Lemon grass oil. (2) Sandalwood
oil. Textile fibre&-- (1) Cotton raw. (2) Wool raw.

Wood and Timber- Sandal wood. Hides and skins- Raw goat skins and sheep skins of
heavier variety and hides and skins tanned. Miscellaneous- (1) Myrobalan and
Myrobalan extracts. (2) Paraffin wax. (3) Art Shellac.

Articles mainly manufactured Chemicals, chemical products and drugs and medicines-

(1) Chemicals (Bichromates, Calcium Chloride, Chromic Acid, Glycerine, Magnesium

Chloride, Magnesium Sulphate, Naphthalene, Potassium Bromide, Potassium Nitrate,
Sodium Bromide, Sodium Sulphide, Sodium Sulphite). (2) Electric lamps. (3)
Processed dyes. (4) Shark liver oil. Instruments, apparatus and appliances- (1) Clinical
thermometers. (2) Electric lamps. (3) Electric insulating materials. (4) Electro-medical
apparatus. (5) Mathematical instruments. (6) Surgical instruments. (7) X-Ray
equipment. (8) Telephone. (9) Electric Fans. Machinery- (1) Ball and Roller bearings.
(2) Generators. (3) Motors. (4) Textile Machinery including Spindles, ring frames,
carding engines, looms and finishing machinery. (5) Boilers. Machine Tools: including

23
Centre Lathe, Drilling Machine, Shaping Machines, Slotting Machines, Planing
Machines, Hack sawing machines, Mechanical Power Presses, Lathe Chuks, Drill
Chucks, Lathe Centres and Lathe mandrills, Machine Vices, Plain Drill Sleeves, Wood
Thiclmess Planers, Round Collects, Acetylene Generators, Round seaming machines,
Power operated belt driven guillotine shearing machines, Live Centres, Hand Presses
and Foot Presses, Treadle guillotine shearing machines, Plan Milling Machine. Metal
manufactures- (1) Aluminium, brass and copper wares. (2) Iron and Steel manufactures
excluding containers. (3) Non-ferrous metal products. Textiles- (1) Cotton piecegooda
and cotton manufactures. (2) Cotton twist and yarn. (3) Flax manufactures. (4) Sisal
ropes and twine. (5) Jute manufactures.

Vehicles- (1) Bicycles. (2) Motor Cars. Miscellaneous- (1) Indian films exposed. (2)
Light engineering goods: centrifugal pumps, G.I. buckets, hurricane lanterns, sewing
machines. (3) Plastic manufactures. (4) Shellac. (5) Mica. (6) Asbestos cement sheets.
(7) Cement. (8) Hume pipes. (9) Builder's hardware. (10) Tyres and tubes. (11) Belting
for machinery. (12) Paper. (13) Bituminous composition. (14) Agricultural implements.
(15) Disinfectants.

Part III

GOODS AVAILABLE FOR EXPORT FROM INDIA TO THE TIBET REGION OF

CHINA FOOD PRODUCTS AND TOBACCO

(1) Confectionery.

(2) Hydrogenated Oil.

(3) Tlmned fruits and vegetables. (4) Cigarettes.

Raw materials and articles mainly unmanufactured Oils, Vegetable- (1) Castor oil. (2)
Kardiseed oil. (3) Linseed oiL (4) Mustard oil. (5) Nigerseed oil. (6) Rapeseed oil.
Textiles- Apparel.

Miscellaneous- Gums other than gum arabic.

Articles mainly manufactured

Instruments, apparatus and appliances,- (1) Accumulators. (2) Electric wires and
cables. (3) Scientific instruments. (4) Transmission line equipment. (5) Wireless
instruments.

Machinery- Control and transmission gear.

Metal manufactures- (1) Bolts and nuts. (2) Enamelware. (3) Wood Screws. Stationery
includingpaper- Paper and stationery. Vehicles- (1) Trucks. (2) Carriages and carts. (3)
Wheels and shafts for carts. Miscellaneou&- (1) Candles. (2) Clocks. (3) Coral
manufactured. (4) Matches. (5) Soaps and washing powders. (6) Toilet requisites. (7)
Lard. (8) Pork. (9) Sugar. (10) Rain coats. (11) Rubber shoes. (12) Reinforcement steel
bars. (13) Galvanised iron wire. (14) Barbed wire. (15) Steel plates and sheets, (16)

24
Road Rollers. (17) Gasoline, Kerosene, Diesel and Engine Oils. (18) Galvanized iron
sheets, plain and corrugated. (19) Leather and leather goods. (20) Safety razor blades.
(21) Biscuits. (22) Rubber manaufactures other than tyres and tubes. (23) Sheet glass
and glasswares. (24) Sports goods. (25) Hard wood.

LETTERS

No. 1.

GOVERNMENT OF INDIA MINISTRY OF COMMERCE AND INDUSTRY

New Delhi, the 14th October, 1954

Dear Mr. KUNG,

In the course of the discussions that have led to the conclusion of the Trade Agreement
between the Government of the Republic of India and the Government of the People's
Republic of China, it was agreed that the intentions of the two Governments regarding
Article VI and the procedure for its implementation should be placed on record by an
exchange of letters.

2. On the basis of equality and mutual benefit, both Governments desire to maintain
and develop the existing customary trade between India and the Tibet Region of the
People's Republic of China.

3. The Government of the Republic of India appreciate that the Tibet Region of the
People's Republic of China may need certain commercial goods that cannot be obtained
in India and are, therefore, willing to give reasonable facilities for the clearance of such
goods through Calcutta for movement to the Tibet Region of the People's Republic of
China, provided the goods are of Chinese origin.

4. It is agreed that the following broad lines of procedure may be adopted for the
clearance and movement of the goods mentioned in the preceding paragraphs : (i) With
a view to facilitating clearance and transport, the Government of the People's Republic
of China will give advance intimation to the Government of India of such goods to be
transported to theTibet Region of the People's Republic of China, in order to ascertain
with reference to the availability of such goods in India, whether clearance and
movement facilities can be accorded. Matters pertaining to the transportation of such
goods will be discussed and settled between the Chinese Embassy in New Delhi and
the Government of India. (ii) The goods agreed to be cleared shall, on import, be
entered at the Custom House in the Port of Calcutta. (iii) Subject to the Indian Customs
Regulations, and on a deposit being made as required by the Customs Authorities, the
goods will be cleared under Customs seal for onward despatch to the Tibet Region of
the People's Republic of China by the agreed routes. (iv) The goods will be produced
with the Customs seals intact before the Land Customs Officer at the point of final exit
and cleared for export to the Tibet Region of the People's Republic of China.

(v) The Land Customs Officer will, if the goods are received with seals intact, clear the
goods and grant a certificate to that effect. (vi) On presentation of such certificate to the

25
Customs Authorities at the Port of Calcutta, the deposit shall be returned with such
deductions for incidental charges as may be mutually agreed upon.

5. This letter and your confirmation will be treated by both Governments as forming
part of the Agreement.

Yours sincerely,
H.V.R. IENGAR.

His Excellency Mr. KUNG YUAN,

Vice Minister for Foreign Trade and Leader of the Chinese Trade Delegation, New
Delhi.

No. 2.

New Delhi, the 14th October, 1954

Shri IYENGAR,

I have today received with thanks your letter dated the 14th October, 1954 which reads
as follows : (Here follows the text of letter No. 1) I agree to the contents stated in your
aforesaid letter on behalf of the Central People's Government of the People's Republic
of China. Your letter and this confirmation will be treated as forming part of the
agreement.

Yours sincerely,
KUNG YUAN.

Shri H.V.R. IYENGAR,

Secretary to the Government of India, Ministry of Commerce and Industry, New Delhi.

No. 3.

GOVERNMENT OF INDIA MINISTRY OF COMMERCE AND INDUSTRY

New Delhi, the 14th October, 1954

Dear Mr. KUNG,

During the course of the negotiations which have led to the conclusion of the present
Trade Agreement between India and China, both the Delegations recognised that the
problems concerning inspection, surveys, shipping, insurance and travel by
businessmen should be considered and solved in a practical manner so that the
objectives of the Agreement are better achieved and trade relations between the two
countries further strengthened. These problems relate to questions of detail rather than
of principle and the two Delegations have accordingly agreed to defer the discussion on
these matters to a later date. It is hoped that in these subsequent discussions our two

26
Governments will be able to arrive at constructive solutions that will help to encourage
and stimulate the smooth flow of trade between our two countries.

2. In the meanwhile, the trade between the two countries will continue to be conducted
on such basis as may be agreed upon between the importers and exporters concerned.

3. This letter and your confirmation will be treated by both Governments as forming
part of the Agreement.

Yours sincerely,
H.V.R. IENGAR.

His Excellency Mr. KUNG YUAN, Vice Minister for Foreign Trade and Leader of the
Chinese Trade Delegation, New Delhi.

No. 4.

New Delhi, the 14th October, 1954

Shri IENGAR,

I have today received with thanks your letter dated the 14th October, 1954, which reads
as follows : (Here follows the text of letter No. 3) I agree to the contents stated in your
aforesaid letter on behalf of the Central People's Government of the People's Republic
of China.

Your letter and this confirmation will be treated as forming part of the Agreement.

Yours sincerely,
KUNG YUAN.

Shri H.V.R. IENGAR,

Secretary to the Government of India, Ministry of Commerce and Industry, New Delhi.

EXCHANGE OF LETTERS, NEW DELHI, 25 MAY 1957

EMBASSY OF THE PEOPLE'S REPUBLIC OF CHINA IN INDIA

New Delhi, the 25th May, 1957.

Dear Mr. RANGANATHAN,

I have the honour to refer to the recent discussions regarding promotion of trade
between the People's Republic of China and India when it was agreed that the trade
relations between our two countries will continue to be regulated by the terms and
conditions embodied in the Trade Agreement concluded on the 14th October, 1954 for
a further period ending 31st December, 1958, subject to the substitution of Article VII
of the old Agreement by the following Article --

27
"All commercial and non-commercial payments between the People's Republic of
China and the Republic of India may be effected in Indian rupees. For the purpose of
facilitating such payments, the People's Bank of China and/or other commercial banks
in China will open one or more account(s) with one or more commercial bank(s) in
India authorised to deal in foreign exchange. In addition, the People's Bank of China
will open another account with the Reserve Bank of India. All payments between the
two countries will be made through the account(s) maintained with the commercial
bank(s). Payments to be made by residents of India to residents of the People's
Republic of China will be effected by crediting Ova amounts of such payments to the
above-mentioned account(s) with the commercial bank(s) in India. Payments to be
made to residents of India by residents of the People's Republic of China will be
effected by debiting the said account(s) with the commercial bank(s) in India. The
account(s) with the commercial bank(s) in India will be replenished as and when
necessary by one of the following methods, namely :-

(i) by transfer of funds from another account(s) of the People's Bank of China or the
commercial bank(s) in China with another commercial bank(s) in India, or

(ii) by transfer of funds from the account of the People's Bank of China with the
Reserve Bank of India, or

(iii) by sale of sterling to the bank concerned.

The account of the People's Bank of China with the Reserve Bank of India will be
replenished either by sale of sterling to the Reserve Bank of India or by transfer of
funds from the account(s) of the People's Bank of China or the commercial bank(s) in
China with the commercial bank(s) in India.

2. Article VII of this Agreement covers the following payments W Payments for the
commodities imported or exported under the present Agreement; (ii) Payments
connected with commercial transactions and covering insurance, freight (in case of
shipments of goods by the ships of either country), port charges, storage and
forwarding expenses and bunkering; (iii) Payments for distribution of films, for
incomes and expenses of cultural performances and other exhibitions; (iv) Payments of
expenses on account of tours of delegations of commercial, cultural, social or official
nature; (v) Payments for the maintenance of the Embassy, Consulates and Trade
Agencies of the People's Republic of China in India and for the maintenance of the
Embassy, Consulates and Trade Agencies of the Republic of India in China; (vi) Other
non-commercial payments on which agreement is reached between the Reserve Bank
of India and the People's Bank of China.

3. Any balance in the Rupee account maintained by the People's Bank of China with
the Reserve Bank of India will be convertible on demand into sterling at the usual
Banks selling rate for sterling as fixed from time to time by the Indian Exchange Banks'
Association. The above-mentioned balance will also be convertible into sterling after
the expiry of this Agreement.

4. Payments for Border Trade between the People's Republic of China and the Republic
of India, however, will be settled according to the customary practices." The new

28
Article VII will come into force with effect from the 1st July 1957. I shall be glad if
you will please confirm that the above correctly sets out the understanding reached
between us.

Yours sincerely,
Sd/- PAN T'zu-Li

Ambassador Extraordinary and Plenipotentiary of the People's Republic of China to

India.

Shri S. RANGANATHAN, I.C.S.

Secretary to the Government of India,

Ministry of Commerce and Industry, New Delhi.

GOVERNMENT OF INDIA MINISTRY OF COMMERCE AND INDUSTRY

New Delhi the 25th May, 1957

Dear Mr. PAN Tzu-Li,

I write to acknowledge the receipt of your letter dated May 25, 1957, which reads as
follows : (Not reproduced) I confirm that the foregoing correctly sets out the
understanding reached between us.

Yours sincerely,
(Sd.) S. RANGANATHAN, Secretary to the Govt. of India.

H.E. Mr. PAN TZU-LI,

Ambassador Extraordinary and Plenipotentiary of the People's Republic of China, New

Delhi.

GOVERNMENT OF INDIA MINISTRY OF COMMERCE AND INDUSTRY

New Delhi, the 25th May, 1957

Dear Mr. TU YU-YUN,

In the course of discussions which we had recently regarding further development of

trade between the People's Republic of China and India, it was agreed that the
Government of the People's Republic of China will encourage the State Trading
Corporations of China to establish and strengthen contacts to the extent practicable
with the State Trading Corporation of India in those commodities which are handled by
the State Trading Corporation of India. I shall be grateful if you would kindly confirm
that the foregoing correctly sets out the understanding reached between us.

Yours sincerely,
(Sd.) K.B. LALL, Joint Secretary to the Government of India.

29
Mr. TU YU-YUN,

Counsellor for Commercial Affairs,

Embassy of the People's Republic of China, New Delhi.

EMBASSY OF THE PEOPLE'S REPUBLIC OF CHINA IN INDIA

New Delhi, 25th May, 1957

Dear Mr. LALL,

I have the honour to acknowledge the receipt of your letter of today's date which reads
as follows : (Not reproduced)

I confirm that the foregoing correctly sets out the understanding reached between us.

Yours sincerely,
(Sd.) Tu YU-YUN. Counsellor for Commercial Affairs, Embassy of the People's
Republic of China in India.

Shri K.B. LALL,

Joint Secretary to the Government of India, Ministry of Commerce and Industry, New
Delhi.

TRADE AGREEMENT EXTENSION (1959)

EXCHANGE OF LETTERS, 25 MAY 1959

GOVERNMENT OF INDIA MINISTRY OF COMMERCE AND INDUSTRY

New Delhi, May 25, 1959

Dear Mr. TU YU-YUN,

With reference to Article IX of the Trade Agreement between the Republic of India and
the People's Republic of China concluded on the 14th October, 1954 and the recent
discussions regarding the promotion of trade between the two countries, I have the
honour to say that the two contracting parties have agreed that the present Trade
Agreement as modified by the letters exchanged on the 25th May, 1957, shall remain
valid up to the 31st December, 1959.

Yours sincerely,
(Sd.) K.B. LALL. Additional Secretary to the Government of India. MR. TU YU-
YUN, Counsellor for Commercial Affairs, Embassy of the People's Republic of China,
New Delhi.

EMBASSY OF THE PEOPLE'S REPUBLIC OF CHINA IN INDIA

New Delhi, May 25, 1959

30
Dear Mr. LALL,

With reference to Article IX of the Trade Agreement between the People's Republic of
China and the Republic of India concluded on the 14th October, 1954 and the recent
discussions regarding the promotion of trade between the two countries, I have the
honour to say that the two contracting parties have agreed that the present Trade
Agreement as modified by the letters exchanged on the 25th May, 1957, shall remain
valid up to the 31st December 1959.

Yours sincerely,
(Sd.) Tu YU-YUN Counsellor for Commercial Affairs. MR. KB LALL, I.C.S.,

Additional Secretary to the Government of India, Ministry of Commerce and Industry,

New Delhi.

India – China Trade Relationship: The Trade Giants of Past, Present and
Future

1. Introduction

The relationship between the two giants of Asia, and the world, has been progressing at
a tremendous pace. Both nations have witnessed their share of ups-and-downs over the years.
India and China today represents Asia‘s two largest and most dynamic economies which are
emerging as new trend setters in international relations. The history of bilateral relations
between India and China dates back to mid 1980s1.

The process of dialogue initiated by the governments of the two countries at that point of time
was quite helpful in identifying the common trade interests. Efforts were initiated to make
the most of their economic strengths so as to further the economy relations between India
and China. In the year 1984, India and china entered into a Trade Agreement, which provided
themwith the status of Most Favored Nation (MFN). It was in 1992 that the India and China
got involved in a full-fledged bilateral trade relation.

The year 1994 marked the beginning of a new era in the India- China economic relations. In
this year a double Taxation Agreement was signed between India and China. The
government of both the countries also took the necessary initiative to turn into dialogue
partners in the Association of Southeast Asian Nations (ASEAN). In 2003, Bangkok

31
Agreement was signed the two countries. Under this agreement both India and china
offered some trade preferences to each other. India provided preferences on tariff for 217
products export from India. In 2003, India and China entered into an agreement to initiate
open border trade via the Silk Route.

The two countries have also shown interest to take part in a multilateral trade system as per
the WTO commitments. China has already been the top trading partners of India in the
recent time. The economic relation between the two countries is considered to be one of the
most significant bilateral relations in the contemporary global economic scenario and
this trend is expected to continue in the years to come. Today, China is India‘s largest
trading partner; whereas India is within the top ten of China‘s trading partner.

2. Bilateral Trade: Dynamics and Direction

The bilateral trade between India and China has grown four-fold in the past decade. But the
trade was tilted more in favour of China. India had unfavorable balance of trade with China.
While China continues to enjoy a huge favourable balance of trade vis-à-vis most other
smaller states of the South Asian region, it is only the India-china trade that has remained to
be China‘s most balanced trade in South Asia. However, both these nations are growing
very fast and can propel the future world economy with a pool of the world‘s largest
skilled work force.
Singh, Joginder (2014); A Comparative Study of India-China Bilateral Trade; PP 269

India – China Trade at a Glance (USD Billion)

9.58
10.17
2.62 3.62

1.53 2.57 4.10

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Source: PHD Research Bureau; Compiled from Trade Map Database

In 2013, China overtook UAE to become India‘s biggest trading partner. Presently,

32
China is India‘s 4th biggest export destination whereas the biggest import source. The
trade figures between India and China witnessed a tremendous jump from USD 2.71
billion in 2001 to around 70 billion in 2016. Importantly, majority of the trade remained
in favour of China as it exported around 60.48 billion and imported 9 billion during
2016.

China share in India‘s totaltrade stood at around 11% during 2016. Further, its share in India‘s
total exports stood at 3.7% whereas its share in India‘s overall imports stood at 16% during
the same period. Comparatively, the growth of India‘s imports from China was laggard
with respect to exports. The trend in trade deficit gap for India exponentially widened over
the years.

India – China Trade Statistics

2001 2006 2011 2016

India's imports from China (USD billion) 1.83 15.64 55.48 60.48

CAGR (%) - 53.6% 28.8% 1.7%

Share in India's total imports 3.6% 8.8% 12.0% 17.0%

India's exports to China (USD billion) 0.92 7.83 16.72 8.92

CAGR (%) - 53.4% 16.4% -11.8%

Share in China's total imports 0.4% 1.0% 1.0% 0.6%

Source: PHD Research Bureau; Compiled from Trade Map Database

Despite rising presence of Chinese products in India, breakdown of India – China trade era into
four periods reveal a different story. During 2001-06, the growth rate of imports from China
were 53.6%, which were reduced to 28.8% during 2006-11 and further diminished to 1.7%
during 2011-16.

Although, the trend in exports from India also remained lackluster during the same period,
with growth rate in exports to China entering into negative trajectory of -11.8% during
2011-16.

33
 Astoundingly, India‘s share in China‘s imports stood at a menial 0.6% during 2016
revealing insignificant presence of Indian products in Chinese markets.

India – China Trade at a Glance (April – October 2017)

USD Million Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17

India's exports to China 978.46 751.37 754.56 793.64 908.29 1036.95 1224.6

Growth (Y-o-Y) 40.08% 3.69% 20.85% 31.85% 60.08% 38.21% 72.13%

India's imports from China 5904.12 5942.42 6237.88 6026.38 6489.53 6939.07 5907.76

Growth (Y-o-Y) 64.75% 28.80% 16.67% 19.46% 20.55% 29.72% 4.22%

Source: PHD Research Bureau; Compiled from Ministry of Commerce and

Industry

Interestingly, during April – October 2017, India‘s export growth to China witnessed a
surge from 40% in April 2017 to 72.13% in October 2017 whereas India‘s import growth
from China shrunk from 64.7% to 4.22% during the same period previous year

India‟s top ten import items from China

HS code Product label India's imports from China (USD Share in 2016 CAGR 2011-16
Billion)

2001 2006 2011 2016 (In %) (In %)

85 Electrical machinery and equipment 0.21 3.77 13.24 20.87 34.5% 9.5%
and parts thereof;

sound recorders and reproducers,

television

84 Machinery, mechanical appliances, 0.22 3.09 9.79 10.73 17.7% 1.8%

nuclear reactors,

boilers; parts thereof

29 Organic chemicals 0.29 1.62 4.08 5.59 9.2% 6.5%

39 Plastics and articles thereof 0.02 0.32 1.21 1.84 3.0% 8.7%

89 Ships,boats andfloating structures 0.00 0.09 1.44 1.78 2.9% 4.4%

72 Iron and steel 0.01 0.50 1.99 1.65 2.7% -3.7%

34
31 Fertilizers 0.01 0.10 2.73 1.54 2.5% -10.8%

90 Optical, photographic, 0.04 0.18 0.92 1.31 2.2% 7.3%

cinematographic, measuring,
checking, precision, medical or

surgical

73 Articles of iron or steel 0.01 0.78 1.45 1.20 2.0% -3.7%

87 Vehicles other than railway or 0.01 0.19 1.01 1.14 1.9% 2.5%
tramway rolling stock,

and parts and accessories thereof

Total value of top ten import items 0.82 10.64 37.86 47.64 78.8% 4.7%

Rest of the products 1.01 5.00 17.62 12.84 21.2% -6.1%

Total Imports from China 1.83 15.64 55.48 60.48 100.0% 1.7%

Source: PHD Research Bureau; Compiled from Trade Map Database

India‘s top ten imports from China comprise of 79% of the overall imports from China. The
majority of the share is held by Electrical equipments (HS-85) at 34.5%, followed by
Mechanical appliances (17.7%) and Organic Chemicals (9.2%) among others.

Interestingly, top ten importable products from China witnessed a positive rise of 4.7%
during 2011-16, whereas the rest of the products witnessed a fall of -6.1% during the same
period. Among top imports, electrical products (HS 85) grew by 9.5% followed by plastic
products (HS 39) at 8.7% and Optical, photographic and other medical devices (HS 90) at
7.3% during the same period.

India‟s top ten export items to China

HS code Product label India's exports to China (USD Share in CAGR 2011-
Billion) 2016 16

2001 2006 2011 2016 (In %) (In %)

52 Cotton 0.07 0.70 2.80 1.26 14.2% -14.7%

26 Ores, slag and ash 0.25 3.61 4.30 1.17 13.1% -23.0%

29 Organic chemicals 0.10 0.52 0.86 0.79 8.8% -1.8%

35
27 Mineral fuels, mineral oils and 0.00 0.06 1.62 0.70 7.9% -15.4%
products of their

distillation; bituminous substances

74 Copper and articles thereof 0.00 0.40 1.87 0.64 7.2% -19.3%

25 Salt; sulphur; earths and stone; 0.05 0.15 0.47 0.51 5.7% 1.5%
plastering materials,

lime and cement

84 Machinery, mechanical appliances, 0.01 0.18 0.37 0.47 5.2% 4.5%

nuclear reactors, boilers; parts

thereof

85 Electrical machinery and equipment and 0.01 0.07 0.33 0.39 4.4% 3.6%
parts thereof;

sound recorders and reproducers,

television

15 Animal or vegetable fats and oils and 0.00 0.05 0.30 0.27 3.0% -2.1%
their cleavage

products; prepared edible fats;

animal

39 Plastics and articles thereof 0.11 0.40 0.62 0.27 3.0% -15.4%

Total value of top ten import items 0.62 6.15 13.54 6.46 72.5% -13.8%

Rest of the products 0.30 1.68 3.18 2.46 27.5% -5.0%

Total exports to China 0.92 7.83 16.72 8.92 100.0% -11.8%

Source: PHD Research Bureau; Compiled from Trade Map Database

India‘s top ten export items to China comprise of 73% of the overall exports to China. The
majority of the share is held by Cotton (HS 52) at 14.2%; followed by Ores, Slag and ash
(HS 26) at 13.1% and Organic Chemicals (HS 29) at 8.8% among others.

Contrary to the rise in imports of top ten products from China, growth rate of exports of
India‘s top ten items to China fell by a drastic -13.8% during 2011-16. The exportable

36
products that witnessed majority of the fall include Ores, slag and ash (HS 26) by -23%,
followed by Copper (HS 74) by -19.3%, Plastic products (HS 39) and mineral fuels (HS 27) by
15.4% each and cotton (HS 52) by -14.7% among other during the same period. Machinery
and Mechanical appliances witnessed highest positive growth of 4.5% among top ten
exportable products to China during the same period

India’s Exports to China

Based on Level of Processing Based on Category
2.3% 3.4% 5.0% 0.78% 7.86% 7.27%
10.0% 2.8% 12.6%
10.8%
34.5% 13.3%
43.0% 36.3%

49.3% 95.26% 88.20% 73.41%

84.19%

59.3%
44.7% 47.9%
24.9%
18.73%
4.74% 11.03% 8.54%
2001 2006 2011 2016
2001 2006 2011 2016
Raw Materials Intermediate Goods
Consumer Goods Capital Goods Agricultural Industrial Petroleum

Source: PHD Research Bureau; Compiled from World Integrated Trade Database

Based on level of processing, India‘s exports to China shifted from Raw materials to
Intermediate goods over the decade. Around 60% of the exports to China were focused
on Raw materials in 2006. However, during 2016, share of raw materials fell to 25%,
which compensated to the rise in share of intermediate goods from 34.5% in 2006 to
50% in 2016.

Conversely, based on category front, India‘s industrial export share to China fell from 95%
to 84% during 2001-16. The fall in share was compensated with the rise in share of Petroleum
products and Agricultural products. The share of petroleum exports to China from India
grew by 7 percentage points during 2001-16.

37
 India‟s Imports from China

22.4% 0.2% 1.1% 0.1%

10.9%
44.3% 47.7%
10.4% 56.4%
12.1%
13.2%
47.4%
91.6%
19.4%
8.4% 1.6% 1.0%

Raw Materials 2011 2016

Source: PHD Research Bureau; Compiled from World Integrated Trade

Database

Based on level of processing, India‘s import pattern from China witnessed a dramatic
shift. The share of Capital goods grew from 22.4% in 2001 to 56.4% in 2016. This
substantial jump in share of capital goods was compensated for the loss in share of
intermediate goods and raw materials. The import share of intermediate goods from
China fell from 47.4% to 29.4%, whereas share of raw materials fell from 20% to 1%
during the same period. Conversely, based on category, around 99% of the imports by
India from China are industrial products and merely 1% is agriculture products
indicating higher level of reliance on industrial products from China.

Of the total imports, it has been analyzed that around 70% of the imports from China
including electrical equipments, sound recorders and parts thereof; mechanical appliances and
parts thereof; optical and photographic instruments and parts thereof and other items are of
experience nature, viz. majorly comprise of one-time use.

Less than 150 products in India have mandatory technical standards, whereas
developed countries have such standards for most of their product ranges. The Bureau
of Indian Standards, the body that lays down quality standards for most goods in the
country, has laid down 18,000 standards, but they are all voluntary. This provides an easy
passage to low-quality Chinese products to enter into Indian markets despite of imposing
anti-dumping duties and countervailing duties. The cost price of low quality Chinese
products is so low that despite imposing Anti-dumping duties and countervailing duties,
the unit price remains lower than Indian products.

3. Bilateral Trade Analysis: Intensive and Extensive

To gather a comprehensive and in-depth information and pattern between India and
China, an intensive-cum-secondary trade analysis has been conducted.

38
3.1 Trade Dependence Index
The trade dependence index, or trade to gdp ratio, or the openness index is a measure of
the importance of international trade in the overall economy. It gives an indication of the
degree to which an economy is open to trade. Openness of an economy is determined by a
large number of factors, most importantly by trade restrictions like tariffs, nontariff
barriers, foreign exchange regimes, non-trade policies and the structure of national
economies.
Trade-to-GDP ratio at a Glance

42.6%
41.9%

38.2%
33.5%

31.0%

27.3%
2007 2008 2009 2010 2012 2013 2014 2015

In the recent years, India‘s dependence on trade has fallen from 43% in 2013 to 27% in
2016 indicating higher inclusiveness in Gross Domestic Products and relatively lower
susceptibility to external shocks and volatility, ceteris paribus. Conversely, China‘s
dependence on trade has dramatically and drastically declined from 61% in 2007 to
33% in 2016. Despite both nations stronger footprint in global ecosystem as far as
products are concerned, their trade to GDP ratio remained in a comfortable position in the
recent years.

3.2 Rate of Import Penetration

The import penetration rate shows to what degree domestic demand (the difference between
GDP and net exports) is satisfied by imports. It is also called as self-sufficiency ratio. The
index may be used as the basis of specific policy objectives targeting self-sufficiency. It may
provide an indication of the degree of vulnerability to certain types of external shocks.

39
 Rate of Import Penetration between India and China

0.44%
0.18% 0.16%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Source: PHD Research Bureau; Compiled from World Bank Database and
Trade Map Database

Over the years, products from China have deeply penetrated into the Indian markets.
As indicated from the chart above, China‘s import penetration in India increased from
1.9% in 2007 to 2.6% in 2016. Although the trend has witnessed a decline in the recent
years due to various developments in trade relations, it will take India nearly a decade
to have a comfortable trade balance scenario with China. On the other hand, India‘s
import penetration rate in China‘s market has remained abysmally low and has fallen to
a new low in the recent years. India‘s import penetration rate in China fell from 0.44%
in 2007 to 0.11% in 2016.

3.3 Trade Intensity Index

TII or Trade Intensity Index is a uniform export share that describes whether a country
exports more or less to a destination than world does on average. TII value greater than 1
indicates an intense trade relationship.

40
 Trade Intensity Index between India and China at a Glance

2007 2008 2009 2010 2011 2012 2013 2014 2015

China's TII in India

Source: PHD Research Bureau; Compiled from World Integrated Trade
Database

Substantiating the claims of Import Penetration Rate, China has created a significant
presence in India‘s ever growing consumer market. China has an intense export
relationship with India, however, vice versa is not true. India‘s export relationship with
China has remained laggard and abysmal since the beginning of their trade relationship.
China‘s TII in India grew from 0.88 in 2012 to 1.24 in 2016 whereas India‘s TII in
China has consistently fallen from 0.94 in 2007 to 0.34 in 2016 indicating an unintense
presence of Indian products in China‘s market.

3.4 Hirschman Herfindahl Index

HHI or Hirschman-Herfindahl Index is used to estimate the export concentration of

India and China in each other‘s market. HHI as 1 indicates least diversified portfolio of
exports whereas 0 indicates a perfectly diversified portfolio. It is assumed that
diversification of exports are essential for developing countries as it gives them the
space to develop competence over a broader range of manufactured commodities.
Nations grow through entrepreneurial dynamism and not by depending on what they
have traditionally done well.

41
 Hirschman Herfindahl Index between India and China

2007 2008 2009 2010 2011 2012 2013 2014 2015

Export to China
Source: PHD Research Bureau; Compiled from World Integrated Trade
Database

As illustrated from the chart above, India‘s imports from China are highly concentrated on
fewer products compared to India‘s export to China. India‘s exports to China are evidently
very diverse as far as product categories are concerned (at HS-02). The trend in
Hirschman Herfindahl Index suggests that over the years India‘s export basket to China has
expanded making it less susceptible to any volatility in China whereas China‘s export basket
to India has become concentrated.

3.5 Grubel Lloyd Index for Intra Industry Trade

Additionally, GLI or Grubel-Lloyd Index helps in measuring the scale of intra-industry trade
between nations. Nations can hugely benefit from Intra-industry trade due to economies of
scale. GLI value 0 indicates pure inter-industry trade whereas 1 indicates pure intra-
industry trade.

42
 Adjusted Grubel – Lloyd Index for Intra – Industry Trade between India

2007 2008 2009 2010 2011 2012 2013 2014 2015

and China
Source: PHD Research Bureau; Compiled from World Integrated Trade
Database; at HS-02

The intra-industry trade relationship between India and China has expanded consistently over
the years. Around 53% ofthe trade between India and China is in the form of intra-industry, or
similar products. This share has increase from 28% in 2007 to 53% in 2016.

3.6 Trade Cost Analysis

Trade cost analysis provides an optimal viewpoint to access the overall cost as a
percentage of overall export, which is incurred during trade between two nations. Trade
costs are the price equivalent of the reduction of international trade compared with the
potential implied by domestic production and consumption in the origin and destination
markets. Higher bilateral trade costs result in smaller bilateral trade flows.

India’s trade cost scenario with China (in advalorem %)

2010 2011 2012 2013 2014 2015

Agriculture 166.63 164.25 162.10 167.26 184.53 212.88

Manufacturing 98.59 99.91 102.66 93.10 - -

Total Trade 102.64 102.81 105.03 100.30 - -

Source: PHD Research Bureau; Compiled from World Integrated Trade

Database

43
Despite being contiguous nations, India and China witnessed extremely high trade cost. Trade cost for
agricultural products rose exorbitantly from 166% in 2010 to 213% in 2015. Although the data

for manufacturing trade cost is not available for the recent years, the overall trade cost
eased to 100% on the back of lower manufacturing trade cost during 2013. Both India and
China needs to reduce the extra barriers imposed on agricultural products to boost the agri-
products trade and reduce the ever rising trade costs.

The crux of the above analysis suggests that despite rising complementarities in each
other‘s market, both the nations are not able to intensify their trade relationship, perhaps
due to different priorities at hand. Nevertheless, both the nations should zero in on the
removal of different bottlenecks in doing trade with each other and note that with rising
complementarity, both the nations should focus on grasping this opportunity. Further,
the trade relationship and regime should be revisited to arrive at a balance trade
mechanism. The regime should not favour any one nation; in this case the trade highly
favours China whereas India is left with a huge trade deficit in its balance of trade.

4. Tariff Analysis

A tariff is a tax imposed by a country on an imported item. It adds to the cost of imported
goods and is one of several trade policies that a country can enact. The data on tariffs
imposed by China on different products imported from India (at HS-02) level revealed
some startling figures.

The average tariff imposed by China on Dairy products from World was 10.79% compared to
2% on India during 2011. Similarly, tariffs on products like Edible fruit and nuts, coffee and
tea, products of milling industry, preparations of meat and fish, cocoa, beverages, residues
from food industry, footwear, lead and articles thereof, railways, ships and boats, and
aircrafts are lower in case of India compared to the average tariff imposed by China on
world.

Tariff Scenario in China (Simple Average in percentage terms)

HS Code Product Name Tariffs imposed by China

2011 2016
World India World India
01 Live animals 5.25 4.69 5.4
02 Meat and edible meat offal 13.48 11.59
03 Fish and crustaceans, mollusks and other aquatic 8 9.05 6.97 8.85
04 Dairy produce; birds' eggs; natural honey; edible 10.79 2 11.04
05 Products of animal origin, not elsewhere specified 8.15 9.38 7.06 12.67
06 Live trees and other plants; bulbs, roots and the 7.06 8.59 8.05 8.96
07 Edible vegetables and certain roots and tubers 7.55 9.2 8.05 8.5

44
08 Edible fruit and nuts; peel of citrus fruit 14.64 16.5 13.05 8
09 Coffee, tea, maté and spices 11.35 10.75 11.3 10.33
10 Cereals 38.33 38 16.55 21.75
11 Products of the milling industry; malt; starches; 21.64 11.67 17.75 11.67
12 Oil Seeds and oleaginous fruits; miscellaneous 5.67 7.25 5.98 9.72
13 Lac; Gums, resins and other vegetable saps and 9.98 10.07 11.16 12.04
ext
14 Vegetable plaiting materials; vegetable products n 5.16 7.88 4.99 7.88
15 Animal or vegetable fats and oils 11.1 12.12 11.31 12.8
16 Preparations of meat, of fish or of crustaceans, m 8.9 7.45 7.04 6.63
17 Sugars and sugar confectionery 25.18 43.33 19.17 25.17
18 Cocoa and cocoa preparations 8.09 9.7 8.14 7.6
19 Preparations of cereals, flour, starch or milk; pa 14.37 18.36 15.22 17.26
20 Preparations of vegetables, fruit, nuts or other p 16.65 20.21 16.26 19.75
21 Miscellaneous edible preparations 17.56 21.13 17.16 20.7
22 Beverages, spirits and vinegar 15.42 11.9 15.62 12.63
23 Residues and waste from the food industries; 3.69 4 4.44 2.98
24 Tobacco and manufactured tobacco substitutes 25.6 33.5 26.55 29.25
25 Salt; sulphur; earths and stone; plastering 2.23 2.95 2.57 3.26
26 Ores, slag and ash 0.28 0.42 0.15 0.42
27 Mineral fuels, mineral oils and products of their 3.88 4.52 4.46 6.87
28 Inorganic chemicals; organic or inorganic 4.51 5.19 4.68 5.39
compound
29 Organic chemicals 5.05 5.63 4.97 5.76
30 Pharmaceutical products 3.79 3.57 3.87 4.04
31 Fertilizers 15.78 4.5 9.48 14.42
32 Tanning or dyeing extracts; tannins and their 6.37 7.06 6.16 7.16
33 Essential oils and resinoids; perfumery, cosmetic 10.19 11.49 10.04 12.8
34 soap, organic surface-active agents, washing 7.64 8.79 7.74 8.64
35 Albuminoidal substances; modified starches; 7.91 8.04 7.83 8.04
glues;
36 Explosives; pyrotechnic products; matches; 7.24 7.08
37 Photographic or cinematographic goods 10.19 9.42 10.85 11.38
38 Miscellaneous chemical products 5.99 6.79 5.91 7.28
39 Plastics and articles thereof 6.62 7.28 6.38 7.4
40 Rubber and articles thereof 9.46 11.27 9.27 11.28
41 Raw Hides and skins (other than fur-skins) 6.79 8.01 6.55 7.88
42 Articles of leather; saddlery and harness; travel 11.49 13.01 10.95 13.02
43 Furskins and artificial fur; manufactures thereof 15.98 17.8 14.37 17.95
44 Wood and articles of wood; wood charcoal 3.3 5.32 3.1 4.76
45 cork And articles of cork 4.91 8.4 5.03 8.4
46 Manufactures of straw, of esparto 6.32 8.93 6.24 8.92
47 Pulp of wood or of other fibrous cellulosic 0 0 0 0
48 Paper and paperboard; articles of paper pulp, of p 6.43 6.43 6.5 6.88
49 Printed books, newspapers, pictures and other 3.58 3.21 3.57 3.81
prod

45
50 Silk 7.73 9.13 7.08 9.1
51 Wool, fine or coarse animal hair; horsehair yarn a 11.88 15.14 8.48 9.1
52 Cotton 6.59 7.64 6.75 8.2
53 Other vegetable textile fibres; paper yarn and 6.58 8.07 6.66 8.51
54 Man-Made filaments; strip and the like of man- 6.43 7.76 6.06 8.13
made
55 Man-made staple fibres 6.89 8.14 6.5 8.33
56 Wadding, felt and nonwovens; special yarns; 7.14 8.18 6.54 7.96
twine,
57 Carpets and other textile floor coverings 11.09 12.74 10.59 12.82
58 Special woven fabrics; tufted textile fabrics; 8.43 9.82 7.98 9.78
59 Impregnated, coated, covered or laminated textile 7.83 8.81 7.41 8.91
60 Knitted or crocheted fabrics 7.89 8.73 7.37 8.59
61 Articles of apparel and clothing accessories, knit 12.51 12.43 12.01 12.09
62 Articles of apparel and clothing accessories, not 12.94 13.02 12.35 13.04
63 Other made-up textile articles; sets; worn 12.05 14.33 11.75 14.56
64 Footwear, gaiters and the like; parts of such 14.55 12.89 14.09 12.89
65 Headgear and parts thereof 14.55 17.73 12.42 14.86
66 Umbrellas, sun umbrellas, walking sticks, 10.01 11.33 9.05 11.33
67 Prepared feathers and down and articles made of 17.77 18.75 15.98 19.92
68 Articles of stone, plaster, cement, asbestos, mica 10.86 13.31 10.47 13
69 Ceramic products 9.71 10.48 10.77 11.44
70 Glass and glassware 10.72 12.01 10.74 13
71 Natural or cultured pearls, precious or semi- 11.8 14.18 10.18 13.65
precious
72 Iron and steel 4.72 5.35 4.77 5.63
73 Articles of iron or steel 8.18 9.07 8.21 9.59
74 Copper and articles thereof 5.08 6.31 5.21 7.44
75 Nickel and articles thereof 4.45 5.87 4.35 5.9
76 Aluminum and articles thereof 7.1 8.73 7.26 8.56
78 Lead and articles thereof 3.61 4 3.92 3
79 Zinc and articles thereof 3.52 4 3.83 5
80 Tin and articles thereof 4.78 5.5 4.99 6.33
81 Other base metals; cermets; articles thereof 5.53 7.7 5.34 7.36
82 Tools, implements, cutlery, spoons and forks, of b 8.77 10.15 8.85 10.24
83 Miscellaneous articles of base metal 9.43 10.86 9.17 11.09
84 Nuclear reactors, boilers, machinery and 6.16 7.01 6.19 6.94
mechanical
85 Electrical machinery and equipment and parts 5.54 6.29 5.54 6.44
there
86 Railway or tramway locomotives, rolling stock 3.91 4.5 3.25 3
87 Vehicles other than railway or tramway rolling 12.12 12.89 11.61 14.15
stock
88 Aircraft, spacecraft, and parts thereof 1.43 1 1.34 1
89 Ships, boats and floating structures 6.75 3 6.96
90 Optical, photographic, cinematographic, 5.42 6.67 5.32 6.6

46
 measuring,
91 Clocks and watches and parts thereof 13.05 16.18 12.51 15.91
92 Musical instruments; parts and accessories of 15.72 17.41 15.58 17.74
such
93 Arms and ammunition; parts and accessories 12.73 12.21
thereof
94 Furniture; bedding, mattresses, mattress 4.97 6.31 5.95 7.74
supports,
95 Toys, games and sports requisites; parts 8 6.09 7.95 8
96 Miscellaneous manufactured articles 15.81 18.42 15.11 18.67
97 Works of art, collectors' pieces and antiques 7.48 9 7.05 7.73
Source: PHD Research Bureau; Compiled from World Integrated Trade
Database

The overall tariff structure revealed that certain products from India attracted
comparatively higher tariffs. The tariff on products such as Tobacco (29.25%); sugars and
sugar products (25.17%); cereals (21.75%); edible preparations (20.7%); prepared feathers
and articles thereof (19.92%); preparations of vegetables, fruits, nuts (19.75%);
miscellaneous manufactured articles (18.67%); furskins and artificial fur (17.95%);
musical instruments (17.74%); preparations of cereals, flour, starch or milk (17.26%);
clocks and watches and parts thereof (15.91%); headgear and parts thereof (14.86%); other
made-up textile articles (14.56%); fertilizers (14.42%); vehicles other than railway or
tramway (14.15%); natural or cultured pearls (13.65%); articles of apparel and clothing
accessories, not knitted (13.04%); articles of leather, saddlery and harness (13.02%);
articles of stone, plaster, cement, asbestos, mica (13%); glass and glassware (13%); carpets
and other textile floor coverings (12.82%); animal or vegetable fats and oils (12.8%);
essential oils and resinoids, perfumery, cosmetics (12.8%) among others.

5. Non-tariff Barriers Analysis

Export prospects of a country are not completely determined by tariff reduction or tariff
elimination. While every country tries to maximize its export prospects by gaining market
access to the other country, the importing country equally tries to restrict the access of
the exporting countries because in the event of import surge its own sensitive sectors get
weakened. In context to that, they protect their sensitive sectors by raising non-tariff
measures (NTMs). Non-tariff barriers (NTMs) can take various forms. Broadly these can be
categorized as import policy barriers, standards, testing, labelling and certification
requirements, anti-dumping and countervailing measures, export subsidies and domestic
support government procurement.

Unlike tariffs that directly increase the price of imports and indirectly limit the cost of
imports. NTMs tend to have a significant trade-reducing affect that is on par with tariffs.
With tariffs on various products coming down each year, the onus of restricting surging

47
imports lies on variety of non-trade measures.

Various Non-Tariff Barriers imposed by China on World (as on 31st June

2017)
In force Initiated
SPS 118 1074
TBT 102 1085
Anti-dumping 95 5
Countervailing 4 1
Safeguards 2 0
Quantitative Restrictions 42 0
Tariff Rate Quotas 10 0
State Trading Enterprises 171 0

Source: PHD Research Bureau; Compiled from WTO‘s Integrated Trade

Intelligence Portal (I-TIP)

Majority of the non-tariff barriers imposed by China are State Trading Enterprises (171),
followed by Sanitary and Phytosanitary Measures (118), Technical Barriers to Trade (102)
among others. Also, China has resorted to newly initiated SPS and TBT in the recent years to
curb rising imports from across the globe.
Various Non-Tariff Barriers imposed by India on World (as on 31 st June 2017)
In force Initiated
SPS 29 135
TBT 2 100
Anti-dumping 248 80
Countervailing 1 1
Safeguards 3 0

Quantitative Restrictions 59 0
Tariff Rate Quotas 3 0
State Trading Enterprises 29 0
Source: PHD Research Bureau; Compiled from WTO‘s Integrated Trade
Intelligence Portal (I-TIP)

Conversely, Majority of the non tariff measures imposed by India were Anti dumping duties
(248); followed by Quantitative restrictions (59) and Sanitary and Phytosanitary
Measures and State Trading Enterprises (29 each) among others. Further, in the recent years,
India has resorted more towards implementing newer SPSs, TBTs and Antidumping
duties. Interestingly, around anti dumping duties were imposed on 93 Chinese products
whereas 40 new initiatives were started by India2.

48
Less than 150 products in India have mandatory technical standards, whereas developed
countries have such standards for most of their product ranges. The Bureau of Indian
Standards, the body that lays down quality standards for most goods in the country, has laid
down 18,000 standards, but they are all voluntary. This provides an easy passage to low-
quality Chinese products to enter into Indian markets despite of imposing anti-dumping
duties and countervailing duties. The cost price of low quality Chinese products is so low
that despite imposing Anti-dumping duties and countervailing duties, the unit price
remains lower than Indian products.

Around 90 products from China are under the anti-dumping duty ambit. However, merely
putting anti-dumping duties won‘t help curbing imports as unit value of certain products
are so low that despite anti-dumping duty the final value remains lower than unit value of
the same product from different countries.

It is imperative for us to assess whether the Chinese imports are substituting or complementing
the domestic production in India with specific emphasis on sectors like Steel, Urea and other
chemicals, Electronics, Telecom and consumer products of mass consumption. Additional
duties on imports of intermediate and capital goods from China might become
counterproductive in case those products are utilized to propel the domestic production in
India.

India is one of the largest manufacturers of generic drugs. But it has not been able to
export to China because of China‘s protectionist policies. While Indian pharmaceutical
companies exporting generic drugs to the United States and Europe, as most of the drugs
have received FDA and EU approval, it is quite striking that China does not allow imports
of drugs from India.

6. Conclusions

During the first decade of 21st century, the presence of Chinese products in Indian market
has grown profoundly and exponentially. During 2001-2016, India‘s imports from China
jumped to a whopping 33 times, from USD 1.83 billion to USD 60.48 billion. Astoundingly,
India‘s trade deficit with China expanded 57 times during the same period. India's trade
deficit with China narrowed
The lists of products are annexed with the research paper in the end.

Marginally to USD 51.57 billion in 2016-17 from USD 52.69 billion in 2015-16. However, the
magnitude of trade deficit is exorbitant.

In 2016, India was the 7th largest export destination for Chinese products, and the 27th
largest exporter to China. India - China trade in the first four months of2017 increased by
19.92% year-on- year to USD 26.02 billion. India‘s exports to China increased by 45.29%
year-on-year to USD 5.57 billion while India‘s imports from China saw a year-on-year
growth of 14.48% to USD 20.45 billion. The Indian trade deficit with China has further

49
increased by 6.07% year-on-year to USD 14.883 billion during the same period.

With industrialization gaining pace, India‘s import pattern with China has shifted
dramatically from intermediate goods to capital goods. India‘s import share of capital goods
from China jumped from 47% in 2011 to 57% in 2016 whereas share of intermediate goods
fell from 37% to 29% during the same period. China has been able to enhance its footprint in
India to a greater extent. The intensity of Chinese products in Indian market has been
continuously rising since 2009. Conversely, Indian products have a weak intensity in China‘s
market and have been consistently falling over the years.

On the diversification front, China‘s basket of exports to India is highly concentrated and
intensive towards fewer selected products. This enhances the situation of high volatility
due to higher reliance on fewer products.

Total FDI inflows from China to India between April 2000 and September 2017 stood at USD
1.738 billion wherein China‘s share was roughly 0.49% which rightfully indicates that
China is not a significant and substantial investor in India as compared to Singapore,
Mauritius and Switzerland. Conversely, in recent years, China has invested heavily in
billions of dollars in various countries. Unlike trade, levels of investment between China
and India remain relatively low. Though an estimated 100 companies from each country
have offices in the other, cumulative bilateral FDI is less than USD 500 million. Cross-
border investment remains low because Chinese and Indian companies are still in the
early stages of learning how to operate and succeed in each other‘s economies.

Due to cheap labour and economies of scale, china offers low-priced imports such as textiles
and clothing, electronic devices, machinery, etc. Further, exploiting the huge Indian
market to dump their products and indirectly killing Indian units. Chinese products are
affecting our manufacturing units and many ofthem have had to shut their shops. There are so
many Chinese toys in the market that Indian toy industry is finding very hard to survive. In
the last 5 years, many of the Indian toy companies have been shut down.

Going ahead, with the shift in taste and preferences for Chinese products coupled with
growing and competitive Indian production capabilities and shift in the consumption
patterns of Indian consumers, the fame of Chinese products in Indian market will further
witness a decline in the coming years.

50
Appendix 1: List of Chinese products under the Anti-dumping duty by India

S. HS Code Product Description Initiation Date In Force

No. Date
1 293627 Vitamin-C 26-May-97 16-Apr-
98
2 29332920 Metronidazole 29-Jul-99 17-Apr-
00
3 283410 Sodium Nitrite -I 4-Nov-99 23-May-
00
4 281700, 381230 Zinc Oxide-I 8-Dec-00 9-Apr-01
5 283110, 283210 Sodium Hydrosulphite -I 20-Dec-00 28-Mar-
01
6 29222914, 85451101, 85451109, Paracetamol 30-Jan-01 6-Sep-01
85451901, 85451909
7 281511, 281512 Caustic Soda-III 14-May-02 26-Dec-
02
8 7005, 70051010, 70051090, Float Glass 5-Jul-02 7-Jan-03
70052110,70052190, 70052910,
70052990,
70053010, 70053090
9 23099010, 29362800 Vitamin-E 27-Aug-02 17-Mar-
03
10 9017, 90171000, 90173010, 90173029, Measuring Tapes 22-Oct-02 4-Apr-03
901780, 90178010, 90178090, 901790,
90189099
11 29336100 Melamine 10-Sep-03 2-Apr-04
12 59021000 Nylon Tyre Cord Fabric- 29-Oct-03 26-Jul-04
II
13 580610 Narrow Woven Fabric 9-Jun-04 14-Feb-
05
14 381210, 381220, 381230 Certain Rubber 7-Jul-04 27-Sep-
Chemicals-I 05
15 390461 Polytetrafluoro-ethylene- 27-Jul-04 17-Oct-05
II (PTFE)
16 381210, 381220, 381230 Certain Rubber 17-Aug-04 7-Jul-05
Chemicals-II
17 293319 1-Phenyl-3-Methyl-5- 1-Dec-04 10-Jan-06
Pyrazolone
18 290542 Pentaerythritol-II 4-Feb-05 20-Oct-05
19 540332, 540333, 540341 Viscose Filament Yarn 7-Apr-05 24-May-
06
20 500710, 500720, 500790 Silk Fabric 18-May-05 31-May-
06
21 54021 Nylon Filament Yarn 4-Jul-05 29-Mar-
06
22 292511 Saccharin 4-Jul-05 6-Jun-06

51
23 392071 Cellophane Transparent 27-Sep-05 30-Mar-
film 06
24 54024 Partially Oriented Yarn 13-Dec-05 2-Aug-06
(POY)-III
25 401120, 401130, 401290, 401310 New Non Radial Bias 30-Dec-05 9-Oct-06
Tyres-
26 73030030, 73030090 Ductile Iron Pipe 23-Feb-06 14-Sep-
07
27 293621 Vitamin -A Palmitate-II 23-Mar-06 28-Mar-
07

52
28 870870 Wheels 31-May-06 29-Mar-07
29 39042110 Poly Vinyl Chloride (PVC) 28-Jun-06 23-Jan-08
(suspension grade)
30 28092010 Phosphoric Acid - Technical 4-Jul-06 14-Sep-07
Grade and Food Grade
31 283340 Peroxosulphates 28-Jul-06 19-Mar-07
(Persulphates)
32 37013000, 37040090, 37051000, 76069190, Presensitized Positive Offset 24-Aug-06 25-Sep-07
76069290, 84425020 Aluminium plates
33 294200 Ceftriaxone Sodium Sterile 4-Apr-07 30-Nov-07
34 29420090 Diclofenac Sodium 4-Jun-07 10-Apr-08
35 32041967 Sulphur Black 26-Jun-07 11-Apr-08
36 2902, 2907, 2909, 2917, 2921, 2925, 2930, 2933, Certain Rubber Chemicals-III 6-Jul-07 5-May-08
2934, 2935, 2942, 3810, 3811,
3812, 3815
37 8539 Compact fluorescent lamps 30-Aug-07 21-Nov-08
(CFL)
38 85232920, 85232950, 85232970, 85234040, Digital Versatile Disc 20-Nov-07 23-Jul-08
85234050, 85234060, 85234080, Recordable (DVD-R‘s)
85234090, 85235290, 85238050, 85238090,
85239010, 85239040, 85239050,
85239090
39 392690 Cable Ties 1-Jan-08 31-Oct-08
40 540247 All Fully Drawn Yarn 6-May-08 11-Nov-09
41 4411 Plain Medium Density Fibre 6-Jun-08 8-Oct-09
Board
42 8477101 Plastic Processing Machinery 8-Jul-08 23-Mar-10
43 5309 Flax Fabrics 3-Oct-08 21-Dec-09
44 84775100 Tyre Curing Press 16-Oct-08 8-Jan-10
45 7219 Cold Rolled Flat Products 25-Nov-08 20-Feb-10
of Stainless Steel
46 73261910, 73261990, 73269099, 87085000, Front Axle Beam and 8-Dec-08 12-Apr-10
87089900 Steering
Knuckles
47 28030010 Carbon Black 26-Dec-08 28-Jan-10
48 550410 Viscose Staple Fibre 19-Mar-09 26-Jul-10
49 851762, 851770 Synchronous Digital Hierarchy 21-Apr-09 16-Dec-10
(SDH)
transmission equipment
50 28366000 Barium Carbonate 16-Jun-09 7-Feb-11

53
51 29322100 Coumarin 10-Jul-09 20-Aug-10
52 29033919 1,1,1,2 tetra-flouroethane 19-Aug-09 15-Jul-11
53 3904 PVC paste Resin 3-Nov-09 26-Jul-11
54 7019 Glass Fibres 8-Jan-10 4-Mar-11
55 391810, 391890, 391990, 392010, 392049, PVC flex films 1-Feb-10 25-Aug-11
392190, 392690
56 845230 Sewing Machine Needles 20-May-10 22-Jun-11
57 292142 Paranitroaniline 8-Jun-10 9-Sep-11
58 283620 Soda Ash 20-Aug-10 3-Jul-12
59 7013 Opal Glassware 26-Aug-10 23-Nov-11
60 390210, 391400, 392690, 550340, 560313, Geogrids/Geostrips/Geostrap 20-Dec-10 24-Jan-12
560394, 560410, 560490, 560890, es
590310, 590390, 591110, 591131, 591190
61 732591 Grinding Media Balls ( 23-May-11 16-Jul-12
excluding
forged grinding media balls)
62 370130, 370400, 370510, 760691, 760692, Digital Offset Printing Plates 13-Jun-11 3-Dec-12
844250
63 680919, 680990 Plain Gypsum Plaster Board 21-Jul-11 12-Apr-13
64 292310 Choline Chloride 25-Oct-11 21-Dec-12
65 292151 Meta Phenylene Diamine 19-Jun-12 11-Mar-14
66 282990 Sodium Perchlorate 27-Jun-12 6-Sep-13
67 29214290, 29215990 4,4 Diamini Stilbene 2,2 26-Jul-12 23-Jan-14
Disulphonic
Acid (DASDA)
68 28047020 Red Phophorus 28-Sep-12 19-Mar-14
69 870870 Cast Aluminium Alloy 10-Dec-12 22-May-15
Wheels
70 38011000, 38019000, 83119000, Graphite Electrodes of all 20-May-13 13-Feb-15
85354010, diameters
85451100, 85451900, 85459090, 85471090
71 31025000 Sodium Nitrate 5-Jun-13 10-Feb-15
72 85235100 USB Flash Drives 21-Jun-13 22-May-15
73 8546 Electrical Insulators 5-Sep-13 11-Apr-15
74 84701000 Electronic Calculators 18-Oct-13 29-May-15
75 700420 Sheet Glass 20-Dec-13 13-Mar-15
76 291815 Sodium Citrate 28-Feb-14 20-May-15
77 7219, 7220 Hot rolled flat products of 11-Mar-14 5-Jun-15
Stainless
Steel 304 series

54
78 2912291 Hexamine 25-Mar-14 21-Sep-15

79 320411, 320416, 320417, 320419, 320490, Diketopyrrolo Pyrrole 20-Jun-14 17-Aug-15

320611, 320649 Pigment

Red 254 ( DPP Red 254)

80 294200 Gliclazide 28-Aug-14 8-Dec-15

81 29332950 Albendazole 11-Sep-14 14-Dec-15

82 39241010, 39241090, 39249090, Melamine Tableware and 28-Oct-14 4-Dec-15

39264049, 39269099
Kitchenware products

83 50020010 Mulberry Raw Silk 9-Dec-14 20-Jan-16

84 29183040 Methyl Acetoacetate 7-Jan-15 31-May-16

85 29031200 Methylene Chloride 7-Apr-15 31-May-16

86 29173600 Purified Terephthalic Acid 18-Jun-15 5-Jul-16

(PTA)

87 87169010 Axle for trailers 28-Dec-15 29-Nov-16

88 27040010, 27040020, 27040030, Low ash metallurgical coke 30-Dec-15 25-Nov-16

27040090

Source: PHD Research Bureau; Compiled from WTO Database

55
 Appendix 2: List of Chinese products under the Anti-Dumping Duty by India
(initiated but not in force)

S. HS Code Product Description Initiation

No. Date
1 7304 Seamless tubes pipes and hollow profiles of Iron 08-Jul-15
2 6907, 6908, 6914 Glazed/unglazed porcelain/vitrified tiles 13-Oct-15
3 850610 AA dry cell batteries 20-Oct-15
4 38170011 Linear alkyl benzene 07-Dec-15
5 7607 Aluminum foil 15-Dec-15
6 Aluminum radiators, aluminum radiator sub-assemblies and 01-Jan-16
aluminum radiator core
7 540244, 540269, Elastomeric filament yarn 27-Jan-16
540411
8 8503 Castings of wind operated electricity generators/windmills 01-Feb-16
Hot rolled flat products of alloy or non-alloy steel in coils of a
9 7208, 7211, 7225, 7226 width up to 2100mm and thickness up to 25mm and Hot rolled 11-Apr-16
flat products of alloy or non-alloy steel not in coils of a width
up to
4950mm and thickness up to 150mm
10 7209, 7211, 7225, 7226 Cold rolled/cold reduced flat steel products of iron or non-alloy 19-Apr-16
steel or other alloy steel, of all
widths and thickness, not clad, plated or coated
11 294110 Amoxicillin 27-Apr-16
12 401290, 401310 New and unused pneumatic radial tyres with or without 03-May-16
tubes and/or flap of rubber having
nominal rim code above 16" used in buses and lorries/trucks
13 282911 Sodium Chlorate 12-May-16
14 270740 Crude naphthalene 01-Jun-16
15 290290 Refined naphthalene 01-Jun-16
16 7213, 7227 Wire rod of alloy or non-alloy steel 02-Jun-16
17 560311, 560391 Non woven fabric 15-Jun-16
18 700319, 700510, Textured tempered glass whether coated or uncoated 23-Jun-16
700529, 700530,
700719
721011, 721012, 721030,
721041,
19 721049, 721050, 721061, Colour coated, pre-painted flat products of alloy and non- 29-Jun-16
721069, alloy steel
721070, 721090, 721210,
721220,
721230, 721240, 721250,
721260,
722550, 722592, 722599,
722611, 722699

56
20 294190 O-Acids 21-Sep-16
21 Ofloxacin 04-Oct-16
22 292910 Toluene Di-isocyanate (TDI) 05-Oct-16
23 382440 Sulphonated naphthalene formaldehyde 13-Oct-16
24 290721 Resorcinol 13-Oct-16
25 290721 Ceramic tableware and kitchenware 13-Oct-16
26 - Polyester Staple Fibre 3-Feb-17
27 - Fishing Net 4-Mar-17
28 - Isobutyl Benzene (IBB) 8-Apr-17
29 - Toys 8-Apr-17
30 - Methyl Ethyl ketone or MEK 9-Feb-17
31 - Monoisopropylamine‘ (MIPA) 16-Feb-17
32 - Rubber Chemicals, namely, MOR and MBTS 19-Feb-17
33 - Dimethylacetamide or DMAC 20-Mar-17
34 - Phosphorus Pentoxide or P2O5 20-Mar-17
35 - High Tenacity Polyester Yarn 20-Jun-17
36 - Acrylic Fibre 20-Apr-17
37 - Ceramic Rollers 20-Apr-17
38 - Veneered Engineered Wooden Flooring 21-Feb-17
39 Solar Cells whether or not assembled partially or fully in 21-Jul-17
- modules or panels or on glass or some
other suitable substrates
40 - Belting Fabric 23-Aug-17
41 - Pentaerythritol 24-Jan-17
42 - Glassware 30-Mar-17
43 - Playing Cards 31-Mar-17

57
U.S.-India Trade Relations
The United States and India view one another as important strategic partners to advance
common interests regionally and globally. Bilateral trade in goods and services is 2% of
U.S. world trade, and has grown in recent years (Figure 1). The trade relationship is
more consequential for India; in 2017, the United States was its second largest export
market (16% share) after the European Union (EU, 17%), and third largest import
supplier (6%) after China (17%) and the EU (10%). U.S.-India foreign direct investment
(FDI) is small, but growing. Defense sales also are significant in bilateral trade. Civilian
nuclear commerce, stalled for years over differences on liability protections, has
produced major potential U.S. supply contracts. The Trump Administration, which views
bilateral trade balances as an indicator of the health of a trading
relationship, takes issue with the U.S. trade deficit with India, and has criticized India for
a range of ―unfair‖ trading practices. Countering this view, India notes that the U.S.
bilateral trade deficit dropped in 2018. The causes and consequences of trade deficits are
debated.
Figure 1. U.S. Trade and Investment with India

Source: CRS analysis, Bureau of Economic Analysis (BEA) data.

58
India‟s Economy

India is one of the world‘s fastest-growing economies (more than 7% growth projected
for 2019), third largest economy on a purchasing power parity basis, and second largest
country by population, with an expanding middle class. Economic challenges include
poverty, difficulty absorbing millions of young new workers joining the labor force, and
infrastructure gaps. India imports about 80% of its oil needs. Rising energy prices and
other global factors have led to depreciation of the Indian rupee against the U.S. dollar,
leading to inflation concerns. Domestic economic measures include ―demonetization‖ in
2016, which removed 86% of currency by value from circulation in a mostly failed effort
to address tax evasion and corruption,
updated April 3, 2019
and the roll-out of new national value-added goods and service tax in 2017 to streamline
the tax regime.

Selected Issues

Tariffs. Bilateral tensions have increased over each side‘s tariff policies. These include
the U.S. 25% steel and 10% aluminum tariffs under the national-security based ―Section
232‖ law. India did not receive an initial exception like some trading partners, nor
negotiate an alternative quota arrangement. India supplied less than 3% of U.S. steel and
aluminum in 2017. India has delayed further imposing its planned retaliatory tariffs until
May 2, 2019, in hopes of a bilateral resolution; these tariffs of 10% to 50% would target
$241 million in U.S. goods such as nuts, apples, steel, and motorcycles. India also is
challenging the U.S. tariff increases in the World Trade Organization (WTO).
President Trump has called India ―a very high-tariff nation‖ and criticized tariff
imbalances, such as on motorcycles (which previously faced 100%, now 50%, Indian
tariffs, compared to U.S. tariffs of 0% to 2.4%). India has relatively high average tariff
rates, especially in agriculture. It can raise its applied rates to bound rates without
violating its commitments under the WTO, causing uncertainty for

U.S. exporters. India‘s tariff hikes include raising tariffs on cell phones from 0%
originally to 15% to 20%, prompting the United States and others to question India‘s
compliance with the WTO Information Technology Agreement (ITA). India also raised
duties on certain ―non-essential‖ consumer and other goods to stem its current account
deficit. The EU initiated WTO dispute settlement consultations, claiming that certain
tariff hikes by India exceed bound rates. U.S. concerns over Indian market access include
price controls on medical devices, and investment and other non-tariff barriers.
U.S. Generalized System of Preferences (GSP). On March 4, 2019, President Trump
notified Congress of his intent to terminate India‘s GSP eligibility, which gives duty-free
tariff treatment to certain U.S. imports from eligible developing countries to support their
economic development. The notice followed a U.S. review of India‘s market access

59
practices, as well as petitions by the U.S. medical device and dairy industry. By law, the
President must notify Congress at least 60 days prior to a GSP change taking effect. India
is GSP‘s top beneficiary. In 2018, GSP represented 11% ($6.3 billion) of U.S.
merchandise imports from India, such as chemicals, auto parts, and tableware.
GSP removal would reinstate U.S. tariffs, which range from 1% to 7% on the top 15
GSP bilateral imports. India sought continuation of its eligibility, but since the
President‘s announcement, has downplayed the impact of the proposed change. India
plans to treat retaliatory tariffs separately.

Services. The United States and India are competitive in certain services industries.
Barriers to U.S. firms‘ market access include India‘s limits on foreign ownership and
local
presence requirements. A key issue for India is U.S. temporary visa policies, which
affect Indian nationals working in the United States. India is challenging U.S. fees for
worker visas in the WTO, and monitoring potential U.S. action to revise the H-1B
(specialized worker) visa program. India also continues to seek a ―totalization
agreement‖ to coordinate social security protection for workers who split their careers
between the two countries.
Agriculture. Sanitary and phytosanitary (SPS) barriers in India limit U.S. agricultural
exports. The United States questions the scientific and risk-based justifications of such
barriers. An ongoing issue is India‘s purported compliance with a WTO decision against
its ban on U.S. poultry imports and live swine due to avian influenza concerns; the WTO
held that India‘s measures violated WTO SPS rules. Each side also sees the other‘s
agricultural support programs as market-distorting; India‘s view of its programs from a
broad food security lens complicates matters.
Intellectual Property (IP). The two sides differ on how to balance IP protection to
incentivize innovation and support other policy goals, such as access to medicines.
India‘s IP regime remains a top U.S. concern, and India remains on the ―Special 301‖
Priority Watch List for 2018, based on such concerns as its treatment of patents,
infringement rates, and protection of trade secrets.
“Forced” Localization. The United States continues to press India on its ―forced‖
localization practices. Initiatives to grow India‘s manufacturing base and support jobs
include requirements for in-country data storage, domestic content (such as laws
protecting India‘s solar sector), and domestic testing in some sectors. Adding to U.S.
concerns
are India‘s new data localization requirements for electronic payment service suppliers
(e.g., MasterCard, Visa)

Investment. India aims to attract foreign investment and has made FDI reforms, such as
raising foreign equity caps for insurance and defense, and other strides to improve its
business environment (World Bank, Doing Business Indicators). U.S. concerns about
investment barriers remain nevertheless, heightened by new Indian restrictions on how e-
commerce platforms such as Amazon and Walmart- owned Flipkart conduct business.
From the U.S. view,
India‘s weak regulatory transparency and other issues, such as India‘s IPR and
localization policies (see above), add to concerns about FDI barriers. Two-way U.S.-

60
Indian FDI is linked to U.S. jobs and exports in a range of sectors, yet
U.S. FDI in India prompts some offshoring concerns.

Defense Trade. The two nations have signed defense contracts worth more than $15
billion since 2008, up from
$500 million in all previous years combined. Major anticipated sales include 24 MH-60
Seahawk multi-role naval helicopters and a potential commercial sale of AH-64 Apache
attack helicopters. India is eager for more technology-sharing and co-production; some
reports indicate U.S. and Indian interest in producing F-16 combat aircraft there. The
United States, meanwhile, urges more
reforms in India‘s defense offsets policy and higher FDI

Current Negotiations and Agreements

Bilateral Engagement. The United States and India have held ―intensive‖ negotiations to
address the U.S. steel and aluminum tariffs, India‘s GSP status, and other trade issues. Dialogues
include the government-to-government Strategic and Commercial Dialogue (S&CD) and Trade
Policy Forum, and the private sector-based CEO Forum.

―…after intensive [bilateral] engagement…, I have determined that India has not assured the
United States that it will provide equitable and reasonable access to the markets of India…‖—
President Trump’s GSP notification letter to Congress, March 4, 2019

“…India was able to offer a very meaningful way forward on almost all the US requests. In a few instances, specific
US requests were not found reasonable and doable… in light of public welfare concerns reflective of India’s
developing country status…”—Indian Ministry of Commerce statement, March 5, 2019

The United States and India do not have a bilateral free trade agreement (FTA). In
October 2018, President Trump stated that India expressed interest in negotiating an
FTA. Some India watchers advocate for an FTA, while others question India‘s
willingness to open its markets. Past negotiations on a bilateral investment treaty are
stalled.
Regional Integration. India is party to negotiations on the Regional Comprehensive
Economic Partnership (RCEP) with China and 15 other Asia-Pacific nations. Seven
RCEP members (but not India) are among the 11 remaining parties of the proposed
Trans-Pacific Partnership (TPP); they concluded a new trade agreement after President
Trump ceased U.S. participation in the TPP. Among other issues, India has long sought
to join the Asia-Pacific Economic Cooperation (APEC) group of the United States,
China, and 19 other economies. The United States stated previously that it welcomes
India in APEC. Some question if India is willing to make sufficient economic reforms to
join APEC.
WTO. Differing U.S. and Indian views have constrained multilateral negotiations to
liberalize trade in the WTO. The Trade Facilitation Agreement (TFA) to remove customs
barriers, the first multilateral agreement concluded in over 20 years, entered into force in

61
2017 after India reversed its prior blocking of the TFA. This change followed a U.S.-
Indian understanding not to challenge specific food security programs until the WTO
reaches a solution on public stockholding for food security, a top Indian priority,The
WTO‘s future direction is unclear amid institutional issues.

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The WTO

The World Trade Organization (WTO) is the only global international organization dealing
with the rules of trade between nations. At its heart are the WTO agreements, negotiated and
signed by the bulk of the world‘s trading nations and ratified in their parliaments. The goal is
to ensure that trade flows as smoothly, predictably and freely as possible.

Location: Geneva, Switzerland

Established: 1 January 1995
Created by: Uruguay Round negotiations (1986-94)
Membership: 164 members representing 98 per cent of world trade
Budget: 197 million Swiss francs for 2018
Secretariat staff: 625
Head: Roberto Azevêdo (Director-General)

Functions:

 Administering WTO trade agreements

 Forum for trade negotiations
 Handling trade disputes
 Monitoring national trade policies
 Technical assistance and training for developing countries
 Cooperation with other international organizations

Who we are

There are a number of ways of looking at the World Trade Organization. It is an organization
for trade opening. It is a forum for governments to negotiate trade agreements. It is a place for
them to settle trade disputes. It operates a system of trade rules. Essentially, the WTO is a
place where member governments try to sort out the trade problems they face with each other.

The WTO was born out of negotiations, and everything the WTO does is the result of
negotiations. The bulk of the WTO‘s current work comes from the 1986–94 negotiations
called the Uruguay Round and earlier negotiations under the General Agreement on Tariffs
and Trade (GATT). The WTO is currently the host to new negotiations, under the ‗Doha
Development Agenda‘ launched in 2001.

Where countries have faced trade barriers and wanted them lowered, the negotiations have
helped to open markets for trade. But the WTO is not just about opening markets, and in some
circumstances its rules support maintaining trade barriers — for example, to protect consumers
or prevent the spread of disease.

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At its heart are the WTO agreements, negotiated and signed by the bulk of the world‘s trading
nations. These documents provide the legal ground rules for international commerce. They are
essentially contracts, binding governments to keep their trade policies within agreed limits.
Although negotiated and signed by governments, the goal is to help producers of goods and
services, exporters, and importers conduct their business, while allowing governments to meet
social and environmental objectives.

The system‘s overriding purpose is to help trade flow as freely as possible — so long as there
are no undesirable side effects — because this is important for economic development and
well-being. That partly means removing obstacles. It also means ensuring that individuals,
companies and governments know what the trade rules are around the world, and giving them
the confidence that there will be no sudden changes of policy. In other words, the rules have to
be ‗transparent‘ and predictable.

Trade relations often involve conflicting interests. Agreements, including those painstakingly
negotiated in the WTO system, often need interpreting. The most harmonious way to settle
these differences is through some neutral procedure based on an agreed legal foundation. That
is the purpose behind the dispute settlement process written into the WTO agreements.

What we do

The WTO is run by its member governments. All major decisions are made by the
membership as a whole, either by ministers (who usually meet at least once every two years)
or by their ambassadors or delegates (who meet regularly in Geneva).

While the WTO is driven by its member states, it could not function without its Secretariat to
coordinate the activities. The Secretariat employs over 600 staff, and its experts — lawyers,
economists, statisticians and communications experts — assist WTO members on a daily basis
to ensure, among other things, that negotiations progress smoothly, and that the rules of
international trade are correctly applied and enforced.

Trade negotiations

The WTO agreements cover goods, services and intellectual property. They spell out the
principles of liberalization, and the permitted exceptions. They include individual countries‘
commitments to lower customs tariffs and other trade barriers, and to open and keep open
services markets. They set procedures for settling disputes. These agreements are not static;
they are renegotiated from time to time and new agreements can be added to the package.
Many are now being negotiated under the Doha Development Agenda, launched by WTO
trade ministers in Doha, Qatar, in November 2001.

Implementation and monitoring

WTO agreements require governments to make their trade policies transparent by notifying
the WTO about laws in force and measures adopted. Various WTO councils and committees

64
seek to ensure that these requirements are being followed and that WTO agreements are being
properly implemented. All WTO members must undergo periodic scrutiny of their trade
policies and practices, each review containing reports by the country concerned and the WTO
Secretariat.

Dispute settlement

The WTO‘s procedure for resolving trade quarrels under the Dispute Settlement
Understanding is vital for enforcing the rules and therefore for ensuring that trade flows
smoothly. Countries bring disputes to the WTO if they think their rights under the agreements
are being infringed. Judgements by specially appointed independent experts are based on
interpretations of the agreements and individual countries‘ commitments.

Building trade capacity

WTO agreements contain special provision for developing countries, including longer time
periods to implement agreements and commitments, measures to increase their trading
opportunities, and support to help them build their trade capacity, to handle disputes and to
implement technical standards. The WTO organizes hundreds of technical cooperation
missions to developing countries annually. It also holds numerous courses each year in
Geneva for government officials. Aid for Trade aims to help developing countries develop the
skills and infrastructure needed to expand their trade.

Outreach

The WTO maintains regular dialogue with non-governmental organizations, parliamentarians,

other international organizations, the media and the general public on various aspects of the
WTO and the ongoing Doha negotiations, with the aim of enhancing cooperation and
increasing awareness of WTO activities.

What we stand for

The WTO agreements are lengthy and complex because they are legal texts covering a wide
range of activities. But a number of simple, fundamental principles run throughout all of these
documents. These principles are the foundation of the multilateral trading system.

Non-discrimination

A country should not discriminate between its trading partners and it should not discriminate
between its own and foreign products, services or nationals.

Lowering trade barriers is one of the most obvious ways of encouraging trade; these barriers
include customs duties (or tariffs) and measures such as import bans or quotas that restrict
quantities selectively.

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Predictable and transparent

Foreign companies, investors and governments should be confident that trade barriers should
not be raised arbitrarily. With stability and predictability, investment is encouraged, jobs are
created and consumers can fully enjoy the benefits of competition — choice and lower prices.

More competitive

Discouraging ‗unfair‘ practices, such as export subsidies and dumping products at below cost
to gain market share; the issues are complex, and the rules try to establish what is fair or
unfair, and how governments can respond, in particular by charging additional import duties
calculated to compensate for damage caused by unfair trade.

More beneficial for less developed countries

Giving them more time to adjust, greater flexibility and special privileges; over three-quarters
of WTO members are developing countries and countries in transition to market economies.
The WTO agreements give them transition periods to adjust to the more unfamiliar and,
perhaps, difficult WTO provisions.

Protect the environment

The WTO‘s agreements permit members to take measures to protect not only the environment
but also public health, animal health and plant health. However, these measures must be
applied in the same way to both national and foreign businesses. In other words, members
must not use environmental protection measures as a means of disguising protectionist
policies.

Overview

The World Trade Organization — the WTO — is the international organization whose
primary purpose is to open trade for the benefit of all.

The WTO provides a forum for negotiating agreements aimed at reducing obstacles to
international trade and ensuring a level playing field for all, thus contributing to economic
growth and development. The WTO also provides a legal and institutional framework for the
implementation and monitoring of these agreements, as well as for settling disputes arising
from their interpretation and application. The current body of trade agreements comprising the
WTO consists of 16 different multilateral agreements (to which all WTO members are parties)
and two different plurilateral agreements (to which only some WTO members are parties).

Over the past 60 years, the WTO, which was established in 1995, and its predecessor
organization the GATT have helped to create a strong and prosperous international trading
system, thereby contributing to unprecedented global economic growth. The WTO currently
has 164 members, of which 117 are developing countries or separate customs territories. WTO

66
activities are supported by a Secretariat of some 700 staff, led by the WTO Director-General.
The Secretariat is located in Geneva, Switzerland, and has an annual budget of approximately
CHF 200 million ($180 million, €130 million). The three official languages of the WTO are
English, French and Spanish.

Decisions in the WTO are generally taken by consensus of the entire membership. The highest
institutional body is the Ministerial Conference, which meets roughly every two years. A
General Council conducts the organization's business in the intervals between Ministerial
Conferences. Both of these bodies comprise all members. Specialised subsidiary bodies
(Councils, Committees, Sub-committees), also comprising all members, administer and
monitor the implementation by members of the various WTO agreements.

More specifically, the WTO's main activities are:

— negotiating the reduction or elimination of obstacles to trade (import tariffs, other barriers
to trade) and agreeing on rules governing the conduct of international trade (e.g. antidumping,
subsidies, product standards, etc.)
— administering and monitoring the application of the WTO's agreed rules for trade in goods,
trade in services, and trade-related intellectual property rights
— monitoring and reviewing the trade policies of our members, as well as ensuring
transparency of regional and bilateral trade agreements
— settling disputes among our members regarding the interpretation and application of the
agreements
— building capacity of developing country government officials in international trade matters
— assisting the process of accession of some 30 countries who are not yet members of the
organization
— conducting economic research and collecting and disseminating trade data in support of the
WTO's other main activities
— explaining to and educating the public about the WTO, its mission and its activities.

The WTO's founding and guiding principles remain the pursuit of open borders, the guarantee
of most-favoured-nation principle and non-discriminatory treatment by and among members,
and a commitment to transparency in the conduct of its activities. The opening of national
markets to international trade, with justifiable exceptions or with adequate flexibilities, will
encourage and contribute to sustainable development, raise people's welfare, reduce poverty,
and foster peace and stability. At the same time, such market opening must be accompanied by
sound domestic and international policies that contribute to economic growth and development
according to each member's needs and aspirations.

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Decision Making

Membership, alliances and bureaucracy

All members have joined the system as a result of negotiation and therefore membership
means a balance of rights and obligations. They enjoy the privileges that other member-
countries give to them and the security that the trading rules provide. In return, they had to
make commitments to open their markets and to abide by the rules — those commitments
were the result of the membership (or ―accession‖) negotiations. Countries negotiating
membership are WTO ―observers‖.

Members and Observers

164 members since 29 July 2016 , with dates of WTO membership.

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China‟s Role in the WTO

On the 10th anniversary of China‘s World Trade Organization entry, WTO Director-General
Pascal Lamy highlights the significance of the country‘s membership.

Established in 1995, the World Trade Organization (WTO) is the only global international
organization that manages trade rules between countries. By providing a forum for
governments to negotiate trade agreements and settle trade disputes, the organization aims to
help governments solve their trade problems. The WTO is a rules-based, membership-driven
organization with 153 member countries. China joined the WTO on December 11, 2001.

To mark the tenth anniversary of China’s WTO entry, WTO Director-General Pascal Lamy
recently discussed China’s role in the WTO with CBR Editor Paula M. Miller. The fifth
director-general of the WTO, Lamy began his first four-year appointment in September 2005
and his second four-year term in September 2009. He was commissioner for trade at the
European Commission in Brussels, Belgium, from 1999 to 2004.

The first 10 years of China’s WTO membership coincided with remarkable economic and
trade growth in the country. How much of the boom can be directly tied to China’s WTO
membership?

Lamy: This is a very difficult question to answer. What we know is that from 2001 to 2010,
China‘s exports rose nearly 6 times to roughly $1.57 trillion, while imports rose by nearly the
same order of magnitude to $1.39 trillion.

Surely, the market access that China received as a result of its accession to the WTO
contributed to its trade performance. Lower tariffs on imports would have stimulated
purchases of foreign goods as well. But other factors have helped. The reforms that China
undertook as part of its accession process have improved economic efficiency and boosted
growth. Membership in the WTO also provided foreign investors with assurances that China
was part of a system of international rules and disciplines. In addition, foreign investors found
a huge domestic market in which to offer their goods and services. Inflows of foreign direct
investment rose exponentially from practically zero in the early 1990s to $108 billion in 2009.
This is important because more than half of China‘s exports come from subsidiaries or
branches of foreign-owned companies in China. Sales of these affiliates increased from $10
billion in 1990 to $545 billion in 2009. So, defining precisely the impact of China‘s WTO
accession is difficult, but undoubtedly the contribution to China‘s growth has been significant.

What has China’s WTO membership meant for the global trading system?

Lamy: Just as the WTO has had a significant impact on the development of China‘s economy,
China‘s accession has made the organization stronger. Surely, the accession contributed to
China becoming the world‘s largest exporter of merchandise goods and the second-largest
importer of such goods. This latter point is important because the crisis that hit the global
economy in 2008-09 led to a severe contraction of the economies of Western Europe and

69
North America. With those markets consuming less, exporters needed to look to other
countries for export growth. This was true of US, Japanese, and European exporters, but it was
also true of developing country exporters. China picked up a great deal of slack, and this was
an important factor in keeping the global recession from widening and deepening.

China‘s WTO entry has also facilitated greater South-South trade [trade between developing
countries]. Today South-South trade comprises more than 20 percent of global trade, and this
figure is rising rapidly. In 2010, for example, total trade by developing countries expanded by
around 17 percent (compared to 13 percent for developed countries). In 2011, WTO
economists forecast an overall trade expansion of 6.5 percent, with general trade by
developing countries to all trading partners expanding by 9.5 percent—far higher than the 4.5
percent predicted growth in the developed world. So in terms of trade expansion and shifting
trade flows, China‘s accession has had a dramatic impact. Other developing countries—such
as Brazil, India, South Africa, and Indonesia—are also rising rapidly and exuding greater
influence in the WTO arena. This rise of developing countries—with China at its center—has
changed the balance of power within the WTO.

Having another trade power in the WTO has also led to some frictions. China, for instance, is
the third most active participant in the WTO‘s dispute settlement process, after the United
States and the European Union.

What are some of the most significant trade-related changes you have seen China make
during its WTO membership? What is the most significant WTO commitment that China
has implemented?

Lamy: There have been a great many such changes. Among the significant changes are the
expansion of trade from foreign-owned subsidiaries and branches, China‘s role in the center of
the increasingly large global supply and production chain, and the country‘s move up the value
chain in terms of production. China‘s labor costs are rising and its minimum wage is
scheduled to double by 2015. Even now, China‘s labor costs are higher than most other
developing countries in Asia—only Malaysia‘s and Thailand‘s are higher. This means that
Chinese companies are starting to look to other locations to produce their goods. Chinese
textile investment in Africa and Bangladesh is growing rapidly, for instance.

In terms of commitments that China has undertaken, I would not want to rate them in order of
significance, but agreeing to implement a tariff schedule in which the average tariff on
manufactured goods is 9 percent [down from 24 percent before China‘s WTO accession] and
the average tariffs on agriculture imports is 15 percent [down from 24.6 percent before
China‘s WTO accession] was highly significant. These figures are much lower than those of
many other developing countries and the farm tariff rate is even below that of many developed
countries.

70
What are the most significant WTO commitments that China has failed to implement or to
implement fully?

Lamy: As a neutral director-general it is not for me to assess this. China has done really well
in terms of implementing its long list of commitments. But no country is above criticism. Our
trade policy review [TPR] mechanism provides the opportunity for WTO members to assess
and criticize the trade policies of those under review. China, as one of the four largest traders,
has a TPR review every two years. What I can say is that members have complained about
certain services sectors not being open sufficiently and that intellectual property rights [IPR]
protection needs to be improved.

How does China compare to other WTO members as a user of trade remedy measures, such
as antidumping and countervailing duties?

Lamy: China refrained from using trade remedies in the first few years of its WTO accession.
In recent years, however, we have seen the frequency increase. China is among those countries
that initiated the most antidumping investigations. In 2009, China ranked fifth among WTO
members in the initiation of antidumping actions. In 2010, China ranked sixth, but the number
of initiations in 2010 (8 cases) was much lower than in 2009 (17 cases). Of course, there is a
distinction between cases initiated and final measures applied. It is clear that China has
become a frequent user of trade remedy instruments.

It is also clear that in 2009 and 2010 China was by far the biggest target of antidumping
investigations (77 investigations in 2009 and 43 in 2010) and countervailing measures (13
measures in 2009 and 6 in 2010) applied to allegedly subsidized Chinese exports.

China offered its second bid to join the WTO Government Procurement Agreement (GPA)
last year. Though the second bid was considered better than its initial 2007 offer, some
issues remain. When do you think China will join the GPA, and what are the greatest
barriers it faces in seeking to do so?

Lamy: I never make predictions on timing for matters such as this, but I guess the sooner the
better. China has made initial offers and is now preparing a revised one. Becoming part of the
GPA is part of the commitments taken by China upon accession. And it is a win-win scenario:
Good for China because it will get value for its money in public purchases, and good for the
rest of the WTO membership because it will give countries access to China‘s huge public
procurement market. In terms of barriers, perhaps one complicating element is China‘s vast
size and complex web of national, provincial, and local procurement practices and policies.

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China’s formal WTO accession also made it a signatory to other agreements, including the
WTO agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs). Despite
China’s accession to that agreement, however, IPR protection remains a highly contentious
issue between China and other countries. How would you evaluate China’s progress on IPR
since joining the WTO, and what role do you envision TRIPs and the WTO playing in
future IPR progress?

Lamy: As we know, intellectual property enforcement poses significant challenges to many

countries. China is a huge country, with many decisions in the hands of provincial and
municipal authorities. It is therefore not difficult to imagine the challenges of IPR
enforcement. My own sense is that China has improved its IPR protection and enforcement
recently, but I also believe that more can be done. I believe this is a sentiment shared by the
Chinese government itself—an important reason for this is the fact that protecting IPR is also
in China‘s own interest. China is rapidly developing patents, trademarks, and copyrights of its
own. As a means of encouraging innovation and invention, incentives are required. This
means the inventor needs the assurance that he or she will retain ownership rights and that if it
is a success, the inventor will benefit.

As to your last question, I see the TRIPs agreement as a big step forward in the overall IPR
progress. And I believe WTO members will continue to review and improve the TRIPs
agreement‘s provisions to keep up with the rapid development in technology.

Recently, many observers in the United States have focused on the role of state-owned
enterprises and “state-supported enterprises” in China’s economy. Chinese companies often
benefit from preferences such as favorable financing regardless of their ownership
structure, however. What role does the WTO have in addressing these types of benefits that
affect whether there is a level playing field in China?

Lamy: The WTO has specific agreements that spell out the manner in which subsidies can be
used. Generally speaking, the rule is that subsidies cannot undermine the position of foreign
competitors in either China or third-country markets. As to the specifics of the Chinese
situation, this has been a subject of dispute settlement activity so as a matter of prudence I will
refrain from comment.

What do you expect to see from the next 10 years of China’s WTO membership? What role
do you envision China playing in the continued evolution of the WTO and the world trading
system the WTO helps to arbitrate?

Lamy: China will continue to grow and its influence will expand. This much is true. China is
unique, and in some ways it resists conventional definition. It is a developing country with
world-class cities on its coast that offer everything you could find in a developed country.
China is the world‘s largest exporter and second-largest economy, but average income is still
far below that of advanced economies. Wages are rising and people are prospering, but 36

72
million households remain below the poverty line. Due to this complexity, it is of vital
importance for China to think that its role in the multilateral trading system, with its newly
gained strength, also comes with new responsibilities. As a key player in the WTO, other
countries have high expectations for China, and I hope China will continue to play a
constructive role in the evolution of the WTO. It is in China‘s fundamental interest to do so.

What major developments do you see in the WTO’s future, and when do you expect the
Doha round (the current trade negotiation round of the WTO) to end?

Lamy: I believe that the WTO‘s work in surveillance and monitoring and its dispute
settlement activity will remain vibrant and active in the coming years. The WTO‘s
coordinating role in the Aid for Trade program will remain important as well. As far as the
negotiating function of the WTO, and in particular the Doha Round, the picture looks less
clear. We are witnessing an impasse in the negotiating role of the WTO. This impasse is
evident between developed and emerging economies. Developed countries believe that
emerging economies must make further contributions. Emerging economies believe further
concessions should not mean aligning themselves with developed countries. It is important
that we examine together the causes that have led to this situation and the role we think the
WTO should play in the twenty-first century.

What role do you think sub-global trade agreements such as the Asia-Pacific Economic
Cooperation (APEC) play in shaping the WTO agenda?

Lamy: APEC has played an important role in support of the WTO and the Doha Development
Agenda. In the case of APEC, it‘s clear that the roles of this group and the WTO are
complementary. One good example of this is trade facilitation where APEC has done some
very good work in streamlining and harmonizing customs procedures. This has led to faster
clearance times, more trade, and faster growth.

There are some 300 regional, plurilateral, and bilateral preferential trade agreements in place
at the moment that differ in nature and content. As we have said in our recently released World
Trade Report, governments enter into preferential trade agreements (PTA) such as this for a
variety of reasons, but what is increasingly evident is that seeking preferential tariff treatment
alone cannot explain the PTAs. Nearly 85 percent of world trade takes place at the WTO tariff
rate rather than a lower PTA rate… It is clear, however, that such forums are being used to
develop regional rules and regulations, and that this web, or noodle bowl, of regulations can
confuse many entrepreneurs who find the cost and hassle of trading under so many different
sets of rules simply not worth it. This explains why an Asian Development Bank survey found
that only a quarter of businesses surveyed actually used the trade preferences available to
them.Having said all this though, it is evident that as long as the Doha Round continues to
struggle, governments will seek to open markets through other means. Eventually we will have
to move from co-existence with PTAs to greater coherence. Meanwhile, it is crucial to gain a
better understanding of what these agreements contain by making full use of the WTO
transparency mechanism

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 USA and the World Trade Organization

Trade Benefits America‘s Workers & Families

The United States was a leading force in establishing the World Trade Organization (WTO) in
1995. The WTO is an international institution in which we negotiate agreements to reduce
barriers to trade with 134 other members, allowing American businesses, farmers and working
people to find new opportunities, create new jobs, and raise family living standards. The WTO
is also a forum for countries to enforce trade agreements and continue negotiations toward
expanding world trade opportunities.

Under WTO rules, foreign nations assure us greater access to their markets, and are
constrained from giving their workers and firms unfair advantages through subsidies and
protectionist domestic policies. At the same time, WTO rules recognize and respect
governments‘ right to maintain high standards for the environment, labor, health, and safety.
The trade gains that the United States has won through the WTO Agreements and other trade
policies have been a major contributing factor to our thriving economy. Studies estimate that
the effect of full implementation of the WTO Agreements will be to boost U.S. GDP by $125-
250 billion per year (in 1998 dollars). We have a great stake in further expanding
opportunities for U.S. companies and workers in manufacturing, agriculture, and services
industries through the WTO.

Did You Know

Promoting U.S. exports and jobs

 WTO rules lower trade barriers abroad and help us export more of our goods and services
to other countries.
 On average, every billion dollars of goods and services exports results in thousands of jobs
here at home.
 Between 1994 and 1998, 1.3 million new jobs supported by exports of goods and services
have been created in the United States. Over the same period, total U.S. employment
increased by 11.7 million jobs, and the unemployment rate declined from 6.1% to 4.5%.
 Jobs supported by goods exports pay 13-16% above the average wage.
 Today, industrial production in the United States is over 34% higher than it was in 1992.
This compares to a 3.5% increase in Germany and a .5% decline in Japan. Between 1992
and 1998, manufacturing productivity was up nearly 4% per year, and manufacturing jobs
increased by over half a million.
 Benefitting from new opportunities created by WTO rules, over one-third of U.S.
agricultural production was exported in 1998, with a value of $52 billion.

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 The services sector--including retailing, transport, construction, insurance, finance,
accounting, advertising, computer services, tourism, engineering, and environmental
services--accounts for over 60 percent of the U.S. economy, and 80 percent of our jobs.
 Helped by WTO services rules, the United States leads the world in trade in services with
over $264 billion in exports annually. It is the fastest growing sector in our economy and
provides the greatest number of new jobs.

Raising living standards for all Americans

 The creation of higher-paying jobs supported by trade raises living standards for tens of
thousands of American households.
 Trade barriers, by making goods and services more expensive, cost you money at the store.
In 1990, prior to the WTO, private sector studies estimated that trade protection cost U.S.
consumers approximately $70 billion per year. Our commitment to open markets has led to
more affordable prices and a greater variety of the things that we purchase everyday, in the
grocery shopping cart and for household goods, such as clothes, autos, toys, and consumer
electronics. The standard of living improves for all Americans, but particularly for low-
income families, since lower prices mean that your paycheck goes further in the
marketplace.
 The WTO Agreements result in lower prices for business and consumer products. By the
time that the Agreements are fully implemented in 2005, the annual effect will be
equivalent to an increase of $1500-$3000 in purchasing power for the average American
family of four.

Base of Trade War:

The Quad, the Quint, the Six and „not‟

Some of the most difficult negotiations have needed an initial breakthrough in talks among
four to six ―major‖ members.

Once upon a time, there was the ―Quadrilaterals‖ or the ―Quad‖:

 Canada
 European Union
 Japan
 United States

Since the turn of the century and the launch of the Doha Round, developing countries‘ voices
have increased considerably, bringing in Brazil and India — and Australia as a representative
of the Cairns Group. Japan remains in the picture not only in its own right, but also as a
member of the G-10 group in agriculture. Since 2005, four, five or six of the following have
got together to try to break deadlocks, particularly in agriculture.

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 Australia
 Brazil
 European Union
 India
 Japan
 United States

They have been called ―the new Quad‖, the ―Four/Five Interested Parties‖ (FIPS), the ―Quint‖
and the ―G-6.‖ The Doha Round was suspended in July 2006 because the six could not agree.
Afterwards an alternative group of six, sometimes called the ―non-G-6‖ or the ―Oslo Group‖
tried their hand at compromise, sometimes listed in reverse order to emphasise their
―alternative‖ nature — Norway, New Zealand, Kenya, Indonesia, Chile, Canada

European Union

The EU is a WTO member in its own right as are each of its 28 member states — making 29
WTO members.

While the member states coordinate their position in Brussels and Geneva, the European
Commission alone speaks for the EU at almost all WTO meetings. For this reason, in most
issues WTO materials refer to the EU or the more legally-correct EC.

However, sometimes references are made to the specific member states, particularly where
their laws differ. This is the case in some disputes when an EU member‘s law or measure is
cited, or in notifications of EU member countries‘ laws, such as in intellectual property
(TRIPS). Sometimes individuals‘ nationalities are identified, such as for WTO committee
chairpersons.

The Cairns Group

From four continents, members ranging from OECD countries to the least developed

Argentina
Australia
Bolivia
Brazil
Canada
Chile
Colombia
Costa Rica
Guatemala
Indonesia
Malaysia
New Zealand

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Pakistan
Paraguay
Peru
Philippines
South Africa
Thailand
Uruguay

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Conclusion:
Hong Kong-based billionaire Victor Fung has said that India has a window of opportunity in
the midst of the US-China trade war and that the trade imbalance between China and India
will be corrected as Chinese consumption increases.

Fung told ET that as the US-China trade war refuses to abate despite talks of a truce, China is
facing higher import duties on exports to the US and would now look to markets such as India
where the products can be finished and exported from.

―The trade war has made the finishing in China very difficult because of high duties. There is
a diversification of final stages of finishing. Made-in-China products will have trouble going
in some markets like the US,‖ said Fung, honorary chairman of Li & Fung group of
companies.

―While there are places like Vietnam and Bangladesh that are becoming active, they have
limited capacity while India has infinite capacity. We are making that transition ourselves and
moving in this direction by necessity,‖ he said. The group, which has been in export trading
and global supply chain management since 1906, wants to push its supply of global brands to
Indian retailers through business-to-business ecommerce platform ShopX, which it invested in
this year.
Alongside, Chinese markets are also opening to imports and Li & Fung itself is looking at
India as a supply base, said Fung. India and China have had a growing trade imbalance, with
the deficit widening to $63 billion in 2017-18.

―I think that trade imbalance is well on its way to being corrected. China is opening up its
markets. The Chinese economy is driven by consumption and there is a huge opportunity in
China for Indian goods.‖

WTO Report on China Tariff

More particularly, we have found that China's administration of its wheat, rice, and corn
TRQs inhibits the filling of these TRQs.444 We have therefore resolved the issue of whether
China's TRQ administration restricts imports at the in-quota rates under the TRQs.4457.238.
Finally, we recall that panels are not required to examine all legal claims made by the
complaining party, and need only examine those claims that must be addressed to resolve the
matter at issue in the dispute.4467.239. In the light of the foregoing, we consider that it is not

necessary for us to make a finding under Article XI:1 of the GATT 1994 to secure a positive
solution to this dispute. We are also of the view that, should our Report be appealed and the

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Appellate Body consider it necessary to complete the analysis with regard to the United States'
claim under Article XI:1, the factual findings we made in sections 7.1.4.4 and 7.1.4.6 above,
would assist the Appellate Body.7.240. We therefore do not make a finding on the United
States' claim under Article XI:1 of the GATT 1994.8

CONCLUSIONS AND RECOMMENDATIONS

With respect to the United States' claims under Paragraph 116 of China's Working Party
Report, as incorporated into the WTO Agreement pursuant to Paragraph 1.2 of China's
Accession Protocol:

i.The basic eligibility criteria used in China's administration of its TRQs for wheat, rice, and
corn are inconsistent with the obligations to administer TRQs on a transparent, predictable,
and fair basis, and to administer TRQs using clearly specified requirements;

ii.The allocation principles used in China's administration of its wheat, rice, and corn TRQs
are inconsistent with the obligations to administer TRQs on a transparent, predictable, and fair
basis, and to administer TRQs using clearly specified administrative procedures;

iii.The reallocation procedures used in China's administration of its wheat, rice, and corn
TRQs are inconsistent with the obligation to administer TRQs using clearly specified
administrative procedures;

iv.The public comment process used in China's administration of its wheat, rice, and corn
TRQs is inconsistent with the obligations to administer TRQs on a transparent, predictable,
and fair basis, and to administer TRQs using clearly specified administrative procedures;
v.The administration of STE and non-STE portions of China's wheat, rice, and corn TRQs is
inconsistent with the obligations to administer TRQs on a transparent, predictable, and fair
basis, to administer TRQs using clearly specified administrative procedures, and to administer
TRQs in a manner that would not inhibit the filling of each TRQ;

vi.The United States has not demonstrated that the extent of the public notice provided in
connection with the allocation, return, and reallocation of China's wheat, rice, and corn TRQs
is inconsistent with the obligations to administer TRQs on a transparent and 444 See section
7.1.5 above. 445 We note that, in addressing the claim under Paragraph 116 regarding the
obligation not to inhibit the filling of each TRQ, we rejected some of the United States'
arguments, for instance the one concerning the usage requirement for rice. We do not consider
that addressing these arguments again under Article XI:1 would have led to a different
outcome and contributed to the resolution of this dispute.446 Appellate Body Report, US –
Wool Shirts and Blouses, pp. 18-20, DSR 1997:I, p. 323, at pp. 3 39-341 (referring to Articles
3.2, 3.4, 3.7, 3.9 and 11 of the DSU).

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WT/DS517/R- 77 - predictable basis, and to administer TRQs in a manner that would not
inhibit the filling of each TRQ;

vii.The usage requirements for imported wheat and corn used in China's administration of its
TRQ for wheat and corn are inconsistent with the obligations to administer TRQs on a
predictable basis, to administer TRQs using clearly specified administrative procedures, and to
administer TRQs in a manner that would not inhibit the filling of each TRQ;

viii.The United States has not demonstrated that the usage requirement for imported rice used
in China's administration of its TRQ for rice is inconsistent with the obligation to administer
TRQs in a manner that would not inhibit the filling of each TRQ;And, therefore, China's
administration of its wheat, rice, and corn TRQs is, as a whole, inconsistent with the
obligations to administer TRQs on a transparent, predictable, and fair basis, to administer
TRQs using clearly specified requirements and administrative procedures, and to administer
TRQs in a manner that would not inhibit the filling of each TRQ;

b.With respect to the United States' claim under Article XIII:3(b) of the GATT 1994, the
United States has not demonstrated that China's administration of its wheat, rice, and corn
TRQs is inconsistent with this provision;c.With respect to the United States' claim under
Articles X:3(a) and XI:1 of the GATT 1994, we consider that it is not necessary for us to make
findings under these provisions to secure a positive solution to this dispute. 8.2. Under Article
3.8 of the DSU, in cases where there is an infringement of the obligations assumed under a
covered agreement, the action is considered prima facie to constitute a case of nullification or
impairment. We conclude that, to the extent that the measure at issue is inconsistent with
China's obligations under Paragraph 116 of its Working Party Report, as incorporated into the
WTO Agreement pursuant to Paragraph 1.2 of China's Accession Protocol, it has nullified or
impaired benefits accruing to the United States under that Working Party Report.8.3. Pursuant
to Article 19.1 of the DSU, we recommend that that the DSB request China to bring its
measure into conformity with its obligations under Paragraph 116 of China's Working Party
Report, as incorporated into the WTO Agreement pursuant to Paragraph 1.2 of China's
Accession Protocol.

From above report I have concluded that US & China both countries are taking advantages of
strong economy and influencing in Indian trade which leads to disadvantage for Indian trade ,
Economy & Indian entrepreneurs

India have to take strong decisions like ― MAKE IN INDIA‘‘ and keep updating trade policies
as many countries taking advantage of trade agreements where India is not able to take any
advantage . For this India have to be stable government to make new policies and execute that
policies and also India have to follow ancieant Kautilya Arthshastra to make better
International & domestic trade.

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Bibilography :
 Google study & Research – WWW.google.com
 https://www.indiatradepromotion.com
 www.gatewayforindia.com
 https://tradingeconomics.com
 https://www.ceicdata.com
 indiantradeportal.in
 https://www.tradeindia.com
 https://atlas.media.mit.edu
 https://commerce.gov.in
 https://wits.worldbank.org
 https://www.india-briefing.com
 https://www.export.gov
 https://dgft.gov.in
 mea.gov.in
 importexport.com
 https://www.wto.org
 https://www.adb.org
 https://en.wikipedia.org
 https://www.bbc.com
 https://www.scmp.com
 https://ig.ft.com
 https://www.china-briefing.com
 https://www.channelnewsasia.com

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