India China establish joint panel to defuse trade tension and resolve toy imports issue

India and China are in bilateral official-level talks in New Delhi. China is now India’s largest trading partner and India is China’s 10th largest trading partner. There is a huge trade surplus favoring the Chinese side, but China says it does not intentionally seek a trade surplus with India. From the new developments it seems unlikely that China will go in for formal WTO dispute settlement on the toy imports issue. The Indian government has admitted that the safety standards applicable at present exclusively to toy imports from China, need to be extended to imports from other countries and that comparable standards need to be put into place for Indian-made toys as well.

Xinhua reports:

During the talks, both sides agreed to set up a joint working team to coordinate and communicate regularly on the problems of bilateral trade, said the sources

    The Chinese side expressed great concern over India’s frequent trade remedy probes against Chinese products, especially the prejudicial restrictive measures against Chinese toys, and asked India to avoid abusing trade remedy measures to over-protect its domestic products, and to uplift the restrictive measures on Chinese products, which were imposed merely out of prejudice and contradicted the WTO rules, said the sources.

    The Chinese side also hoped that the two sides should solve bilateral trade disputes through government-to-government communications and coordination and strengthening of dialogue between the industrial sectors of the two countries, said the sources.

    Vice Minister Zhong said at a media conference that China reserves the right to resort to the WTO dispute solution authorities over India’s ban of Chinese toys, but still believes the two sides have the capability and wisdom to solve this problem through communications and coordinations

    Secretary Pillai said that according to Chinese statistics, bilateral trade between India and China has attained a volume of 51.8 billion U.S. dollars in 2008, so China has overtaken the United States as India’s largest trade partner.

    Pillai expressed his hope that both sides expand bilateral trade and investment, and stand up against trade protectionism, saying India is willing to solve the problem of on-going anti-dumping and anti-subsidy investigations against Chinese products through coordination at the level of the joint working team.

    In order to avoid possible prejudice against Chinese toys, India will also study and make up as soon as possible the safety standards for toy products, so that all imported toys and domestically made toys will all abide by the standards, he added.

    The Indian side also hopes that China will solve as soon as possible the problem of quarantine and safety tests for Indian agricultural products and beef products bound for Chinese market, and take concrete measures to expand import of such products from India.

    The Chinese side said that China does not intentionally seek trade surplus with India and wants to have a balanced development of bilateral trade and push forward the solution of the problem of quarantine for Indian food products.

    According to statistics of Chinese Ministry of Commerce, from October 2008 to February 2009, India has launched 17 trade remedy probes, including those of anti-dumping and anti-subsidy, against Chinese products, covering industrial salt, steel, auto parts, coal products, porcelain products, textile and rubber products, which means a total loss of more than 1.5 billion U.S. dollars for the Chinese producers and traders.

    Moreover, the Indian government has imposed restrictions on imports of Chinese steel, chemical and textile products and declared a six-month ban of Chinese toys in January. But due to opposition of home toy dealers, India has eased the ban on boys and allows import of products with international safety certificates.