Saturday, November 25, 2006

>India has reasons not to trust China yet

Despite all the recent noise over India-China cooperation in trade, the Indian industry is still not ready to do the `Indo-Chini bhai-bhai’ act. One look at India’s anti-dumping case history, and it becomes clear why Indian business cannot yet trust its Chinese counterpart. The figures are mind-boggling. Of the 188 anti-dumping cases initiated by India since it kicked-off the process in 1992, 89 are against Chinese companies.

The Indian chemicals and petrochemicals industry has been affected the most on account of dumping by Chinese companies. Of the 82 cases initiated by India, almost half (40) are against imports from China. India’s sunrise industry, pharmaceuticals, has also not been spared the Chinese blow. India initiated 17 anti-dumping cases against pharma exporters from China compared to a total of 29 over-all cases initiated in the sector.

In consumer goods, China accounted for 60% of the 15 investigations. In textiles, fibres and yarn, India filed six investigations against China out of 21 investigations. An equal number of investigations against Chinese companies was initiated in the area of steel & other metals, where India initiated 14 investigations.

With such heavy dumping taking place in India by Chinese manufacturers, it is not surprising that the Indian industry sees red whenever there is a talk of extending market economy status to China. Once India recognizes China as a market economy, it will have to accept prices provided by China in its anti-dumping calculations.

India, at present, uses third-country prices in all investigations of dumping against China. This is because India believes that China has an extremely non-transparent system of accounting and arriving at prices which could lead to faulty calculations in anti-dumping investigations.

If India recognizes China as a market economy right away, it may lose many anti-dumping cases at the World Trade Organization, which will then examine the cases on the basis of prices provided by China. Only when India is totally satisfied with accounting and pricing system in China, can it consider giving it the market economy status. Till then a free trade agreement between the countries will have to wait.

Apart from China, other countries which prominently feature on India’s anti-dumping investigation list include EU, Chinese Taipei, Korea RP, Japan, USA, Singapore, Indonesia, Thailand and Russia.

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