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Rediff.com  » Business » FTA with China not possible: Nath

FTA with China not possible: Nath

Source: PTI
July 14, 2005 14:49 IST
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India feels that a free trade agreement with China will not work as it is not a market economy.

But India wants its relations with China to shift from the political to the commercial domain and has suggested that both sides should ensure that they are not played against each other by the rest of the world.

"For a free trade agreement with China, both countries should have market economies. India will be ready with China for an economic cooperation agreement as China moves to become a market economy," Commerce Minister Kamal Nath said.

Asked about the possibility of establishing a free trade area between India and China, he said that since China was not a 'market economy,' it will not work. Nath, who was in Dalian to attend the World Trade Organisation informal ministerial meeting said China wants ties with India to flourish for which the relations must move from the political to the commercial domain.

"This is the century of Asia and the partnership of India and China must flourish," he said.

"As China slowly moves towards a market economy, both countries will have to strengthen their relations to ensure that one is not played off against the other by the rest of the world," the minister said.

Nath, who had a successful meeting with Chinese Commerce Minister Bo Xilai, noted that India-China bilateral trade had touched an all-time record at $13.6 billion in 2004-05.

"Our bilateral trade has moved up from $1 billion per annum to $1 billion per month," he said, adding that the synergies between both countries need to be harnessed.

He noted that during Chinese Premier Wen Jiabao's visit to India in April, the two governments had agreed to appoint a joint task force to study in detail the feasibility and the benefits that may derive from an India-China regional trading arrangement.

The RTA was recommended by the joint study group that was set up to examine the potential complementarities between the two countries in expanded trade and economic cooperation following the visit to China by the then Prime Minister Atal Bihari Vajpayee.

The JSG had recommended an India-China RTA, comprising trade in goods and services, investments, identified trade and investment promotion and facilitation, and measures for promotion of economic cooperation in identified sectors.

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

Highly impressed by China's economic growth and world-class infrastructure, Nath said that India, Indian political parties and bureaucrats must learn lessons from the Chinese experience.

"India must learn from the Chinese experience in creating a world-class infrastructure. The city of Dalian is a showpiece not only to India but also to the world since the construction and management skills have exceeded that of developed countries," he said.

"Indian political parties and bureaucrats must study the Chinese style - be it for foreign investment or be it for reducing bureaucratic red tape. Somehow in India, we get enamoured in narrow revenue considerations forgetting the larger and broader revenue picture," he said.

He also pointed out that China single-mindedly looks at commerce and development and it does not let politics come in their way.

"For the last decade, China's foreign policy has been driven by commerce where it has risen above political considerations to meet its commercial interests," Nath said.
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