India, China agree to safeguard border peace

Wednesday 25th March 2015 05:43 EDT

As India's national security adviser Ajit Doval and Yang Jiechi, China's state councillor, sat down for the 18th round of boundary talks in Delhi on Monday, peace on the border was as much an issue as the boundary dispute itself.

This was the first time the two special representatives discussed the boundary issue since the Narendra Modi government assumed office. While the Chinese side had a fair idea of how the previous Manmohan Singh government approached the talks, they were keen to see what are the priorities of the new government during the talks. The talks this time also included preparatory discussions for Modi's visit to China, expected in May-June. The Indian side refrained from commenting on talks.

However, the Chinese side reported in their official media that both sides had agreed to “safeguard peace and tranquility in their border regions before the boundary issue is solved.” During Doval's first meeting with the Chinese leadership in 2014, he was told that this was an appropriate moment for both sides to put political will behind a settlement, particularly with two strong leaders at the helm of affairs in both countries.

However, after the bruising experience of Chinese troop incursions in Demchok and Chumar in Ladakh coinciding with Xi Jinping's maiden visit to India, the Modi government has prioritized stability on the boundary as a precursor to any settlement on the boundary issue.

Working on new border patrolling framework

Official Xinhua news agency reported the two sides agreed to take forward process of negotiations based on consensus achieved following Modi and Chinese President Xi Jinping's meeting in September. The report indicated the two sides were trying to bring in greater flexibility in negotiations instead of remaining bound by the framework that Manmohan Singh and former president Hu Jintao had worked out. The agency said the two countries have agreed to “properly handle and control their disputes''. The two agreed to jointly safeguard peace in the border regions before the boundary dispute is resolved.

India’s hardtalk on trade

India has raised the heat on trade talks with China, with New Delhi warning Beijing that “protectionist tendencies” in the Indian industry may force the government to take a “proactive view” on Chinese imports.

According to Indian officials, New Delhi is frustrated that administrative agencies in China have not responded to India’s demands in three key sectors - pharmaceuticals, agriculture, including bovine meat, and IT services - where the country has “demonstrated its strength”.

The timing of the official communication from the department of commerce is significant with Modi scheduled to visit China within the next two months. While a large part of Modi’s bilateral talks President Xi Jinping would focus on the crucial boundary question, Modi is also expected to raise issues relating to greater market access for Indian products and services, and Chinese investment in India.

According to senior officials, China has been warned “in as many words” that New Delhi may introduce standards for a variety of products and subsequently restrict Chinese imports of “non-essential items where India had quality concerns”. The officials said Bejing’s first reaction when India expresses concern in a particular area is to sign a memorandum of understanding, with little follow-up action. “We have signed several MoUs with China. Two of them relate to export of buffalo meat and IT services. But in both these areas, where India has immense potential to export, Chinese agencies have been very bureaucratic,” a senior official said.

Bovine meat needs sanitary and phytosanitary clearance from the relevant Chinese agency. “It’s been more than two years, but they continue to delay finalisation of protocol on sanitary and phytosanitary measures and certification procedures,” the official said, adding that Indian buffalo meat finds its way to China through Vietnam.

Similarly, for IT services, tenders floated by Chinese state organisations have set a high bar of US$100mn for bidding. “This is an artificial barrier and many Indian companies are unable to participate despite their competence,” the official said. Trade in pharmaceuticals has, meanwhile, become a strategic issue, the officials said. India imports almost 70% of its API (active pharmaceutical ingredient) requirement from China. But non-trade barriers have held back Indian drug companies from exporting formulations to the Chinese market.

“There are regulations which require state-run hospitals to sell two branded versions of a medicine for every generic version they want to sell,” a commerce ministry official said, adding this was why Indian companies were unable to get a foothold in China despite their products being much cheaper.

Officials also pointed out that the bilateral trade balance has consistently worsened over the years. In 2013-14, bilateral trade stood at US$65.78bn, with India suffering a deficit of US$36.21bn. During the first half this year (April-September 2014), bilateral trade was US$16.4bn, with a US$9bn deficit. A slowdown in China will likely derail the two countries’ plans to cross US$100bn in bilateral trade.

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