Blunt and bold China vs. Bumbling India

From the US 2016 National Trade Estimate Report on Foreign Trade Barriers published on March 23, 2016. I am merely listing the observations which I found interesting. I am not judging them (all). Where I have a comment to make, I have made them in square brackets.

China

(1) The U.S. goods trade deficit with China was $365.7 billion in 2015, a 6.6 percent increase ($22.6 billion) over 2014. U.S. goods exports to China were $116.2 billion, down 6.1 percent ($7.5 billion) from the previous year. Corresponding U.S. imports from China were $481.9 billion, up 3.2 percent.

U.S. exports of services to China were an estimated $42.5 billion in 2014 (latest data available), and U.S. imports were $14.4 billion

(2) FDI stock from the US

U.S. foreign direct investment (FDI) in China (stock) was $65.8 billion in 2014 (latest data available), a 9.8 percent increase from 2013.

(U.S. foreign direct investment (FDI) in India (stock) was $28.0 billion in 2014 (latest data available), a 11.7 percent increase from 2013)

(3) PRIORITY ISSUES

At present, China’s trade policies and practices in several specific areas cause particular concern for the United States and U.S. stakeholders, including in relation to China’s approach to the obligations of WTO membership.

(No ‘Priority Issues’ header for India)

(4) Trade Secrets

The protection and enforcement of trade secrets in China is a serious problem that has attained a higher profile in recent years. Thefts of trade secrets that benefit Chinese companies have occurred both within China and outside of China. Offenders in many cases continue to operate with impunity.

(5) Since joining the WTO 14 years ago, China has not yet submitted to the WTO a complete notification of subsidies maintained by the central government, and it has not yet notified any of its sub-central government subsidies.

(6) China prohibits the importation of remanufactured products, which it typically classifies as used goods.

(India allows imports of secondhand capital goods by the end users without an import license, provided the goods have a residual life of five years.)

(7) China has limited the sale of equity stakes in existing state-owned banks to a single foreign investor to 20 percent, while the total equity share of all foreign investors is limited to 25 percent.

(In India, foreign banks are not authorized to own more than five percent of an Indian private bank without approval by the RBI. Total foreign ownership of any private bank from all sources (foreign direct investment, foreign institutional investors, and nonresident Indians) cannot exceed 74 percent.)

(8) China’s current government procurement regime is governed by two primary laws. The Government Procurement Law, which is administered by the Ministry of Finance and the Tendering and Bidding Law which falls under the jurisdiction of the National Development and Reform Commission.

(India lacks an overarching government procurement policy, and as a result, its government procurement practices and procedures vary among the states, between the states and the central government, and among different ministries within the central government.)

(9) China’s market for political risk insurance is completely closed to foreign
participation.

[Surprise, surprise!]

(10) In China, outright blocking of websites appears to have worsened over the past year, with 8 of the top 25 most trafficked global sites now blocked in China. Much of the blocking appears arbitrary; for example, a major home improvement site in the United States, which would appear wholly innocuous, is typical of sites likely swept up by the Great Firewall.

(11) Corruption among Chinese government officials, enabled in part by China’s incomplete adoption of the rule of law, is also a key concern.

India

(1) Lack of clarity regarding jurisdictional authority between the Food Safety and Standards Authority of India (FSSAI) and the Ministry of Consumer Affairs could also have negative effects on U.S. biotechnology products entering the Indian market.

(2) While India removed most of these measures in response to international stakeholders’ concerns, India retains the objective of testing all “security-sensitive” telecommunications equipment in India starting April 1, 2016. However, the testing criteria have yet to be published or notified to the WTO, and India’s domestic security
testing capacity is currently very limited.

(3) India continues to insist on religious and cultural grounds that dairy products be derived from animals who have never received any non-vegetarian feeds.

(4) U.S. stakeholders report confusion over products that were not yet approved or rejected under the old system and whether these products may now enter India.

(5) In addition to being announced with the annual budget, India’s customs rates are modified on an ad hoc basis through notifications in the Gazette of India and contain numerous exemptions that vary according to the product, user, or specific export promotion program, rendering India’s customs system complex to administer and open to administrative discretion.

(6) India has not systematically reduced the basic customs duty in the past six years.

(7) India, however, often fails to observe transparency requirements, such as publication of timing and quantity restrictions in its Official Gazette or notification to WTO committees.

(8) Refurbished computer spare parts can only be imported if an Indian chartered engineer certifies that the equipment retains at least 80 percent of its life, while refurbished computer parts from domestic sources are not subject to this requirement.

(9) India’s customs officials generally require extensive documentation, inhibiting the free flow of trade and leading to frequent and lengthy processing delays. In large part, this is a consequence of India’s complex tariff structure, including the provision of multiple exemptions which vary according to product, user, or intended use.

(10) While difficulties persist, India has shown improvement in this area through the automation of trade procedures, including through the ICEGATE  (http://icegate.gov.in) portal and other initiatives. The government of India is increasing use of electronic forms and only three documents are now required for importers and exporters for 13 separate government agencies, which has reduced wait times from weeks to days.

(11) Foreign suppliers of higher education services interested in establishing a presence in India face a number of barriers, including: a requirement that representatives of Indian states sit on university governing boards; quotas limiting enrollment; caps on tuition and fees; policies that create the potential for double-taxation; and difficulties repatriating salaries and income from research.

[Personally, I think this (item 11 above) can be liberalised and, as quid pro quo, some other demands be required to be dropped and some other market access in the US gained – H1B visa fees and quotas and in any other area of interest for India]

I do not know what you take away. The complaints against India have mostly to do with lack of clarity, complexity, procedures and delays, etc. whereas complaints against China are policy-related. So, in other words, China is blunter and bolder. India is bumbling.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s