China seeks to resolve dispute with India, retains WTO option

China today said it does not rule out going to the WTO against India on import curbs on its products, mainly toys, but hoped Beijing can resolve the trade dispute with New Delhi through bilateral negotiations.

"We do not rule out litigation at the WTO. But (now), we are (in) bilateral consultation," visiting Chinese Vice-Minister of Commerce Zhong Shan told reporters after talks with Commerce Secretary G K Pillai here.

The two countries have also decided to set up a joint panel to remove irritants in trade matters.

India has lifted the ban on importing Chinese toys imposed in January, but retained the safety standards for consignments from China. Pillai said he has assured the Chinese Vice-Minister that India is in the process broadbasing the safety norms for imports from all countries.

"The future course of action ...On safety standards will be applicable even to domestic industry," Pillai informed the Chinese delegation led by Zhong.

India sought access to the vast Chinese market for farm products. With China agreeing to send an inspection team for Basmati rice for the kharif season, India can hope to ship the fine grain variety this year, Pillai said.

India-China trade has seen a sharp rise to over USD 51 billion in 2008-09 from USD 38 billion in the previous fiscal.

Asked whether China would retaliate against India taking anti-dumping measures, Zhong said, "I believe China will not resort to retaliatory measures ... China believes in WTO rules."

While India has explained the reasons for its import ban on Chinese toys, it is not worried over China taking the dispute to the WTO. "We are not worried," Pillai said.

China felt that the Indian action on import curbs was directed against it only.

"I told them this is being examined by the government and these standards for import of toys would be extended to all countries. Similar standards would need to be imposed on domestic manufacturers," Pillai said.

China also conveyed its concern over India imposing safeguard duties on its goods. But Pillai said the safeguard duties were being resorted to within the framework of multilateral rules.

The Chinese delegation would hold talks with Indian officials dealing with the safeguard duties, including Revenue Secretary P V Bhide.

Pillai said there has been misunderstanding between the two countries over the last 12-18 months.

"Our ministers have not been able to meet secretaries. We now have agreed to identify nodal offices at the joint secretary level," he said. Issues like import surge can be sorted out by these officials.