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India rejects trade pact, cites 'trade imbalance'

Jyoti Malhotra  |  New Delhi 

India refused to enter into any discussions on a regional trading arrangement (RTA) with China, even though it was raised by Chinese premier Wen Jiabao at talks with Prime Minister Manmohan Singh in Hyderabad House this morning. The PM said the time was not ripe because of the severe “imbalance” that existed in the $50-billion trade this year.

Wen JiabaoHowever, both sides agreed to put out the public positive spin, saying they were buoyed by the large number of agreements between their private companies yesterday and had, therefore, decided to double the existing trade volume to $100 billion by 2015.

A close reading of the joint statement also suggests that the Indian side stood its ground during negotiations with the Chinese delegation in the run-up to premier Wen’s visit, and would not agree to the phrase “one-China policy” if Beijing did not reciprocate with phrases on the integrity of Kashmir that would satisfy the Indian government, highly placed sources said.

Instead, the “one-China policy” phrase has been replaced by “mutual respect and sensitivity”, language that betrays the diplomatic joust that must have taken place before this compromise was reached.

Business Standard had earlier reported this shift on New Delhi’s part to change the jargon that has so far characterised the Sino-Indian relationship, pointing out that the government was determined to protect the integrity and inalienable nature of Jammu & Kashmir, which Beijing had over the last couple of years called into question by issuing only “stapled” visas to J&K residents.

The officials pointed out that in the negotiations, the Indians made clear to the Chinese that they had “Kashmir-related issues” and that China should deal with this “sensitively,” just as Beijing had sensitive issues related to Tibet and Taiwan which New Delhi had agreed to abide by.

For the first time since 1988, when former prime minister Rajiv Gandhi went to China for what is now described as a “path-breaking visit,” the “one-China policy” phrase has been omitted from a joint communiqué between New Delhi and Beijing.

The officials cautioned against an over-interpretation of the omission, saying this did not mean that India did not recognise the Tibet Autonomous Region as being a part of China, which it did.

“The change in the language is far more significant for its tone, rather than the substance. This indicates that we now have a much more equal conversation,” the officials said, admitting that with the Chinese the tonal quality of diplomatic conversation was as important as content.

As for the RTA, which also doesn’t find any mention in the joint statement — for the first time since 2005 — Foreign Secretary Nirupama Rao went on the offensive on this subject in the concluding minutes of her press conference this afternoon, asking Chinese journalists if they also wanted to ask her a question.

One of them did, on the RTA, wanting to know if the subject had come up in talks between the two prime ministers.

“The Chinese should know,” the foreign secretary said, “that there is a big imbalance in the trade and that we (India) would like a little more market access in areas like pharma, agri-products and IT services…please take this message to China,” she added.

Officials pointed out that trade had touched a $49.5-billion high in October, but of this the Chinese basket was worth $35 billion, while Indian exports only amounted to $15 billion. New Delhi has for some time been pushing Beijing to open its markets, but to no avail.

The Indian assertiveness on the trade and political front was matched by its concessions to the Chinese demands that there be no mention of the Mumbai attacks or the issue of stapled visas in the joint statement, even though the foreign secretary went out of her way to assuage public opinion at the press conference that the subject of terrorism was discussed long and hard between the two prime ministers and that Wen had indeed “expressed great sympathy for the Mumbai attacks and said the Chinese people had felt great concern for the victims of Mumbai”.

On the stapled visa issue, Rao said the Chinese premier brought up the matter himself and suggested that officials from both sides meet to discuss the issue and come to a satisfactory conclusion.

Clearly, with Prime Minister Manmohan Singh setting the tone of the Wen visit at his dinner last night, saying that when “India and China, representing more than two and a half billion people speak in one voice, the world listens,” government officials said they didn’t want to go public with its apprehensions vis-à-vis Beijing.

Premier Wen responded in kind this morning, stating that “through our joint efforts, we will be able to reach important strategic consensus during the visit”.

The officials explained the absence of any reference to the Mumbai attacks or Pakistan’s hand in the attacks — always unlikely since Wen goes to Islamabad from Delhi and because Pakistan is China’s major strategic partner — in the joint statement by admitting that indirect reference to UNSC resolution 1267 which proscribes all those involved in the Mumbai attacks.

As for support for India’s permanent membership to the Security Council, Wen reiterated China’s earlier positions which says that it “understands India’s aspirations” to play a bigger role in the international arena and welcomed India becoming a non-permanent member for the next two years.

The officials admitted that the conversation on reviving defence exchanges, that were put on hold after the visa refusal for J&K army commander Lt Gen B S Jaswal, had not been fully successful, but that both sides had agreed to continue talks on this issue “without restraint”.

The joint statement also promises enhanced cooperation on river waters, thereby taking care of India’s concerns of the dams that the Chinese are building on the Yarlung Tsangpo (which becomes the Brahmaputra in India), as well as political issues which include freedom of navigation in the Indian Ocean as well as cooperation in Afghanistan.

First Published: Fri, December 17 2010. 01:28 IST
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