India’s trade with China was one- sided affair from beginning
By any yardstick, the 1954 agreement was one-sided. Today, any negotiator who agreed to this would be hauled over coal. Nor, since GATT was already been established in 1948, could one claim that India lacked in relative negotiating capacity
Writing in the Indian Express, Bibek Debroy, who is the chairman of Economic Advisory Council to the Prime Minister, maintains that India’s trade agreement with China was a one-sided affair from the beginning.
According to him, India entered into a trade agreement with the People's Republic of China in October 1954, which was apparently based on “equality and mutual benefit.” But this trade agreement over-rode many historical rights India possessed in Tibet.
There were no talks of cross-border labour or capital movements. China was allowed to export cereals, machinery, minerals, silk and silk made goods, animal products, paper and stationery, chemicals, oils and miscellaneous items. In turn, China was allowed to export-grams, rice, pulses, raw tobacco, raw materials, ores, wood, timber, hides and other miscellaneous items.
He further says that India had a strong domestic base in the 1950s of producing newsprint, mechanical pulp-free printing paper, packing paper, stencil paper, blotting paper, fountain pens, pencils, ink, printing ink, and numbering machines.
But when “Article XVIII of GATT was amended in 1954 to introduce Article XVIIIB, justifying quantitative restrictions (QRs) on imports on the balance of payments grounds, one of the eight items India imposed QRs on was fountain pens,” Bibek Debroy writes in his article.
He maintains that China’s fountain pen manufacturing base in Shanghai, other than Hero, is of later vintage. The Shanghai Hero Pen Company traced its antecedents back to 1931. That is when the Wolff Pen Manufacturing Company was founded, renamed Shanghai Hero Pen Company later. Companies like Jinhao didn’t exist then.
But India’s fountain pen and ink base was much older, yet it was a bit strange that in 1954, it was pre-decided that China would have a comparative advantage in exporting fountain pens and ink and India would not.
He says if an item figures in one country’s list and not on the other’s, that suggests an odd kind of preference. What’s dumped into a “miscellaneous” basket is relatively insignificant. “If you scrutinise the schedules, you will find non-manufacturing items in China’s miscellaneous list, but many manufactured items in India’s miscellaneous list (light engineering, plastic, cement, agricultural implements, paper).
“By any yardstick, the 1954 agreement was one-sided. Today, any negotiator who agreed to this would be hauled over coal. Nor, since GATT was already established in 1948, could one claim that India lacked in relative negotiating capacity,” Debroy maintains.