EFFECT ON TRADE LAWS BY THE INDO-CHINA ISSUE

AUTHORED BY:

Sanjana Mishra, NMIMS School of Law

Anila Krishna, Pendekanti Law College

Ritu Sharma, The NorthCap University, Gurgaon

EDITED BY:

Smaraki Nayak, Amity Law School, Noida

INTRODUCTION:

Everything has its pros and cons, same is the case with “boycotting china”. It is rightly said that it is better to stand alone than stand with someone who is working against you. So, it is very appropriate to boycott china and its products. This will have a major impact on trade as we have a habit of seeing a label that says “Made in China”.

Scope of the paper is as follows:

1. From where did Indo China issue start and what agreement happened between the two nations?

2. What are the Indian trade laws?

3. Why at this time the clashes have outraged more between the two nations?

4. Ban on certain applications of china and its effects.

INDO CHINA ISUUES AND THE AGREEMENT PACT:

India and China have had tense relations with each other and the major reason of this issue is Line of Actual Control. It is a loose demarcation line that separates Indian-controlled territory from Chinese-controlled territory in the Sino-Indian border dispute. It subsequently referred to the line formed after the 1962 Sino-Indian War, and is part of the Sino-Indian border dispute. The Chinese have stuck to their guns since the 1962 border conflict when it comes to approaching a border settlement with India and reaching a common position on who sits where along the Line of Actual Control.[1] So, to resolve this entire conflict on Line of Actual Control, both India and China came together and decided to sign a pact in 1993, which is known as Maintenance of Peace and Tranquility along Line of Actual Control, 1993. This agreement provides the framework for border security between the parties until final determination is made regarding border demarcation. The parties agreed to reduce troop levels, compatible with friendly and good relations between them. They also agree to undertake confidence building measures along the line of actual control including by providing notification of troop movements. The major purpose of this pact was to bring peace, harmony and friendly relation between two nations.

INDIAN TRADE LAWS:

The export and import in India are governed by the Foreign Trade (development and regulation) act 1992[2]. The act empowers the Central Government to make provisions for development and regulation of foreign trade by facilitating imports into, and augmenting exports from India and for all matters connected therewith or incidental thereto and empowers the Central Government to formulate and announce an Export and Import (EXIM) Policy and also amend the same from time to time. The Central Government can prohibit, restrict and regulate exports and imports, in all or specified cases as well as subject them to exemptions. India China both being member to World Trade Organization also follow General Agreement in Trades and Tariffs (GATT)[3] and General Agreement on trades in services (GATS)[4], hence WTO also serve as an international guideline for trade with China.

WHY CLASHES ARE MORE OUTRAGEOUS NOW:

Although no shots were fired, stones were thrown and fistfights broke out. Numerous fights also occurred in the following weeks, with troops stationed in disputed territories accusing the other side of trespassing

However, this is not the first China-India border conflict. In 2017, both sides confronted each other in Doklam Plateau — a tri-border area between India, China and Bhutan — for two months, almost triggering an armed conflict. Such tensions between the two countries have existed for over seven decades. They triggered the Sino-Indian War in 1962. Today, China claims and refers to the Indian state of Arunachal Pradesh as Southern Tibet. On the other hand, India sees the China-controlled Aksai Chin as its territory. Since 1962, both sides have signed a series of agreements and agreed to respect the Line of Actual Control that separates the countries.

China might just be showing off its army’s capabilities while, at the same time, delivering a political message to India not to get too close to the US. Since the 2017 Doklam border standoff, Indian Prime Minister Narendra Modi has been moving closer to the Americans. India has agreed to expand its two-way trade in advanced defense items and become part of the US manufacturing supply chain. The South Asian giant has also decided to block Chinese companies from taking over domestic businesses. If India moves closer to the US, this could hamper China’s infrastructure development in South Asia, including the disputed economic corridor that links China to Pakistan.

The border conflict might be serving domestic political needs in addition to Chinese President Xi Jinping’s, but a full-blown would serve neither. The novel coronavirus, which causes the COVID-19 disease, has hit India hard and the government has been criticized for its response. At the time of publishing, there were over 340,000 confirmed cases of COVID-19 in India.

IMPACT ON INDIA’S TRADE:

The Indian Government through a notification by Press Information Bureau[5] banned 59 chinese apps under Section 69 A of the Information Technology act[6] which empowers the state to issue direction for blocking public access of any information through any computer resource, read with the Blocking Rule[7] which further comprehend the procedure to be followed for the blocking. The government in this case acted on first ground of blocking i.e. interest of sovereignty and integrity of India, defence of India, security of the State. The Supreme Court in 2015 in Shreya Singhal vs Union of India[8] upheld the validity of the Section 69 A as well as the blocking rules when done on reasoned orders. China after the app-ban issued a statement saying that India should abide by WTO rules. The WTO rules which may be pertinent here is General agreement on Trade in services which calls for fair trade practices in services, but even that has security exceptions which India may take up. Trade figures have suggested that India is one of the biggest importer of Chinese consumer goods. India imports almost seven times more from China than it exports to it. India has huge trade deficit with China – largest with any country. In 2018-19, India’s exports to China were mere $16.7 billion, while imports were $70.3 billion, leaving a trade deficit of $53.6 billion.

It needs to be acknowledged that China’s exports to India account for only 2% of its total exports, so even if Indians boycott all the goods imported from China, it will not make as big an impact on China. Data also suggests that China is India’s largest trading partner, but the trade is heavily skewed in favour of China. Thus, initiating a trade war when Indian manufacturing ability is limited is not going to favour India.

The range of goods that we import from China is massive: consumer durables such as electronic goods, smartphones, industrial goods, vehicles, solar cells, and essential pharmaceutical products including tuberculosis and leprosy drugs and antibiotics, among many others.

In 2017-18, almost 60% of India’s import requirements of electrical and electronic equipment was met by China. In our smartphone industry, out of the five bestselling phone brands in India, four are Chinese – Xiaomi, Vivo, Realme and Oppo. These four brands combined dominate over 60% of the smartphone market in India. On the other hand, 30% of India’s automobile components are met from China and about 90% of the country’s toy market is occupied by Chinese products. Similarly, 50% of the demand in the country’s bicycle market is met by imports in which China has a large share. Thus, some of the key sectors of the Indian economy are critically dependent on China.[9]

[1] Amit Baruah, There will be no conflict if Indian army does not enter our actual line of control NEW DELHI, JUNE 15, 2020 22:55 IST https://www.thehindu.com/news/national/there-will-be-no-conflict-if-indian-army-does-not-enter-our-actual-line-of-control/article31836317.ece [2] Foreign Trade (development and regulation) act 1992 Act no 22 of 1992 (India) [3] General agreement on Tariff and Trade (1947) International treaty [4] General agreement in trade and services (1995) International treaty [5] Press Information bureau, Government bans 59 mobile apps which are prejudicial to sovereignty and integrity of India, security of state and public order (29 June 2020 8:47 pm) https://pib.gov.in/PressReleseDetailm.aspx?PRID=1635206 [6] The Information Technology Act, 2000; Act no 21 of 2000 [7] Information Technology (Procedure and Safeguards for Blocking of Access of Information by Public) Rules 2009 [8] Shreya Singhal vs Union OF India (2013) 12 SCC 73 (India) [9]Basit Amin Makhdoomi, What would boycotting Chinese goods mean for India? (June 9, 2020) https://thewire.in/trade/china-goods-boycott-atmanirbhar-bharat

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