India, China eye $30 bn trade

Agreement on border dispute, aviation.

India and China managed to begin the process of untying several historical knots today, with Chinese Premier Wen Jiabao hoping to boost bilateral trade to $30 billion a year from the present $13 billion.

Despite agreeing to resolve the boundary dispute, China remained ambivalent on the issue of India's permanent seat in the United Nations Security Council.

A host of economic initiatives, including the launch of an India-China financial dialogue process, agreements on Customs and aviation and relaxing of phyto-sanitary measures for the export of certain farm products, including rice, from India, were agreed upon.

The report of the joint study group on trade and economic cooperation was also submitted. Of particular importance was the agreement on political parameters and guiding principles for the settlement of the India-China boundary issue that was likely to be put on the fast track.

Addressing reporters at a function hosted by industry chambers Ficci and CII, Wen said: "We have jointly adopted a five-year-plan for economic cooperation and trade and decided to start a joint feasibility study for a bilateral free trade agreement. We also decided on an objective that by 2008, two-way trade volume a year should increase from $13.6 billion to $20 billion or more, and, by 2010, $30 billion."

However, the fine print shows that progress in areas where India and China are competitors will be slow. For instance, there was no agreement on software development in China by India. The countries, however, agreed on the exploration of hydrocarbons in third countries -- an area both countries feel is critical for development.

Prime Minister Manmohan Singh and his Chinese counterpart agreed that the ministerial level joint economic group would consider the report of the joint study group, which was set up to examine the potential complementarities between the two countries in expanding economic cooperation.

The joint study group has identified a series of measures related to trade in goods and services, investments and other areas of economic cooperation.

Ministers from both countries will consider the report and a joint task force will be set up to study in detail the feasibility of an India-China Regional Trading Arrangement (RTA). The RTA may take time in coming as no time-frame has been set for the arrangement beyond a meeting of the joint economic group within six months.

An agreement on the financial dialogue mechanism will further facilitate economic cooperation between the two sides.

On World Trade Organisation talks, both agreed to conduct regular exchange of views on major international and regional issues and work together to preserve stability and growth in the global economy and reduce disparities between developed and developing countries.

Sanitary and phyto-sanitary protocols for the export of grape and bitter gourd from India were signed, with both sides agreeing to constitute a joint working group to implement a memorandum of understanding (MoU) on the issue between the Chinese general administration of quality supervision, inspection and quarantine and the Indian agriculture ministry.

Recognising the importance of strengthening connectivity, the two sides agreed to enhance direct air and shipping links and people-to-people contacts. An MoU on the liberalisation of aviation links between the two countries was also signed.

The two countries also reviewed the implementation of an agreement on border trade through the Nathula pass between the Tibet and Sikkim.