Feb 5, 2009

Business - China to challenge India's toy ban at the WTO

Saibal Dasgupta

BEIJING: China plans to move the World Trade Organisation challenging India's decision to ban Chinese toy imports. It feels that the ban amounts to
violating WTO laws, which is something the world body must investigate. This is apparently a desperate move on the part of Chinese rulers engaged in saving the toy industry, which has already retrenched thousands of workers because of loss in export market. More than 1,000 toy manufacturers have closed down in recent months. New Delhi announced a six-month ban on imports of toys from China on January 23. The Directorate General of Foreign Trade from India, which imposed the ban, did not cite any reasons to support it. But Indian industry sources claimed it was meant to protect local manufacturers from cheap Chinese imports. Chinese toys make up nearly half of the total toys retained in India, sources claimed. The Indian decision came after the United States imposed anti-dumping and anti-subsidy duties on four categories of Chinese imports. Beijing took on the US at the WTO over these decisions last December. The European Union has now slapped an 85 percent punitive duty on imports of screws from China, which will affect nearly 200 local manufacturers. China observers see these decisions as an attempt to leverage WTO rules to protect local manufacturers from trade barriers and punitive measures being put up by different countries. Critics have also dubbed it as a protectionist move by Chinese leaders, who have been advising western nations to avoid protectionism in order to tackle the world economic crisis. Beijing did not resort to moving the WTO during the boom years when its exports grew at a pace exceeding 25 per cent a year. It is only when it has been hit by a sharp fall in exports that the Chinese government has decided to use the world body to protect local businesses. Some estimates show that nearly 70 per cent of the toys marketed worldwide are made in China, mostly in Guangdong province in the south of the country.

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