Just one example—that of trade policy—suffices to show how very different are the Bric economies even amongst themselves. The single aspect in which they all vary is the foreign exchange dividend that each Economy reaps from her investment in a foreign trade policy (FTP). Even the more efficiently administered economies offer export sops and tax derogations, although they themselves would much rather that the developed economies did not.

Take, for instance, the cases of India and China. Both are Bric economies, and their growth rates (ranging from 9% to 11%) are amongst the world’s highest. But a closer look will show that China’s most prolific exports are also the ones that have the highest amount of value-addition—while altogether too many of India’s are reminiscent of the initial stages of development for industrialisation.

According to WTO norms, market access would entail developing economies opening up “substantially”, while they also bring export subsidies to heel. Also, it would have to be done in tandem with the phase-out of domestic support to effect “substantial” trade-barrier reductions.

Much, meanwhile, will also depend on the structure and depth of the subsidies that are on offer. But that, alas, is just where most calculations have been going awry: observers apparently seem quite unable to distinguish between returns and outlays.

Some examples will not be amiss, and the thing to notice from the WTO’s records is the continence with which China treats economies that baulk at importing from it. But there are not too many such products, nor even that many economies.

One example of the above, currently available in the WTO’s Internet portal, relates to the imposition, by the US, of punitive—tariff-based—‘safeguards’ against certain steel items (such as flat products, hot-rolled and cold-finished bars, rebars, welded tubular products, carbon and alloy fittings, stainless steel bars, wires, rods and tin-mill products plus stainless steel wire).

By so doing, however, the US has been violating the rules of General Agreement on Trade and Tariffs (GATT) as well as of the Agreement on Safeguards. But China is not the sole exporter which has been thwarted. Keeping it company are the EU, Japan, South Korea, Switzerland, Norway, New Zealand and Brazil.

A second case, but one that is being fought by China alone, relates to the imposition by the US of countervailing and anti-dumping duties on Chinese exports of coated sheet-free paper.

Meanwhile, there are a myriad instances that involve China's attempts to queer the pitch for exports...

Soumya Kanti Mitra

Posted online: Wednesday, May 28, 2008 at 2121 hrs IST

Source: www.financialexpress.com