The Trade Barriers Within China and India

When we think about China and India we think two of the most populated countries in the world. We would also that they have quite a lot of power as well, however that could have been a lot different if they did not start to trade internationally when they did. China and India were some of the slowest nations to get involved with trading globally. However, when they did start they quickly rose to become some of the biggest traders in the world. They also started to become countries that implemented some of the highest trade barriers and tariffs which they did to either keep foreign companies out, or to make as much money of foreign companies to make sure that their domestic economy does not get ruined because of foreign businesses trying to take over their market.

Before the 1990’s India was a closed economy implementing tariffs exceeding 200%, along with this they were putting harsh restrictions on products that were being imported into the country which meant that foreign countries were less likely to export their goods to India.

Going back over a decade ago India enforced high tariffs on China, for example, they implemented 100% tariffs on coffee, tea, wheat and many more other products. They went on to impose a 100% to 182% tariff on alcoholic beverages, on top of this there were products that were not even allowed to enter the Indian market. (China.org) Even though India had started trading with different countries they did still put into place ridiculously high tariffs which most companies would not pay.

Coming back to recent times, India have become a massive player in trading, India is an important trading partner for the EU and the EU is India’s biggest trading partners. After reading an article on the European Commission website about the trading relationship between India and the EU, I found out that the EUs exports into India grew from €21.3 billion in 2005 to €38.1 billion in 2015, Also the EUs imports from India grew from €19.1 billion in 2005 to 38.1 billion in 2015. This shows how important India is to the EU and vice versa. If now India decided to implement trade barriers on products that the EU exports into India then that would cause a lot of problems for the EU financially, it could also affect India’s relationship with the EU which could affect not only the EU but other countries that trade with India as well.

China was also a little bit late in trading internationally, when they did start in the late 1970s they were a huge influence to the market which is one of the reasons why the economic boom in the 1970s did so well. This also showed that China played an important role and why they rose to become one of the biggest traders in the world. With all of China’s tariffs which restricted foreign companies entering specific industries such as healthcare, financial service and many other industries, it did not allow foreign business to go to the Chinese market and make a profit. Whereas Chinese companies were still exporting their products to different parts of the world without the consequences of such high tariffs.

The EU and China are two of the biggest traders in the world, the EU is China’s biggest trading partner and China is EU’s second biggest trading partner, just behind the United States. Over the recent years the EU’s and China’s trade increased dramatically to a point where they were trading at €1 billion a day. This is shows how valuable the relationship is between the EU and China and if something was to go wrong in terms of higher tariffs from either parties then the figures that I stated before would be drastically decrease.

Coming to the more recent years and China are still not lowering their trade barriers and tariffs. The European Commission President Jkean-Claude Juncker stated that China’s progress is still not enough. Due to the all the high trade barriers foreign business are not able to access the Chinese market in all its potential. If the Chinese Government lowered their trade barriers then it would open the market a lot more for the EU and for the rest of the world, which could benefit everyone one financial.

To see where China and India started off being so isolated from trading with different nations. These two countries have grown really quickly in a short period of time. Their only problem is that they do not want to open up their market too much to foreign businesses, but if they do then it would only help them build more and stronger relationships with other countries and it would help them financially as well as they would be importing and exporting their products and services. I believe in the next few years both China and India would make reforms to their trade barriers, tariffs and open up their market a little bit more which would benefit them greatly.

Sources

http://ec.europa.eu/trade/policy/countries-and-regions/countries/india/index_en.htm

http://www.china.org.cn/english/features/fmar/168186.htm

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