The arrangement between China and India on mutual preferential tariffs is expected to be put into practice soon, sources from the Ministry of Commerce revealed.

With the arrangement, China and India, two developing nations, will offer each other special tariff treatment, which is to be more preferential than their most-favored-nation (MFN) tariffs.

China will provide a list of reduced tariffs to India based on its 2003 MFN tariffs, with the average tariff rate for goods in the list 13.5 percentage points lower than its MFN tariffs.

The list will cover 217 items, including food, pharmaceutics and leather, as well as chemicals, textiles and machinery.

Similarly, the Indian Government will also provide specific preferential tariffs for some products imported from China.

At the end of last month the Indian Government issued its list. The Indian side promised to offer specific tariffs, lower than its MFN tariffs, on 188 items from China.

They included aquatic products, paper, steel and other metals, chemical and rubber products, electric equipment and toys.

The bilateral arrangement was made under the framework of the Sino-Indian Bangkok Agreement signed in 1975, which set out the principles for preferential trade arrangements between developing nations.

Chinese and Indian delegations commenced negotiations on the agreement in Beijing and finalized the arrangement in February. Its implementation was set for the end of this year, after the necessary investigations and approvals.

Xu Changwen, an expert from the Chinese Academy of International Trade and Economic Co-operation, said China and India, the world's two most populous nations, see the implementation of the agreement as a win-win deal for both countries.

"The two sides both offer huge markets that should be economically complementary," said Xu.

(China Daily July 26, 2003)