China warns of tit-for-tat over dairy ban

NEW DELHI: China has retaliated against India's ban on its dairy products, putting the two neighbours with a legacy of estrangement on the brink of a trade war.

China is annoyed with India's decision to extend the ban on its milk and milk products, which expired on June 24, by another six months until December 24. It has threatened to ban Indian products in retaliation.

In a letter to the Indian embassy, general administration of quality control bureau of China said, "During the period of financial crisis, we are strongly against trade protectionism of any form. As a member of BRIC and WTO, we hope your party determines the prohibition towards China's dairy products ASAP, in the spirit of safeguarding bilateral trade."

It added, "If India insists on this decision, China will respond to the safety and quality of imported products from India."

According to commerce ministry officials, China has raised doubts about food products imported from India, including seafood products, dairy products and sesame oil to pressurise India to lift the ban. "China has also taken a moral high ground by saying that it has not banned import of these Indian products," an official said.

Arguing for lifting the ban, China pointed out that after the milk scandal, it had taken several measures to deal with the problem and highlighted that these measures prompted countries like Singapore, Malaysia, Thailand and Chile to lift the ban on Chinese dairy products.

China has asked India to provide the scientific basis and risk assessment under the WTO/SPS agreement to enforce the ban on its products.

"The Chinese side shows grave concern because the ban is extended in India while it is removed in other countries. The reaction in India, regardless of the efforts and achievements by Chinese government, differ from good cooperation between both sides, lacking scientific ground and against scientific principle, the transparency principle and the minimum impact on foreign trade principle stipulated in WTO agreements," the letter said.

The ban on dairy products was extended for six months to ward off any threat of contaminated whitener which had caused deaths of several infants and made several thousands ill. A notification to this effect was issued by the Directorate General of Foreign Trade (DGFT).

India, in September 2008, had banned Chinese milk and its byproducts for three months which was later extended in December last year for six months. Melamine, used to make plastics and fertilisers, was found in infant milk and other dairy products of several Chinese firms. The dangerous chemical can cause kidney stones as well as failure of the organ.

More than a dozen countries in Asia and Africa had also banned milk and dairy product imports from China, while several others had recalled products suspected to be contaminated.