The government can choose to invoke the "nonapplication clause" article XIII of the agreement establishing the WTO. This permits either a WTO member or an incoming member to refuse to apply WTO commitments to one another and does not require any reason for doing so. However, nonapplication covers all WTO provisions and cannot be selective. Invoking nonapplication does not require India to vote against China's admission to the WTO. It can invoke nonapplication and still vote to have China admitted to the WTO. Further, nonapplication need not be permanent. A country can rescind nonapplication, resulting in both parties applying all WTO rights and obligations to each other. Such instances are not uncommon. The US, for instance, invoked these rights and later rescinded them in the case of Romania, Hungary and Mongolia. But the country invoking nonapplication must notify the WTO ministerial conference before the approval of the agreement on the terms of accession by the ministerial conference.

Since the WTO working party on China's accession is at an advanced stage of its work, the Indian government will have to move fast if it wants to exercise the right of "nonapplication". It will have to weigh the consequences, political and economic, of doing so. It should be understood that if India invokes nonapplication against China, its rights against China too are suspended. Clearly this calls for a serious examination of the costs and benefits of granting full WTO benefits to China once it joins.

What if this option is not exercised and China joins the WTO? India would have to honour all of its commitments under the WTO to China. However, depending on the final negotiating package that the ministerial conference will offer to China, India may have the option of applying special provisions to China.

We do not know what bilateral agreement was reached between India and China. The Indian government, in line with its time-honoured tradition of keeping its commitments to others secret from its own citizens, has classified the agreement as secret. Fortunately, the agreement negotiated between China and the USA was declassified as a result of the intervention of the US Congress. Since the US fought hard to extract concessions, it is unlikely that the final package will leave out any of the provisions of the US-China agreement. And since any agreement reached between China and any other country will apply to all WTO members under the most-favoured-nation principle, India will benefit from the US-China agreement. In particular, it will benefit from the protocol language agreed to between the US and China.

The final package offered to China will include special mechanisms to address increased imports from China that "cause or threaten to cause market disruption to the domestic producers of like or directly competitive products." This mechanism will be in addition to those already available under WTO rules. In particular it will allow India to address imports solely from China rather than from the whole world, getting around Article 2 of the WTO agreement on safeguards, which requires that "safeguard measures shall be applied to a product being imported irrespective of its source".

Furthermore, the conditions under which such safeguards restraints can be applied will be less stringent than the legal standards required in the WTO safeguards agreement. This provision will be applicable for 12 years after China accedes to WTO.

In determining price comparability, India would be able to treat China as a non-market economy unless producers in China can clearly establish that market economy conditions prevail in the industry. And, in particular, use a methodology not based on strict comparison with domestic prices or costs in China. However, India would need in such cases to notify the committee on anti-dumping practices the methodology used for price comparability. This provision will be in place for 15 years after Chinese accession.

A similar provision exists on subsidies and countervailing duties. In applying countervailing duty laws to China, India will be able to take the special characteristic of China's economy into account when measuring the subsidy benefit in China. In light of the role of state-owned enterprises (SOEs) in the Chinese economy and exports, subsidies to SOEs will be viewed as specific if, among other things, SOEs are the predominant recipients of such subsidies or receive disproportionately large amounts of them. This too will be in place for 15 years after Chinese accession.

China's protocol package will also include disruptions in the market because of imports of Chinese-origin textiles and apparel products covered by the Agreement on Textiles and Clothing (ATC). This textile safeguard provision will be in effect until December 31, 2008, which is after the ATC expires.

Taking these factors into account, and the fact that China may not be able to enter the WTO as a developing country, there are sufficient instruments to mitigate the effects of Chinese imports into India, provided early steps are initiated to study the actions required.