Appendix-II

Memorandum of Understanding between the Government of the People’s Republic of China and the Government of the Republic of India in terms of Article XII of the Agreement Establishment the World Trade organization in partial fulfillment of the requirements for the People’s Republic of China to accede to the World Trade Organization.

Keeping in view the requirement for the People’s Republic of China to accede to the World Trade Organization, in particular Article XII of the Agreement Establishing the World Trade Organization, the people’s Republic of China commits to the Government of India as follows:

1. The People’s Republic of China confirms that the Tariff Rate Quotas that will be established for agricultural Products, such as for rice, will be global quotas and will not be allocated selectively among different supplying countries. Allocation of Quotas to end-users including State Trading Enterprises and other entities shall be transparent and fair and all products imported under Tariff Rate Quotas will be accorded national treatment, in particular under Article III of the GATT 1994. The Tariff Rate Quotas will be administered in a manner that will provide an opportunity for Indian exporters to supply the products on terms and conditions, which are transparent and non-discriminatory. The People’s Republic of China agrees to fully take into account the concerns of India before finalizing the system.

Phyto-Sanitary Measures

2. China agrees to immediately review the current plant quarantine restrictions on the import of mangoes and other fresh fruits and vegetables from India into China. In this regard China commits itself to sending to the Government of India full information about the phyto-sanitary statutory, administrative and other formalities for the entry of fruits and vegetables of Indian origin by 31^st March, 2000. Both India and China agree that internationally recognised phyto-sanitary norms and procedures will be applied in respect of agricultural products traded between the two countries and the measures shall be transparent and based on scientific principles. Both countries agree to conclude a protocol as early as possible on phyto-sanitary measures and certification procedures to be applied by the two countries. A Chinese expert team will visit India for this purpose before 31^st May, 2000. The exact dates of the visit will be finalised based on mutual agreement.

Pharmaceuticals

3. The People’s Republic of China confirms that their laws, regulations and measures applying to imports, distribution, sale and supply of pharmaceuticals, including in respect of registration of drugs, will be framed and administered on a non-discriminatory basis, both in respect of products from different foreign supplying countries and in respect of products from domestic manufacturing companies including foreign invested joint ventures.

Banking :

4. The People’s Republic of China takes note of the interest of Indian banks to establish commercial presence in China and agrees to give positive consideration to their applications as and when submitted. The specific commitments by China in the banking sector is attached at Annexure A.

Insurance:

5. The People’s Republic of China takes note of the interest of Indian insurance companies to establish commercial presence in China and agreed to give positive consideration to their applications as and when submitted.