Despite pledges at WTO, protectionist measures and product dumping in markets are growing
Economic offenses that are taking center stage in the booming global trade navigating through the deadly pandemic-hit economies, geo-political crisis and proliferation of yet to be trusted crypto currencies.
Governments are also on the guard because they do not want leakages in revenue. While companies are complaining of ‘witch hunting and vendetta’, the stand of federal governments is that economic liberalization does not mean turning a blind eye to corruption and economic misdeeds.
The World Trade Organization (WTO) was set up in the mid-1990s, to make global trade in goods and services seamless and transparent. China joined WTO in 2001 while Russia did so in 2012. However, somewhere down the line, after the Doha Round commenced in 2001, further opening up global trade has got stuck due to differences between developed countries and emerging economies.
Lack of movement in multilateral co-operation has led to spawning of shadow economy and international economic offences.
To give just one example, First Information Reports have been lodged against at least 40 Chinese businessmen in India for fraudulently becoming directors of Indian investment drawing companies. But there are counter reports that these Indian companies’ proposals became dubious, some with land assets only on papers.
Chinese-origin businesses, not only from China but anywhere else from prospering economies, are under scanner in India after the country invaded eastern Ladakh and occupied vast tracts of land including Galwan Valley, Hot Springs and Pangong Tso.
India has also revised its FDI policy since April 2020 when the People’s Bank of China (PBoC) raised its stake in India’s largest non-banking mortgage provider HDFC. The central government now critical view any investments from China. Such investment requires a clearance from New Delhi.
Nevertheless, India’s imports from China have increased manifold, that is simply because products made in China are much cheaper than those made anywhere in the world. No matter what is said about the cost of production in China, the mass-producing Chinese factories are way ahead of those in other countries when offering competitively priced products and goods in the global market, in many cases it is called “dumping”.
Similarly, India opted out of the Regional Comprehensive Economic Partnership (RCEP), the world’s largest trading bloc of 15 Asian countries, or nearly a third of the global economy. Except for IT related services, small Indian enterprises would not have competed with manufacturers’ products from China other RCEP member countries on production costs and quality basis.
India is also pursuing cases against economic offenders from other countries. Its stance is that businessmen from China alone have not been singled out.
According to media reports, Indian police have pointed out that in total 38 FIRs have been filed against 150 people, including 60 foreigners. These include not only investors from China but also Singapore, the UK, Taiwan, the USA, Cyprus, the UAE and South Korea.
According to police, the charge against them relates to violating laws regarding registration of new companies and fraudulently becoming directors of Indian companies. Preliminary investigation shows that the accused gave false statements to the Registrar of Companies (ROC) and in some cases, the communication addresses of the companies were changed.
Such crimes are not possible without connivance of locals. Therefore, it is not surprising that even Indians have been charged including chartered accountants and company secretaries.
Money laundering through use of crypto currencies and the ongoing Russo-Ukraine war that has led to a fresh wave of the US, UK and European Union sanctions implies that perusal of economic offences will dominate global crime investigations for years to come. fiinews.com
