Beijing may retaliate against India’s recent decision to extend an import ban on Chinese dairy products, the Times of India reported Wednesday.

”If India insists on this decision, China will respond to the safety and quality of imported products from India,” the Indian daily quoted from a letter sent by the Chinese quality control bureau to the Indian embassy in Beijing.

The statement came after India announced 17 June that it would extend its ban on Chinese dairy imports for six months.  The ban, in effect since September 2008, was slated to expire last week. In the fall of 2008, more than 20 countries imposed at least a partial ban on Chinese dairy after the chemical melamine was found in milk, infant formula, and other products.  Melamine, which is used to make plastics and fertiliser, is known to cause kidney stones and organ failure when ingested. Thousands of people, mostly children, became sick after consuming the tainted dairy products.

But milk is far from the only Chinese product that has been the subject of trade tensions between the world’s two most populous countries. In addition to the dairy ban, New Delhi has banned cell phones and toys made in China, citing  safety and health concerns.

The cell phone ban applies specifically to phones without an International Mobile Equipment Identity number, which allows enables officials to track the sale and use of mobile phones. Indian authorities are concerned about these phones because they have been used by terrorists to communicate with each other or to set off bombs. About 800,000 such phones enter India from China each month.

India also banned the import of Chinese toys, citing high lead content, but relaxed the ban when Beijing pointed out that New Delhi had not placed similar restrictions on toys from other countries. The ban will not apply to Chinese toys that are certified by the International Laboratory Accreditation Cooperation.

Beijing believes Chinese products are being unfairly stigmatised.  China has invoked the WTO/SPS agreement, requiring India to provide the basis for its ban on dairy products.  China points out that it has taken several measures to address the dairy problem, prompting several countries to lift their import bans.

The Times of India described the trading partners as “on the brink of a trade war” due to the Chinese letter and history of tension between the trading partners. But others downplayed these concerns. “The ban does not cover a large number of consumer electronic items, engineering items, furnishing items and other items. So a selective and limited ban doesn’t affect the overall trade volumes between the countries,” said Rajesh Rathi, vice-president of Chinese electronics firm TCL India Holdings.

At least until the global financial crisis dealt a severe blow to global trade flows, trade between India and China had been growing rapidly. In 2007, India and China conducted US $ 34 billion in two-way trade. Eleven percent of India’s imports came from China.

ICTSD reporting; “China warns of tit-for-tat over dairy ban,” TIMES OF INDIA, 1 July 2009; “China suffers from poor brand image syndrome,” THE ECONOMICS TIMES, 28 June 2009; “Govt bans import of Chinese mobiles, dairy products, toys,” TIMES OF INDIA, 18 June 2009; “India extends ban on Chinese milk products,” INDO-ASIAN NEWS SERVICE, 17 June 2009.