Director-General of the World Trade Organization Ngozi Okonjo-Iweala speaks during the opening ceremony of the WTO ministerial meeting in Abu Dhabi, United Arab Emirates, February 26, 2024.
| Photo Credit: Reuters
India on February 26 expressed “serious” concerns in a WTO meeting in Abu Dhabi over increase in the use of trade protectionist measures by certain countries in the name of environment protection.
The remarks assume significance as the country has earlier flagged issues over the European Union’s (EU) decision to impose carbon tax (a kind of import tax) on sectors such as steel and fertiliser; and adoption of deforestation regulation by the 27-nation bloc.
Speaking at a session on sustainable development and policy space for industrialisation, Commerce Secretary Sunil Barthwal said developing countries require flexibility in the existing WTO (World Trade Organization) agreements to overcome the constraints faced by them in their industrialisation.
He also expressed concerns on the concerted attempt by the developed countries to club long-standing development issues like policy space for industrial development with new issues of ‘Trade and Industrial policy’.
The CBAM (Carbon Border Adjustment Mechanism), or carbon tax, will come into effect from January 1, 2026 for seven carbon-intensive sectors, including steel, cement, fertiliser, aluminium and hydrocarbon products.
The CBAM will translate into a 20-35% tax on select imports into the EU starting January 1, 2026.
India’s 26.6% of exports of iron ore pellets, iron, steel, and aluminium products go to the EU.
These products will be hit by CBAM. India exported these goods worth $7.4 billion in 2023 to the EU.
Mr. Barhthwal “expressed serious concerns regarding the increasing use of trade protectionist unilateral measures, which are sought to be justified in the guise of environmental protection”.
India’s exports of products like coffee, leather hides, and paperboard worth $1.3 billion annually to the European Union are likely to be impacted due to the deforestation regulation adopted by the EU in May 2023.
In another session on ‘Trade and Inclusion’, the Secretary, who is in Abu Dhabi for the 13th ministerial conference of the WTO, cautioned members that mixing non-trade topics with WTO rules can lead to greater trade fragmentation.
“Bringing issues like gender and MSMEs in the realm of WTO discussions was not practical because these issues were being discussed in other relevant international organisations already,” he said.
He added that issues like inclusion can be better addressed through targeted national measure as they did not fall in the domain of international trade relations.
“In the name of non-trade issues, several developed countries were already considering adopting trade distortive subsidies and had erected non-trade barriers.
Expressing concerns, he said such unilateralism and its negative spillover effect on the trade interests of developing countries.
India has taken a series of measures for greater inclusion of MSMEs and women, especially through use of Digital Public Infrastructure.
India against mainstreaming of climate change issues
India has strongly objected to the efforts of developed nations to include environmental or climate change issues at the World Trade Organisation (WTO) stating that the matters can be dealt with under specialized multilateral environmental agreements, an official said.
In a session on trade and sustainable development in Abu Dhabi, the country conveyed that developing countries have differentiated responsibilities for the mitigation of climate change.
A team of Indian officials is in Abu Dhabi for the 13th ministerial conference of the WTO. Trade ministers of 164 member countries of the multilateral trade body are gathering to discuss wide-ranging issues such as agriculture and fisheries subsidies.
Commerce and Industry Minister Piyush Goyal will also attend the meeting.
In the session, India stated that unilateral protectionist measures being taken by certain rich nations in the name of environmental protection are effectively nullifying the tightly negotiated balance of rights and obligations under the specialized multilateral environmental agreements (MEAs), the official said.
These agreements provide flexibility to developing countries towards their Net Zero transition, equity and Common but Differentiated Responsibilities and Respective Capabilities (CBDR-RC) in the light of different national circumstances.
“Therefore, India does not support mainstreaming of environment/climate change issues at WTO which is being more suitably dealt with under the specialized MEAs,” the official added.
On the issue of the rule book on industrial subsidies, India is of the view that these are new discussions which are initiated by a few members under the topic of trade and industrial policy in the last few months and there has not been enough discussion on the issue in the WTO among the members.
“It appears that this half-baked debate is an attempt by certain developed members to justify their policies of trade-distorting subsidies and protectionist unilateral trade measures in the name of the environment,” the official added.
New Delhi has stated that such topics definitely warranted detailed deliberations among the existing WTO bodies by all Members before being brought to the consideration of the highest body of the WTO – the Ministerial Conference.
“While we would be willing to participate in such discussion in the respective bodies, India cannot commit to proposals that are vague, lack clarity and have not matured,” the official added.
