WTO not a place for discussing labour or environment issues

GS Paper III

News Excerpt:

Developed nations are accused of using sustainability to address trade deficits with developing nations.

More details on the news:

  • Rising environment related measures being introduced by developed nations could hurt exports from developing nations.
  • International trade experts have pointed out that developed nations have been pushing for non-trade issues in the garb of sustainability to reverse the growing trade deficit that it has with the developing nations.
  • The trade experts say that through WTO reform, the developed nations are pushing for fundamental changes in the structure of WTO to favour rich nations.

Decision of the EU

  • The EU has decided to impose a carbon tax CBAM on certain sectors like steel, cement, fertiliser, aluminium and hydrocarbon products from 2026.
  • In 2022, India’s 27% exports of iron, steel and aluminium products worth $8.2 billion went to the EU.
  • According to the think-tank Global Trade Research Initiative (GTRI), India’s exports of products like coffee, leather hides and paperboard worth $1.3 billion annually to the EU will get impacted due to the deforestation regulation adopted by the EU last year.

Carbon Border Adjustment Mechanism (CBAM)

  • Its primary objective is to avert ‘carbon leakage’. It refers to a phenomenon where a EU manufacturer moves carbon-intensive production to countries outside the region with less stringent climate policies. In other words, replace EU-manufactured products with more carbon-intensive imports.
  • From 2026, once the CBAM is fully implemented, importers in the EU would have to buy carbon certificates corresponding to the payable carbon price of the import had the product been produced in the continent, under its carbon pricing rules.
  • Conversely, if a non-EU producer is paying a price (or tax) for carbon used to produce the imported goods, back home or in some other country, the corresponding cost would be deducted for the EU importer.
  • The Commission, in coordination with relevant authorities of the member states, would be responsible for reviewing and verifying declarations as well as managing the central platform for the sale of CBAM certificates. Importers would have to annually declare by May-end the quantity and embedded emissions in the goods imported into the region in the preceding year.

Concerns raised by India:

  • Opposition to Non-Trade Issues : India intends to oppose any work programme or negotiations on non-trade issues such as environment, gender, and MSMEs at the WTO’s 13th Ministerial Conference (MC) that will be held from February 26-29 at Abu Dhabi, United Arab Emirates (UAE).
  • Advocacy for Specialized Forums beyond WTO: As per India, there are different multilateral forums, like in the United Nations, where these issues can be discussed. There are specialised bodies where these issues should be discussed.
  •  Concerns Over Environmental Measures: Last year in May, 2023 India had submitted a paper in the WTO to express its concern over use of environmental measures as protectionist non-tariff measures emphasising unilateral measures such as EU’s carbon tax and deforestation law could disrupt global trade.
  • Opposition to Inclusion of External Stakeholders: Inclusion of external stakeholders, such as civil society organisations and other international organisations, in discussions on policy making at the WTO is also something that India is fiercely opposing.

The move  by India is significant as it comes at a time when the trade ministers of 164 countries are gearing up to converge in Abu Dhabi to tackle a broad spectrum of topics, including agriculture, fisheries, and the nexus between trade and sustainable development. 

WTO’s  ministerial conference

  • The topmost decision-making body of the WTO is the Ministerial Conference, which usually meets every two years.
  •  It brings together all members of the WTO, all of which are countries or customs unions.
  • The Ministerial Conference can take decisions on all matters under any of the multilateral trade agreements.

India joined by other nations

  • India has been joined by countries including Russia, and Brazil, who have also flagged similar concerns over European Union’s (EU) carbon tax and deforestation regulation in a meeting of the WTO in Geneva, arguing that these measures would affect their industries.

Conclusion

India’s and other like minded nation’s stand at the WTO reflects a commitment to fair trade practices and maintaining a distinction between trade issues and non-trade matters. Clarifying the boundaries ensures a focus on sustainable development without compromising international trade relations.

Related news: No farm issues until food stocks issue is resolved: India before WTO talks

 

Prelims PYQ

Q. Consider the following statements: (UPSC 2017)

  1. India has ratified the Trade Facilitation Agreement (TFA) of WTO.
  2. TFA is a part of WTO's Bali Ministerial Package of 2013.
  3. TFA came into force in January 2016.

Which of the statements given above are correct?

(a) 1 and 2 only

(b) 1 and 3 only

(c) 2 and 3 only

(d) 1, 2 and 3

 

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