Last updated: 05 Mar 2024 12:30 Posted in:
The Indian government is ‘seriously concerned’ about what it sees as the increasing use of protectionist measures by countries in the name of environment protection, a senior figure has said.
Speaking at the recent WTO Ministerial Conference held in Abu Dhabi, Commerce Secretary Sunil Barthwal said developing countries require flexibility when it comes to the existing WTO (World Trade Organisation) agreements, to help them overcome the constraints they face as they develop their economies.
At the conference India flagged issues over the European Union's (EU) decision to impose carbon taxes on sectors such as steel and fertiliser, in effect creating an import tax for countries from outside the bloc.
The Carbon Border Adjustment Mechanism (CBAM), or carbon tax, will come into effect from 1 January 2026 for seven carbon-intensive sectors, including steel, cement, fertiliser, aluminium and hydrocarbon products.
The CBAM effectively introduces a 20-35% tax on some imports from that date. Some 26.6% of India’s exports of iron, steel and aluminium products go to the EU, which will be subject to CBAM. India exported these goods worth $7.4 billion in 2023 to the EU.
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 and paper, 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.
Barhthwal also cautioned other WTO 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 said issues like inclusion can be better addressed through targeted national measures, as they did not fall in the domain of international trade relations.
Expressing concerns, he said such unilateralism had a negative impact on the trade interests of developing countries.
Barhthwal added that India has taken a series of measures for greater inclusion of MSMEs and women, especially through use of Digital Public Infrastructure.
The WTO forum was attended by trade ministers from 164 member countries.