While the World Trade Organisation (WTO) looks to promote environmental awareness alongside trade, India has opposed the efforts of developed nations to hasten an agreement on environmental issues at the upcoming WTO Ministerial Conference (MC13). India asserts that WTO members should not be formulating regulations regarding environmental matters, emphasising that any MC13 discussions should adhere to this viewpoint.
India maintains that a consensus must first be reached regarding the role that the WTO can and should play in discussions related to the environment. It also acknowledges certain statements made by members during the last Trade Negotiations Committee meeting, advising caution when pursuing specific environmental outcomes for MC13. The MC13 is scheduled to take place in Abu Dhabi in February next year.
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The WTO recognises its limited role as an environmental agency, primarily focused on promoting international trade and open markets. However, WTO regulations allow members to implement trade-restricting measures to safeguard their environment under specific conditions.
India unhappy over WTO ministerial agenda
This is not the first instance in which New Delhi has raised concerns at the WTO about the growing trend of employing environmental measures as protectionist non-tariff barriers. In fact, several other countries, such as China and Colombia, have also questioned such methods, highlighting that these increasing environmental trade measures often target developing countries. One notable example is the European Union’s Carbon Border Adjustment Mechanism (CBAM), which could disproportionately affect developing nations.
Previously, both India and Colombia had circulated papers outlining how work should be conducted at the WTO, particularly because developing nations were bearing the brunt of these measures. The Indian government has expressed concerns about CBAM to the EU and is considering filing a complaint with the World Trade Organisation (WTO) against this unilateral action. The United States has also argued that it is premature to discuss specific environmental outcomes for MC13 at this stage.
The primary point of contention for New Delhi at MC13 appears to be the European Union’s Carbon Border Adjustment Mechanism (CBAM). CBAM mandates rigorous reporting of carbon emissions for imports from countries like India in sectors such as cement, iron and steel, aluminium, fertilizers, and electricity into Europe. While the World Economic Forum identifies its primary goal as preventing carbon leakage, which involves EU manufacturers relocating carbon-intensive production to nations with less stringent climate policies, Finance Minister Nirmala Sitharaman has recently criticised it as a double-punishing and discriminatory trade barrier.
In a document shared with the WTO in Geneva in March of this year, New Delhi argued that in the fight against climate change, developing and impoverished nations cannot be compelled to undertake the same commitments as wealthier nations. India has also raised concerns about environmental-based management of minimum residue limits in agriculture, deforestation-related measures, and quantitative import restrictions based on the environmental content of commodities, in addition to CBAM.
On the other hand, the European Union has been advocating for enhancing the WTO’s deliberative function as part of ongoing WTO reform discussions. The union emphasises that environmental and climate issues must occupy a more prominent place on the WTO agenda due to the urgency of addressing climate and environmental challenges. However, problems arise when developed nations are perceived as insincere in their efforts to control climate change and are merely greenwashing to demonstrate their commitment to mitigation.
The EU has also proposed increased transparency, coordination, and policy dialogue on trade-related environmental measures. It believes that partner nations should engage in early exchanges of information and discussions on their design to maximise climate and environmental benefits while minimising trade-restrictive impacts. While countries like India remain sceptical of the EU’s sincerity, the union has found allies in nations like Japan, which support the EU’s stance and express the importance of preparing for these issues.
Switzerland has also welcomed climate change as an integral part of the WTO agenda, advocating for the recognition of climate change, biodiversity loss, and pollution as global challenges that must be addressed at the upcoming Ministerial Conference. Norway shares a similar perspective, asserting that MC13 should drive further progress in the WTO’s contributions to addressing environmental challenges.
Those in favour of the WTO’s willingness to incorporate climate change as a focal point on the organisation’s agenda unite in their belief that climate change is a challenge that transcends global issues and affects trade. They argue that the entire membership must collaborate on green solutions, identifying respective comparative advantages through negotiations, as stated by a Norwegian representative. Australia has also urged a focus on the intersection between trade policy and the environment, particularly regarding climate change.
Previously, Policy Circle had argued that while India must not forgo its economic interests, there is a daunting challenge in articulating its concerns without alienating key international partners. With its G20 presidency, India can also amplify the concerns of the Global South and rally other nations against the EU’s carbon tax system, considering the challenges CBAM presents to less affluent countries.