Sunil Barthwal, Commerce Secretary
India on Saturday said unilateral environmental measures such as the European Union’s carbon tax do not reflect equity principles and hinder fair global trade.
Trade Secretary Sunil Barthwal said countries in the Global South face challenges both in terms of climate change and sustainable development strategies and in responding to unilateral measures such as the CBAM (carbon border adjustment mechanism).
“Unilateral environmental measures do not reflect the principles of equity and common but differentiated responsibilities; and they hinder fair global trade,” he said in a virtual speech at the third Voice of the Global South Summit.
India has expressed concern on various platforms over the EU’s decision to impose a carbon tax on certain sectors as it would hurt the country’s exports. The country is currently negotiating with the EU on this issue.
The EU has decided to impose a CBAM, or carbon tax, which will come into force from 1 January 2026. Initially, it would be imposed on seven carbon-intensive sectors, including steel, cement, fertilisers, aluminium and hydrocarbon products.
According to GTRI think tank, when fully implemented, the EU-CBAM will result in a 20-35 per cent import duty on Indian companies and the domestic industry will have to share all details of their plants and production with the EU.
Countries in the Global South include both developing and least developed countries (LDCs).
The Secretary also said that these countries need to increase cooperation in the areas of food security and global value chains, address the challenges faced by MSMEs and also the challenges posed by the current international trading system.
He advocated for investments in advanced manufacturing while fostering a workforce with the skills to take on high-end manufacturing, as this is crucial for developing countries and least developed countries (LDCs) to move up the value chain.
Regarding services exports, the Secretary said developing countries account for 24 percent of world services trade and the share of LDCs is only 0.61 percent.
“We need to develop a vibrant service sector; our people providing services in other countries are the main contributor to global wealth,” Barthwal said, adding that by 2023, developing countries, including LDCs, will receive around USD 687 billion in remittances.
However, the high cost of remittance transfers is a concern for developing countries and LDCs, he said.
Citing an example, he said a 5 percent cost reduction would provide an additional $40 billion to recipient countries.
India’s proposal to reduce the cost of cross-border remittances has found support from several WTO members.
On the issue of food security, the Secretary said that countries in the Global South need to collaborate and find solutions to address the challenges of ensuring food security.
He also said that MSMEs play a key role in trade growth and job creation, but they face problems such as high cost of trade financing, information gaps and lack of capacity to access foreign export markets.
“I must highlight that digital solutions offer a promising prospect to address the trade cost-related issues faced by MSMEs in accessing export markets. In this regard, countries in the Global South should consider implementing interoperability of payment systems to enable greater trade linkages and benefit MSMEs in improving their access to global markets,” Barthwal said.
He added that these companies also face problems related to trade facilitation and logistics infrastructure.
The secretary said they face barriers to accessing foreign markets due to high trade compliance costs related to customs clearance, procedures and other regulations.
“We need to address all these issues with our united voice,” he said.
He added that it is necessary to provide developing countries and LDCs with flexibility in the form of special and differential treatment (SDT) and common but differentiated responsibilities (CBDR) principles so that they can preserve their policy space to achieve development objectives.
“Special and differential treatment remains crucial and non-negotiable within the WTO framework to ensure that global trade is fair, inclusive and sustainable,” he said.
(Only the headline and image of this report may have been reworked by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
First published: August 17, 2024 | 20:31 IS
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