As India pushes for free trade agreements (FTAs), non-tariff issues such as carbon emission standards, climate change measures and work and gender balance standards are becoming an increasingly substantial part of these new agreements. , weighs heavily on these ongoing negotiations.
Policymakers in New Delhi have expressed concern that these issues could become a hurdle for India to enjoy a comparative advantage in its labor force, with officials citing the ongoing UK In the FTA negotiations with the United States, it has expressed the view that these increasing issues need to be handled “carefully.” The European Union and the Comprehensive Economic Cooperation Agreement (CECA) between India and Australia.
Given the series of events related to India’s G20 presidency and the ever-shifting focus of New Delhi on political lobbying by influential governments, the window for concluding these FTA negotiations will be by early next year. There is also the considered view of the policy community that it could be narrowed. Lobbying groups such as farmer unions and the auto sector could intensify by the 2024 general election.
Many of the current negotiations prioritize climate action, carbon emissions and labor issues over pure trade issues. Indian negotiators see these as tools that may provide a cue for partner countries to invoke non-tariff protectionist measures, especially as advanced economies face downturns. there is
“There are significant differences between the old (FTAs negotiated before 2015) and the new FTAs currently being discussed. Previously, mainly trade-related issues dominated. Rules, operations and tariff measures. There used to be about a dozen chapters, but now the new FTAs have doubled the number of chapters and non-trade issues such as gender balance, labor standards, environment and climate issues dominate these FTAs. That is why we are stepping in. We must negotiate these (FTAs) properly in view of this situation,” said a senior government official involved in the negotiations. Indian Express.
For example, in developed countries such as the United States, carbon emissions during the production of molten steel have been raised as a non-tariff related issue. India mainly produces steel from iron ore, which is obtained from mining, while most developed countries rely on methods of producing steel from scrap, which means less carbon emissions are in the negotiations. said the official involved.
“…In our country, it (the production of steel) is the main process, but in some developed countries, we convert scrap into steel. , a carbon adjustment tax could be imposed … in this way, non-tariff barriers are becoming a feature,” the official said.
“We have to be very careful in FTA negotiations… Tomorrow we may benefit from the GSP (Generalized System of Preferences), but if they put up non-tariff barriers citing labor and the environment, It becomes a problem…nominally” standards, adjustments, child labour, many countries do this. If that happens, we will lose our comparative advantage due to non-tariff barriers, and we will not be able to take full advantage of (the merits of an FTA).”
India has been a beneficiary of the US GSP program since November 1975, allowing beneficiaries to export thousands of products to the US without additional tariff burden, but then in 2019 Donald It was withdrawn by the Trump administration.
The European Union is also proposing a Carbon Boundary Adjustment Mechanism (CBAM) to tax carbon-intensive products such as steel, cement, fertilizers, aluminum and power generation from 2026. Under the CBAM system, EU importers purchase carbon certificates. Equivalent to the carbon price that would have been paid if the commodity had been produced under EU carbon pricing rules. Many developing countries, including India, are expected to object to this levy.
As for the India-Australia trade deal, after an interim agreement signed in April came into effect on 29 December, the government has announced a full deal focusing on the more controversial issues of dairy and agricultural products. We plan to launch a tougher round of negotiations towards an agreement.
“The FTA with Australia was the best case … given the complementarity between the major export products of the two countries … will enter into force on 29 December. We had to go to a full fledged (FTA) where there would be other harder problems (sic), the easy ones were sorted and this had its advantages. raw materials from which to access the labor market You will get better facilitation with respect to Australian visas After student visas you will get better facilitation for work visas However, other countries such as the UK and the EU have not agreed to this, so such issues are prominent in bilateral talks (for these agreements).
The problem, however, is that some of the early harvest schemes for these species, signed with Australia and under discussion with other countries, could target easily available fruits and could result in more demanding goods and services. This strategy could significantly delay the completion of a broader FTA and could lead to roadblocks. So far, many Australian commodities have been excluded by New Delhi from tariff reductions under the Early Harvest Agreement, including dairy, rice, wheat, chickpeas, beef, sugar, apples, iron ore and toys.
Also, early harvest agreements that do not develop into full-fledged FTAs face legal challenges from other World Trade Organization (WTO) member countries. trading partner. Exceptions to the rule are full-blown FTAs subject to some conditions.
One covenant incorporated into GATT Article XXIV.8(b) is that the agreement eliminates tariffs and other trade barriers on “substantially all trade” between WTO members that are signatories to the FTA. It stipulates that we should aim to “For the purposes of this Agreement … a free trade zone shall be understood to mean a group of two or more customs territories, where tariffs and other restrictive trade rules … generally excluded from all trade, originating from such regions,” the article states.
A trade deal with the UK is also awaiting conclusion, even though the two countries had begun FTA negotiations in January with the aim of completing negotiations by Diwali (24 October). is past due. India and Britain have completed her six rounds of negotiations so far. UK Trade Secretary Kemi Badenok said he will visit India from December 12 to 13 for the sixth round of negotiations, with the seventh round scheduled to take place early next year. Badenok told the Financial Times that he of India and the UK is unwilling to meet the FTA deadline, and that in both countries he said that if a deal is not reached in the general elections scheduled around 2024, negotiations “will continue.” It will be difficult,” he added. fixed by then.
Shadow of FTAs
As trade negotiations with the UK, EU and Australia enter a critical stage, Indian policymakers are not only gearing up for the G20 summit next year and national elections next year, but also a new series of I found myself fighting non-tariff measures. a real problem now. The recession in advanced economies has also fueled protectionist tendencies and has responded by building walls, not necessarily based on tariffs, to discourage imports from other countries.
