‘WTO not place for discussing labour, environment issues’

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. Moreover, through WTO reform, the developed nations are pushing for fundamental changes in the structure of WTO to favour rich nations.

“India will continue to maintain its stance that labour and environment are non-trade issues and they should not be discussed at WTO, and trade barriers should not be erected under the guise of sustainable development. There are different multilateral forums, like in the United Nations, where these issues can be discussed. There are specialized bodies where these issues should be discussed. These are not trade issues, but they have trade implications,” the official said at a press briefing.

“The purpose of trade is to ensure sustainable development. So under the guise of this, developed countries cannot erect protectionist barriers; this is our submission,” the official said.

Another official said that the European Union’s (EU) Carbon Border Adjustment Mechanism (CBAM) and deforestation laws are cases of dragging environmental issues into trade matters.

The issue of the EU rolling out CBAM – which is applicable to all countries – however, cannot be discussed by the ministerial. The matter is being discussed between India and the EU bilaterally, the official added.

“Such measures may not only violate the rules of the WTO but also have systemic implications for international law as a whole, since unilateral action undermines multilaterally negotiated rights and obligations of countries,” the official said.

Last year in May, India had submitted a paper in the WTO to express its concern over use of environmental measures as protectionist non-tariff measures emphasizing unilateral measures such as EU’s carbon tax and deforestation law could disrupt global trade.

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.

The EU has decided to impose a carbon tax CBAM on certain sectors like steel, cement, fertilizer, aluminum and hydrocarbon products from 2026. In 2022, India’s 27 per cent exports of iron, steel and aluminum products worth $8.2 billion went to the EU.

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, as per think-tank Global Trade Research Initiative (GTRI).