India in the WTO

The Statesman carries a report that an Indian NGO has welcomed statements from EU officials about including animal welfare as a non-trade concern in WTO agreements. The report:

Animal activists in India have welcomed a move by the European Union (EU) to push for inclusion of animal welfare in the World Trade Organisation (WTO) multilateral trade negotiations. They have said that they will pursue the goal of welfare of animals including stray animals that are subjected to untold sufferings.
Hailing the EU move as the right one, Citizens for Animal Rights (CFAR), New Delhi, said that the inclusion of animal welfare standards in WTO agenda is urgently needed to effectively enforce animal standards worldwide, and to improve the appalling condition of slaughter houses in many countries, including India. India should take the lead in promoting animal welfare as the land of Ahimsa, they said.
Animal welfare concerns are being increasingly recognised in food production around the world, but they must be formalised within the WTO trade agreements, according to several senior representatives of the EU who spoke at a recent Brussels conference on "Global Trade and Farm Animal Welfare". Czech agriculture minister Mr Petr Gandalovic, the new chair of the EU Farm Council, explained that the next six months will see a strong focus on European animal welfare standards, including new slaughter rules.
EU health commissioner Miss Androulla Vassiliou also highlighted the growing importance of animal welfare issues as live animals and animal produce are traded across the world, arguing for their inclusion as a "non-trade concern" in WTO agreements. She said: “Animal welfare is gaining rapid momentum, not only in the EU but worldwide”. The importance of animal welfare in ensuring the quality and safety of meat was also highlighted, as well as the goal of minimising animal suffering.

Its interesting to see another example of an Indian NGO engaging with WTO issues.  However, I am not sure (from the above report) as to whether the Indian NGO really understands this issue. They seem to be talking about welfare of animals in all circumstances including stray animals  and their concerns are more appropriately addressed by domestic regulation on domestic treatment of animals. The EU officials on the other hand want to make this a WTO issue and bring in a WTO rule that allows countries to prevent imports on the ground of animal welfare. The issue is whether such a new emphasis on animal welfare is needed in the WTO treaties. Isn’t GATT article XX sufficient to allow for measures on the ground of animal welfare, in as much as it would be necessary to protect public morals or to protect animal life or health? The SPS agreement also allows for measures for the protection of animal life or health. Such measures can include regulation of processes and production methods. The SPS agreement would also arguably allow for otherwise trade-restrictive domestic regulation necessary for humane animal welfare standards.

And with the Doha round floundering and increasing trade protectionism all-round, measures based on animal welfare might be the subject of new battles over non-tariff barriers in the livestock farm sector. The EU’s proposed ban on seal products on animal welfare grounds is already causing friction with Norway and Canada. See a report.

Due to the continuing interest in the discussion on the recent Indian measures against imports of toys from China on safety considerations (first the ban and then its revision to new mandatory safety standards), I have created a new blog category Indian safety measure for Chinese toys where all posts and comments on this issue can be accessed. I hope this will facilitate retrieval of information for those interested.

The Economic Times reported yesterday that China has raised the issue of the mandatory safety standards imposed by India on imported Chinese toys before the WTO Committee on Technical Barriers to Trade. 

In its complaint to the WTO, China has alleged that India’s quality checks violate the condition of “national treatment” laid down under WTO’s trade rules as they did not apply to toys manufactured in India or imported from any other country.

In its submission to the WTO committee on technical barriers to trade, China pointed out that since the restrictions apply only to Chinese toys, it could be viewed as a general ban on and a discriminatory measure against Chinese toys.

This breached a series of fundamental principles embodied in the WTO agreement, including that of most favoured nation treatment (every member country will be treated on a par with other member countries), and national treatment (product from a member country will be given the same treatment as that given to a product made locally), along with provisions of technical barriers to trade (TBT) agreement.

China also pointed out that India did not inform WTO about the restrictions, a procedure necessary under the transparency obligations of TBT agreement.

“China strongly requests that India revoke its discriminatory and WTO-inconsistent restriction on Chinese toys immediately,” the submission stated.

So China is alleging that even the revised Indian notification violates both MFN and national treatment. Further, it violates the notification requirement in the TBT agreement. For more background, see earlier posts on this subject under the category –public health. See http://indiainthewto.wordpress.com/2009/03/02/indian-government-relaxes-ban-on-chinese-toy-imports/

Why did the Indian government not use Clause 2.10 of the TBT agreement permitting the issue of safety standards in urgent cases with post-facto notification to the WTO secretariat and other members? Such a notification requires the statement of objectives and the rational for the standards. India will probably argue that these are international standards not requiring notification, but the application of these standards exclusively to imports from China does raise potential violations of MFN and NT.

The Indian authorities could have avoided a lot of trouble if only they had also followed the letter of WTO rules in this matter. The flexibility to take action against imports for safety reasons is fully available, but the Indians seem to have messed up on procedure. Is this an example of lack of capacity in Indian government institutions to use the WTO rules effectively? Why do they not consult lawyers more? 

The Hindu meanwhile has an interesting take on the matter:

China is likely to convey its concern to India over New Delhi trying to restrict import of Chinese goods, even though Beijing has not "yet" dragged its neighbour to the World Trade Organisation on the issue.

Chinese Vice Minister of Commerce Zhong Shan is expected to convey his country’s strong resentment over India resorting to protect its industry against imports from China, when he meets Commerce Secretary G K Pillai here this week, sources said.

"We have nothing on this yet," WTO spokesperson said in an e-mail from Geneva when asked whether China has lodged any formal complaint against India. China was upset over India slapping a ban on import of Chinese toys on January 23, which was partially eased within six weeks, provided the toys conformed to international health and safety standards.

The official Chinese media had reported that the country was mulling to drag India to WTO for contesting the ban. However, Mr. Pillai is expected to confront Mr. Zhong with data showing surge in imports from China.

While the bilateral trade has seen a sharp rise in the fiscal 2008-09, it is highly skewed in favour of China. In 2007-08, India’s exports to China stood at USD 10.83 billion, while imports was USD 27.11 billion.

So why would Indian Commerce Secretary talk to the Chinese about surging imports in a matter to do with safety issues? To be fair, the discussions between the Indian Commerce Secretary and the Chinese Vice Minister of Commerce will likely cover all the recent trade tensions between the two countries. And the discussion of import surges will probably feature in that context.

The Indian government has relaxed its import ban on Chinese toys and will now allow imports of toys from China provided these are accompanied by prescribed safety certification. For more see earlier post. The text of the new notification issued today reads:

TO BE PUBLISHED IN THE GAZETTE OF INDIA EXTRAORDINARY

PART-II, SECTION—3, SUB SECTION (ii)

GOVERNMENT OF INDIA

MINISTRY OF COMMERCE AND INDUSTRY

DEPARTMENT OF COMMERCE

NOTIFICATION NO. 91 /(RE-2008) / 2004-2009

NEW DELHI, DATED 2^nd MARCH, 2009

S.O. (E) In exercise of powers conferred by Section 5, read along with Section 3(2) of the Foreign Trade (Development and Regulation) Act, 1992, also read along with paragraph 2.1 of the Foreign Trade Policy, 2004-09, the Central Government hereby amends Notification No. 82 /(RE-2008) / 2004-2009 dated 23^rd January, 2009 as under:-

1. “Import of ‘Toys’ from China appearing under ITC Codes 9501, 9502, 9503 of Schedule – I of ITC(HS) Classifications of Export and Import Items is prohibited for six months with immediate effect and until further orders. However, import of toys from China accompanied by the following certificates shall be permitted:

(i) A certificate that the toys being imported conform to the standards prescribed in ASTM F963 or standards prescribed in ISO 8124 (Parts I-III) or IS 9873 [Parts I-III];

(ii) A Certificate of Conformance from the manufacturer that representative sample of the toys being imported have been tested by an independent laboratory which is ILAC accredited and found to meet the specifications indicated above. The certificate would also link the toys in the consignment to the period of manufacture indicated in the Certificate of Conformity”.

2. This issues in public interest.

(R.S. Gujral)

Director General of Foreign Trade and

Ex-officio Additional Secretary to the Government of India

(Issued from F. No. 01/89/180/0053/AM01/PC-2(A)

This comes a day after a news report that a Chinese complaint over the ban was discussed in the Indian Parliament:

"Ambassador of People’s Republic of China to India has expressed the concern of their government regarding the ban on import of Chinese toys…," Minister of State for Commerce and Industry Jairam Ramesh said in a written reply in Rajya Sabha to a question if China has threatened to drag India to the WTO over the ban.

China Daily had filed this report about how the ban had led to stocks shortages in India even for internationally-renowned branded toys given their made-in-China tag:

NEW DELHI — Indian toy dealers are running out of stocks of toys and prices of toys have soared by 30 percent to 100 percent due to a government ban on Chinese toys, reported local daily Times of India Saturday.

The report said since the ban on Chinese toys were imposed last month, the stocks of importers and wholesalers have started diminishing.

The report quoted Ashima Razdan, a merchant at the Mama’s Little Donut in Panchsheel Enclave market in New Delhi, as saying that as "every toys of branded companies which are available around the world are made in China," the banning of Chinese toys led to retailers selling imported toys like special puppets "gone out of stock".

The report also quoted Saurabh Kharbanda, a merchant of Maya Sports in Janpath in the Indian capital who has been in toy business for over 40 years, as saying that "even internationally renowned brands have stopped their billing and we are not getting stocks".

"Prices of some unbranded toys have even become double or higher. We have never seen such a situation before where getting supplies is becoming next to impossible," the report quoted him as saying.

A Bloomberg story reported on the panel established by the Indian government to recommend safety standards for toys:

India has set up a panel to prescribe more stringent standards for the permissible level of hazardous substances, including lead, in toys.

The panel will “very soon come up with recommendations,” junior industry minister Ashwani Kumar said in parliament today.

The plan to toughen the safety standards comes after a spate of recalls of Chinese-made toys by companies such as Mattel Inc. India on Jan. 23 banned imports of Chinese-made toys for six months, saying they were a hazard to public health. Mattel recalled more than 21 million Chinese-made toys in 2007.

The imported toys contained more lead than admissible, Kumar said today. The new rules will specify the quantities of hazardous substances that will be permissible and make the law more enforceable, he said.

The U.S. Congress last year passed the first overhaul of consumer protection laws in almost two decades after millions of Chinese-made toys were recalled because of excessive lead content.

India said it’s ready to discuss its ban on imports of Chinese toys after China said the block will have a “serious impact” on bilateral trade relations.

Asia’s second-biggest economy will probably ask the World Trade Organization to investigate the Indian ban, the official China Daily newspaper reported Feb. 5.

More than 4,000 Chinese toy companies closed last year because of waning demand and tighter safety standards, the official Xinhua News Agency reported Feb. 7.