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.

Look forward to reading this, (the paper contains case-studies for marine products and tea) and will comment on it later:

Pavel Chakraborty ad Nidhi Srivastava, “Environmental Standards and India’s Market Access Concerns” Icfai Journal of Environmental Law, Vol. 7, No. 2, pp. 11-21, April 2008 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1114038

Abstract:
Trade liberalization and improved access to the world’s markets lie at the heart of the sustainable development paradigm for developing countries. It can be growth in aggregate income and its distribution across various economic segments of society, efficiency in allocation of resources, generation of finances for development, or transfer and application of improved technologies and best practices. The expansion and diversification of export opportunities, including diversification into higher value products, also intensified the debate regarding the environmental protection measures and the international trade. The debate on the impact of trade liberalization has intensified with a growing literature on the effects of international trade on the environment. Many participants in the trade and environment debate fear that there could be conflicts between trade liberalization and environmental concerns. The issues of environmental regulation and international competitiveness revolve around the question of harmonization of standards and it is generally observed that competitive deregulation could lead to downward harmonization of environmental standards. This paper addresses reconciliation of these two – somewhat disparate – points of view. It discusses the key issues related to market access, particularly the impact of environmental measures on the access from an Indian perspective in case of two products: (1) marine products, and (2) tea. This paper covers a canvas that includes a background discussion on market access issues related to environmental requirements, emergence of environment-related issues in the WTO agenda, environmental provisions in various agreements that could pose a non-tariff barrier, discussion on experiences with specific non-tariff barriers that have posed a market access concern in individual exportable sectors of India, along with developments in domestic regulation often in response to external requirements. This paper concludes by recapitulating India’s past submissions on Item 6 of the CTE agenda relating to market access issues and providing the way forward. Clearly, the thrust is on developing a position or stand for India that is based on sound logic and concrete experiences from specific export-oriented industries.

Reuters reports:

A WTO dispute settlement panel said a requirement by the United States on India and Thailand to post bonds to cover full anti-dumping duties on imports of shrimp violated trade rules.

The panel, confirming preliminary rulings from October, also backed a Thai complaint against a controversial U.S. method of calculating anti-dumping duties, known as zeroing, which has come increasingly under attack at the WTO.

The panel found the application of the bond to cover the full duties was inconsistent with anti-dumping rules, as was the U.S. use of zeroing to calculate anti-dumping margins.

…

What the dispute was about: 

U.S. Customs introduced a requirement in 2004 that exporters subject to paying anti-dumping duties had to post a bond covering the full amount if there was a risk of default.

Previously affected countries had to post a bond equivalent to only 10 percent of the duties.

India and Thailand argued the requirement to post the full amount was an excessive financial burden on exporters paying the anti-dumping duties.

WTO rules allow a country to levy duties on goods that are “dumped”, or imported at a price below what they are sold for in the exporting country, if that hurts competitors in the importing country.

But there is much controversy about how such anti-dumping duties are calculated and implemented.

The full bond requirement was illegal because WTO rules do not allow an importer to counter dumping with specific measures besides anti-dumping duties.

The U.S. response:

Washington called the findings of the panel “mixed.”

“The panel rejected many of Thailand and India’s claims that an additional bonding requirement is “as such” inconsistent with U.S. obligations under the WTO Anti-dumping Agreement,” said Gretchen Hamel, a spokeswoman for Trade Representative Susan Schwab.

The background:

The case affects Thai seafood exporters such as Thai Union Frozen Products (TUF), Charoen Pokphand Foods and Seafresh Industry.

It will also interest a range of Indian companies including Avanti Feeds, Uniroyal Marine Exports, Waterbase and unlisted exporters Devi Seafoods and Falcon Marine Exports. Thailand is by far the biggest supplier of shrimp to the United States.

According to the U.S. National Marine Fisheries Service, the United States imported $3.9 billion of shrimp in 2007, down from $4.1 billion in 2006.

In the biggest single category, peeled frozen shrimp, accounting for one third of the total, Thailand was the biggest supplier, with nearly one third of that type, followed by Vietnam, Indonesia and India.

Thai exported shrimp end up on the shelves of U.S. retailers such as Wal-Mart Stores.

Total Thai shrimp exports rose about 10 percent in volume terms to 360,000 tonnes in 2007, but in cash terms fell to about 78 billion baht ($1.99 billion) from 84 billion in 2006 because of the strong baht and falling shrimp prices. The Thai shrimp association expects about 60 percent of this year’s exports to go to the United States.

Last year another ruling from the WTO forced the United States to lift anti-dumping duties on shrimp from Ecuador.

One immediate point of interest would be an analysis of the difference in the strategies of Thailand and India in this dispute. India’s legal claims went beyond what Thailand argued. More on this and oher aspects of the panel rulings later.

Kamat, Manasvi Manoj and Kamat, Manoj Subhash, “Implications of the WTO-GATS on Indian Marine Industry, Issues and Policy Perspectives” . Available at SSRN: http://ssrn.com/abstract=1069521

SSRN Abstract:
The outcomes of WTO negotiations under the Doha round, Hong Kong development round and the changing European Union regulations are likely to place new hurdles on the marine exports emerging from developing economies like India. In the light of the above, we attempt to discuss the impact of WTO-GATS on the Indian Marine Trade and Service industry, analyze the challenges faced by the developing countries, and suggest way-outs to respond them. Many other WTO-GATS related aspects have repercussions on the marine exports from the developing countries in Asia and India in particular; namely the outcomes from the Dispute Settlement Mechanism (DSM), the relation between trade rules and Multilateral Environmental Agreements (MEAs), Technical Assistance and Capacity Building (TA & CB) and the provisions for Special and Differential Treatment (SDT). The impact of GATS and the implications on Indian marine trade & services are specifically assessed in context of Tariff barriers, Non-tariff measures, Subsidies and Eco-labeling. Relevant policy implications follow the issues discussed.

India and Brazil have criticised the new EU-US proposal for a new WTO “green trade agreement”. The proposal envisaged as a two tier process would according to the European Commission compise of these two stages:

• First, agreement to liberalise trade in at least 43 goods with clear environmental benefits drawn from a World Bank list including solar panels and wind mill turbines.
• Second, an even more far-reaching Environmental Goods and Services Agreement (EGSA) to be negotiated by WTO Members, which would foresee further binding commitments to eliminate tariffs and non-tariff barriers in trade in green technologies. In services, highly ambitious and comprehensive commitments would be undertaken that address environmental and climate change challenges such as waste management. Developing countries would be asked only to make contributions proportionate to their level of development.

A two page summary of the proposal is available here.

The Guardian reports on Indian and Brazilian reaction to this proposal:

“We don’t think it’s a basis for negotiation on environmental products,” said Brazil’s top trade negotiator, Roberto Azevedo. “Brazil is deeply disappointed with the proposal. We find the proposal modest, we find it biased and we find it protectionist,” he told a briefing.

Azevedo noted that the U.S.-EU proposal made no reference to biofuels, of which Brazil is a major producer, or the technologies to produce them, and said the list was geared to U.S.-EU products. “Anything that they don’t produce is not on the list,” he said.

Bhatia said India could support proposals to free up trade in goods whose sole use was countering climate change, such as solar panels or windmills, but the list could be extended over time to new models of cars or refrigerators that were more energy-efficient, and that was unacceptable.

“Their list is a disguised effort at getting market access through other means and does not satisfy the mandate for environment,” he said.

India and Brazil are also opposing the new negotiating text on “rules” (view it here) that would allow “zeroing” for calculation of anti-dumping duties.

India’s reaction to the fisheries text, is also not very enthusiastic:

Bhatia said the proposals on banning most fisheries subsidies, welcomed by environmental groups, would cause India difficulty as it tries to improve the living conditions of its fishermen, among the poorest people in the country.

The proposals do give some leeway to developing countries to support fishermen, but he said the conditions, such as setting up approved fisheries management schemes, were too onerous.

India had proposed special treatment for small scale, artisanal fisheries on development grounds. Draft article III of the new fisheries text deals with S&DT for developing countries.

The Financial Times reports that an Indian government owned investment company is being readied to secure overseas coal resources to meet India’s growing energy requirements for its steel and power plants.

The FT also carries an accompanying report on India’s imminent struggle for energy supplies against Chinese competitition.

The country has the world’s fourth-largest coal reserves. But a mixture of bureaucratic red tape, poor infrastructure, corruption and social unrest around the mines means the growth of the country’s domestic coal-mining industry is not keeping pace with the demands of its rapidly expanding economy.

To overcome this, India’s biggest energy producers, from Tata Power to state-run companies such as National Thermal Power Corp, are on the hunt for offshore assets.

The move, combined with a government initiative to secure overseas supplies of coking coal for the steel industry, signals the extension of strategic competition for resources between China and India to a frontier beyond oil and gas for the first time.

If India is to sustain economic growth of 8 per cent a year, it will need to nearly double the capacity of its power industry from 135,000 MW today to 250,000 MW by 2015, according to Tata Power.

But India is already running a coal deficit, with coal demand last year for the steel and energy industries reaching 452m tonnes, of which 61m tonnes had to be imported.

By 2015, the country will be consuming about 800m tonnes of coal but will have to import more than a quarter of this, according to estimates from KPMG.

Meanwhile things are heating up for movement towards a new WTO accord on trade in energy. Pascal Lamy, the Director General of the World Trade Oreganization recently addressed the World Energy Congress and suggested that “The WTO can contribute to a more efficient allocation of energy resources and generally a better trading environment for energy”.

Gerald Doucet, World Energy Congress secretary-general is reported to have

urged WTO Members to “open a new chapter” of energy negotiations, looking in particular at new issues arising due to the need to significantly increase the use of clean and renewable energy. Currently, standards, subsidies and other measures to encourage the development and use of renewable energy have not been comprehensively considered within the WTO, leaving the legality of certain measures unclear.

Doucet warned against a “trade war between those who are concerned over carbon emissions and those who are not.” This could come about if countries with stringent climate change policies decide to slap border taxes on imports from nations that take a more lax approach to emissions controls.

BI-ME has a detailed piece on Lamy’s speech and on how energy trade already features in the ongoing Doha talks.

The first area where energy stands explicitly on the Doha agenda is the services negotiations. For the first time WTO members are discussing energy as a specific services sector.

Energy was not addressed in any comprehensive manner during the Uruguay Round, because the liberalisation of the sector was not yet on the political agenda. As a result, WTO members undertook limited commitments to open their markets to foreign operators in energy services, including services incidental to mining at oil and gas fields, services incidental to energy distribution — of, inter alia, gas and electricity — and pipeline transportation of fuels.
However, progressive unbundling of state-owned integrated utilities and technological developments have created room for private operators. This, in turn, has raised the profile of energy services in the WTO.

The current negotiations on energy services cover a broad range of activities relevant for energy companies and span all energy sources, including renewables. Commitments are sought on activities such as drilling; engineering; technical testing and analysis services; construction work for long distance and local pipelines, and for mining; wholesale trade services and retailing services of fuels.

The negotiations are addressing the establishment of commercial presence as well as easing the intra-corporate transfers of specialists and professionals working for energy services companies.

Furthermore, some WTO members have proposed to negotiate additional disciplines which would address, for instance, regulatory transparency, non-discriminatory third-party access to networks and grids, the need for an independent regulator, and requirements preventing certain anti-competitive practices. All this is already on the table.

A second area of the Doha Round relevant for you relates to clean technology. The Doha Round aims at opening markets to environmental goods and services. Many of these have a direct application for promoting energy efficiency, such as material needed for production of renewable energy, heat management and pollution control. Examples of environmental goods that have been proposed include wind turbines, solar panels, geothermal energy sensors, fuel cells and electricity meters. Eliminating or reducing tariffs on environmentally-friendly goods and technology would facilitate their wider dissemination.

Similarly, the negotiations on environmental services include negotiations on energy-relevant activities, such as services to reduce exhaust gases and improve air quality, nature and landscape protection services or services for the rehabilitation of mining sites. The environmental chapter of the WTO Doha Round can therefore make a very concrete contribution to the promotion of energy-efficient technologies. It is a contribution in the making that the trade community can bring to the upcoming UN Climate Change Conference in Bali.

A third area of importance comes under the “trade facilitation” negotiations. Here WTO members have been discussing possible improvements and clarification to the “transit” obligation contained in the old GATT rules that oblige member states to allow passage of goods in transit across their territories. This provision was drafted in 1947. In the current Doha Round, proposals have been tabled to clarify the meaning of this obligation and whether it includes fixed installations, such as pipelines.

Energy-related concerns also underlie proposals on export taxes and subsidies. There are proposals on the table addressing export restrictions on energy goods and other raw materials because these restrictions are more prevalent than in other traded goods, and represent a source of concern for importing countries as they increase prices of inputs. The question of subsidies in the form of low-priced energy products, especially natural gas, has recurrently stirred hot debates among WTO Members and is also part of the on-going negotiations.

Finally, Lamy said, the picture would not be exhaustive without a word about bio fuels. While bio fuels can provide us with the opportunity to address climate change, energy security and rural development, careful planning needs to be undertaken to make sure that they do not create new environmental and social problems. The negotiations to cut tariffs and discipline agriculture subsidies have the potential to contribute to the development of orderly trade in bio fuels.

It’s certain that the interlinked trio of issues: trade, energy supplies and climate change are likely to remain on top of the international negotiating agenda for some time.