Sustainability measures in trade adding to economic uncertainties: Govt

Apart from the traditional non-tariff barriers, new dimensions in trade—such as sustainability and security measures—are adding to regulatory and economic uncertainties, a senior government official said on Tuesday.

 

“Whether it is about the environment, inclusivity, gender, or labour—all trade-related sustainability measures are also bringing in both regulatory and economic uncertainty… Energy is a critical element towards the transition to the future. How do we deal with provisions related to energy, critical minerals… to ensure that our supply chains remain intact in the future?” L Satya Srinivas, additional secretary, Department of Commerce, said at the CII Partnership Summit 2024.

 

Srinivas’s comment comes against the backdrop of new protectionist regulations being implemented globally, such as the European Union’s carbon border adjustment mechanism (CBAM) and other similar measures, which are set to hurt trade. Additionally, India is negotiating free trade agreements (FTAs) with a number of countries, including the EU, which has rolled out some of these regulations.

 

“I’m sure everyone has been hotly debating how we deal with CBAM, how we deal with new regulations coming in Europe, such as EU deforestation laws, or new legislation emerging across the globe, in terms of protectionist elements, domestic legislations that incentivise industries to invest and ensure they have an impact on trade. There are also laws to ensure that there is no transfer of technology,” Srinivas said.

 

According to Srinivas, these new regulations and focus areas are set to dictate the trajectory towards the future. As a result, it is imperative to build a framework to ‘preserve the preferential agreement’ in terms of the free trade agreements India is negotiating.

 

He further stated that FTAs need to take a holistic view of the commercial significance they hold for the country and emphasise the importance of looking at goods, services, and investment together.

 

“There should be a free flow of skilled personnel, and there is a need for investment in skilled personnel across the globe,” he said, adding that going forward, artificial intelligence (AI) will completely change how we trade.