Govt expresses concerns in WTO meet over unilateral protectionist measures

India on Monday expressed "serious" concerns in a WTO meeting in Abu Dhabi over increase in the use of trade protectionist measures by certain countries in the name of environment protection.

The remarks assume significance as the country has earlier flagged issues over the European Union's (EU) decision to impose carbon tax (a kind of import tax) on sectors such as steel and fertiliser; and adoption of deforestation regulation by the 27-nation bloc.

Speaking at a session on sustainable development and policy space for industrialisation, Commerce Secretary Sunil Barthwal said developing countries require flexibility in the existing WTO (World Trade Organization) agreements to overcome the constraints faced by them in their industrialisation.

He also expressed concerns on the concerted attempt by the developed countries to club long-standing development issues like policy space for industrial development with new issues of 'Trade and Industrial policy'.

The CBAM (Carbon Border Adjustment Mechanism), or carbon tax, will come into effect from January 1, 2026 for seven carbon-intensive sectors, including steel, cement, fertiliser, aluminium and hydrocarbon products.

The CBAM will translate into a 20-35 per cent tax on select imports into the EU starting January 1, 2026.

India's 26.6 per cent of exports of iron ore pellets, iron, steel, and aluminium products go to the EU.

These products will be hit by CBAM. India exported these goods worth USD 7.4 billion in 2023 to the EU.

Barhthwal "expressed serious concerns regarding the increasing use of trade protectionist unilateral measures, which are sought to be justified in the guise of environmental protection".

India's exports of products like coffee, leather hides, and paperboard worth USD 1.3 billion annually to the European Union are likely to be impacted due to the deforestation regulation adopted by the EU in May 2023.

In another session on 'Trade and Inclusion', the secretary, who is in Abu Dhabi for the 13th ministerial conference of the WTO, cautioned members that mixing non-trade topics with WTO rules can lead to greater trade fragmentation.

"Bringing issues like gender and MSMEs in the realm of WTO discussions was not practical because these issues were being discussed in other relevant international organisations already," he said.

He added that issues like inclusion can be better addressed through targeted national measure as they did not fall in the domain of international trade relations.

"In the name of non-trade issues, several developed countries were already considering adopting trade distortive subsidies and had erected non-trade barriers.

Expressing concerns, he said such unilateralism and its negative spillover effect on the trade interests of developing countries.

India has taken a series of measures for greater inclusion of MSMEs and women, especially through use of Digital Public Infrastructure.