India faces a litmus test about its constant exhortations about galvanising the Global South. Addressing the Voice of Global South Summit virtually on January 13, Prime Minister Narendra Modi called for globalisation “that does not create [a] climate crisis or debt crisis” for the developing countries.
At a time when globalisation is under attack from the United States for failing to create employment and widening inequalities, Modi says “we appreciate the principle of globalisation”. He seems to acknowledge “developing countries desire globalisation that doesn’t create climate crisis or debt crisis, that doesn’t lead to unequal distribution of vaccines or over-concentrated global supply chains”.
Yet, both a climate crisis and debt crisis seem to be largely created by major developed countries, particularly the United States as well as the European countries. It is an open secret that Big Pharma created an artificial crisis to eke out tens of billions of dollars during the worst pandemic in living memory, COVID-19. If developing countries like India and South Africa had stood solidly for their waiver proposal to suspend certain provisions for TRIPS (trade-related intellectual properties) Agreement at the World Trade Organisation, Big Pharma could have been prevented from its deadly policies of putting profits before human lives.
India’s proposal on the environment
Recently, India has fired an opening salvo against the increasing use of unilateral measures under the garb of environmental measures to address climate change. The proposal seems to be targeted against the European Union’s controversial carbon border adjustment measures, at the World Trade Organisation. India says the unilateral measures such as carbon border adjustment (CBAM) apparently violate the WTO’s core rules and covered agreements.
More disturbingly, such measures pose “systemic implications for international law as a whole, since any unilateral action undermines multilaterally negotiated rights and obligations of countries”.
The Indian proposal under the title ‘Concerns On Emerging Trends Of Ushing Environmental Measures As Protectionist Non-Tariff Measures’ has covered the entire gamut of unilateral measures and offered a blueprint for WTO to pursue against climate change.
India says somewhat emphatically that “the WTO cannot and should not undermine or render ineffective, the specialised rules of multilateral environmental agreements”.
According to India, “the WTO should remain an international organisation, which promotes effective collective action rather than unilateral measures”. The WTO’s Director-General, Ngozi Okonjo-Iweala of Nigeria/the United States, appears to have thrown her weight by linking trade with climate change. She tried hard to include trade in the Nationally Determined Contributions (NDCs) of the Paris Climate Change Agreement through “trade and investment facilitation pathway” at the 27th Conference of Parties meeting of the United Nations Framework Convention on Climate Change (UNFCCC) in Sharm El-Sheikh, Egypt.
She justified the inclusion of trade in NDCs as a “part of the solution for achieving a low-carbon, resilient, and just transition”. However, due to intense opposition from several developing countries, Okonjo-Iweala failed to include her proposal in the COP27 outcome document.
It is against this backdrop that India’s four-page proposal, reviewed by this writer, assumes importance. It says “reducing greenhouse gas emissions to address climate change, is a global effort”, as per the Paris Climate Change accord of 2015.
India argues that “most WTO members are represented at the United Nations Convention on Climate Change (UNFCCC) and participate in its negotiated outcomes”.
The foundational principles of the Paris Agreement are based on “the principles of equity and common but differentiated responsibilities and respective capabilities (CBDR-RC), in the light of different national circumstances, and nationally determined contributions (NDCs) made by the parties to the UNFCCC.”
More importantly, the foundational principles recognise that “the largest share of historical and current global emissions of greenhouse gases originated in developed countries, that per capita emissions in developing countries are still relatively low and that the share of global emissions originating in developing countries will grow to meet their social and development needs,” according to India.
According to India, “it is also important to underscore that the principles of “respective capabilities” recognise the different socioeconomic status of countries”, as stated in the Preamble to the Marrakesh Agreement establishing the WTO.
The Paris Agreement provides for different NDCs to “effectively reflect different climate policy choices across countries”, which may be based on different national circumstances.
“The policy choices include a variety of instruments like regulatory measures for conservation, afforestation, emission reductions, transition to non-fossil fuel-based energy sources, standards, taxation, carbon pricing, and carbon trading,” India has argued, suggesting that the “Regulatory heterogeneity is inherent in the concept of NDCs under the Paris Agreement of the UNFCCC”.
Dangers posed by CBAMs
Against this multilateral framework contained in the Paris Agreement, India says that “carbon border measures (CBAMs) that are being considered (by the European Union and the United States) for imposition on imported products, effectively amount to prioritising a singular policy of the importing country over those of exporting countries and will amount to imposing a unilateral vision of how to combat climate change”.
Such unilateral policies go against “a country which may be fully compliant with its NDCs under the UNFCCC, has to either match the importing country’s emission reduction obligations or pay a cost/price for (the) trade”.
India says these measures tend to “upend the value of any multilaterally negotiated outcomes under Multilateral Environment Agreements (MEAs) such as the UNFCCC”.
“Not only will such measures undermine the multilaterally agreed mandate of NDCs of the country of export, but also create (a) distinct preferential treatment for domestic over imported goods,” India has pointed out.
It is important to consider “the motivation for such measures, since these seem to be primarily aimed at levelling (the) field for domestic producers of countries that, as a result of their climate change commitments under the UNFCCC, have to undertake higher emission reduction norms”, India says.
In short, it suggests that “the measure is a protectionist one and not one that can achieve any greening of the economy”.
Much of the carbon border measures seem to be targeted and applied to “trade-exposed industries” such as steel, aluminium, chemicals, plastics, polymers, chemicals and fertilisers. It seems to reflect “the underlying competitiveness concerns driving such measures” and places an obligation on importers and exporters to comply with mechanisms of verification of whether or not deforestation occurred in the country of the origin, enhancing compliance burdens.
Worse still, “both carbon border measures, and the evolving laws on deforestation, reflect the growing trends towards rule-making that has an extra-territorial reach. Such measures will only burden trade partners, especially the developing countries, with impractical, cumbersome and costly compliance obligations.”
While acknowledging that “ environmental objectives are legitimate policy choices for each government to consider,” India says that “to the extent that such measures are being imposed without contextual risk assessment and without factoring in the differences in climatic and soil conditions around the world, they would need careful deliberation to ensure reasonable nexus with the objective sought to be achieved.”
India says “another area of concern is the emerging arrangements of “green Tariff Rate Quotas””, expressing “concern on these arrangements that seek to develop a methodology to assess the carbon content of traded commodities and provide specific tariff-free quotas to select Members”.
While trade that can facilitate true growth and development can only be achieved through fair access to and transfer of green technologies with “financial assistance”, India argues that “shared global concerns need global solutions, and small clubs cannot achieve this”. The key issues raised by India include: facilitation and and promotion of development and transfer of environmentally sound technology (EST), including financial commitments to ensure access to such technology, and investments in environmental projects; creation of a Trade and Environment Fund with objectives such as facilitating the transfer of ESTs at reasonable prices by funding the incremental costs of sourcing both proprietary and non-proprietary EST through licensing and other mechanisms; and special and differential treatment for developing and least-developed country members including through technical and financial assistance programmes.
Issues of credibility
However, the moot issue is whether India’s proposal can galvanise developing countries of the Global South. That would largely depend on India itself – whether New Delhi will fight to the finish along with other developing countries.
In the arena of global trade negotiations, India’s positions seem somewhat replete with grandstanding and bold pronouncements. But when push comes to shove, India often failed to live up to its positions.
For example, when the Modi government came to power in 2014, a meeting with African trade leaders was convened in New Delhi to pursue common positions on issues of enormous importance to farmers in India and Africa at the World Trade Organisation’s 10th ministerial conference in Nairobi, Kenya, in 2015.
However, during the final hours of the Nairobi meeting, then trade minister Nirmala Sitharaman sunk India’s credibility by not standing up for positions crafted by the Indian trade negotiators.
In June 2022, India failed to pursue the issues that its trade negotiators raised at the WTO’s 12th ministerial conference in Geneva. For example, the Indian negotiators had prepared the ground for standing up for the permanent solution for public stockholding programmes for food security, the removal of moratorium on levying customs duties, and a strong outcome on the Waiver proposal. Yet, India did not even fight for its own proposals.
One would only hope this time around that India could muster the courage to stand up for its own positions instead of leaving the Global South in a lurch. Ultimately, running with the hares while choosing to hunt with the hounds is not an appropriate policy – if India wants to gain credibility among countries of the Global South.
Ravi Kanth Devarakonda is a senior journalist based in Geneva.
