Effect of Environmental Measures on International Trade Indian Experience

1
Effect of Environmental Measures onInternational
Trade Indian Experience
2
Structure of the Presentation

• Experience of leather, textiles and marine
  sectors in India
• Issues emerging from Indian experience
• Issues in standard setting and assistance for
  compliance
• Issues relating to International Rules

3
Experience of Textiles Leather Sectors

• Ban on Azo dyes, PCP, harmful amines, etc.
• Proposal to ban another 300 dyes in EU suspected
  to be carcinogenic
• Eco-labels in textiles based on LCA
• Insistence of buyers on eco-labels, ISO standards
  
• Animal rights issues in Leather sector

4
Steps taken byGovernment of India

• Banned 112 harmful Azo dyes
• Pro-active role played by Pollution Control
  Boards in laying norms for effluent treatment
• Evolved eco-standards in textiles
• Information dissemination efforts
• Technology Upgradation Fund Scheme
• Strengthening testing labs
• Assisting textile units in securing ISO
  certification

5
Effect on Indian Textiles Industry

• Dye substitutes are 2.5 times more expensive
• Azo free dyeing increases costs by 15 20
• Increase in production costs, more due to very
  high standards set by PCBs
• Higher cost of testing
• Shift to common ETP, however, problems for
  dispersed plants
• Compliance generally by larger units while
  smaller units shifted to other markets

6
Processed Foods, Spices, Tea

• Standards for aflatoxin, pesticides residue in
  spices
• Problem of aflatoxin levels in peanuts
• Difficulties in export of fresh fruits like mango
  due to quarantine restrictions in Australia,
  Japan, etc.
• High pesticides residues (Ethion, Bicofol) in tea
  
• Government of India banned a number of pesticides
  like DDT, BHC, Aldrin, Aldrox, etc.
• Standards differ from country to country
• Packaging regulations, ban on wooden boxes and
  jute bags
• Production is predominantly by small farmers and
  small processors

7
Effect on Indian Industry

• Costs went up but a number of units complied with
  new environmental measures
• Smaller units unable to meet environment
  requirements, Shifted to domestic and other
  markets
• Lack of credit/funds to upgrade through in some
  cases like textiles and marine, Government
  introduced specific scheme
• Lack of technical and managerial capability to
  upgrade, particularly for smaller units
• Lack of consultancy firms/agencies/institutions
  who can provide assistance

8
Issues in Standard Development

• Lack of International environmental product
  standards
• Transparency
• Involving exporting firms at an early stage
• Notification requirement in the early stage
• Participation of developing countries in
  international standard setting organizations

9
Issues in Standard Development (Contd.)

• Environmental measures should be based on the
  criteria of sound science
• Proportionality in environment benefits and costs
  in compliance including for exporting firms
• Rio-Principle 11 provides that environmental
  standards should reflect the environmental and
  developmental context to which they apply.
  Standards applied by some countries may be
  inappropriate and of unwarranted economic and
  social cost to other countries, in particular
  developing countries

10
Support for compliance

• Lack of price premium on eco-friendly products
• Assistance and subsidies are provided to local
  firms while bringing new environmental measures.
  This places exporting firms at a disadvantage.
• Bilateral and multilateral assistance for
  capacity building and technical assistance to
  developing countries should be an integral
  obligation when introducing new environmental
  requirements
• Multilateral funding agencies need to earmark
  funds for this purpose
• Assistance to development institutions/certificati
  on agencies in exporting countries who could
  assist exporting firms in compliance and
  certification process

11
Rules related issues for environmental measures

• Labeling
• Precautionary approach in developing standards
• Obligations relating to transparency,
  notification, etc.

12
Labeling requirements

• Mandatory and voluntary schemes
• Large number of labeling schemes
• Lack of international standards
• Equivalence
• Fulfillment of stated environmental objectives
• Transparency and notification requirements
• Problems in certification
• Debate on npr-PPM
• Work Programme in CTE

13
Different approaches for precaution in
International agreements

• Rio-Principle 15 Precautionary approach to be
  applied where there are threats of serious or
  irreversible damage to environment
• Biosafety Protocol Lack of scientific certainty
  due to insufficient sientific information
  regarding effects on bio-diversity and human
  health should not prevent appropriate action
  regarding import
• Article 5.7 of SPS Agreement Provisional
  adoption of SPS measures where scientific
  evidence is insufficient. Shall seek additional
  information within a reasonable period of time.
• Article 2.2 of TBT Agreement Risk assessment in
  technical regulations should be based on
  available scientific and technical information

14
Different approaches to Precaution

• International Environmental Law recognizes
  precautionary approach only for serious or
  irreversible damage to environment.
• Environmental requirements for product standards
  should be based on sound science and scientific
  risk assessment.