In a significant move, India opposed the European Union’s attempt to initiate discussions linking international trade policy with the industrial policy of economies during the 13th World Trade Organisation (WTO) ministerial (MC13). The proposal, a major ask by the EU, was blocked by India, citing that industrial policy falls under the concurrent list, giving both central and state governments the authority to formulate policies.
“Industrial policy is a very wide topic. In India, industrial policy is in the concurrent list, meaning both the center and states have the authority to formulate policies. So if a state government decides to incentivize industrial development, why should we allow scrutiny at the WTO? The factory may not even be exporting,” said an Indian negotiator, requesting anonymity.
The EU’s proposal aimed to scrutinize international trade policies concerning industrial policies and sought to understand the impact on developing countries. India argued that the EU’s objective, particularly with the Carbon Border Adjustment Mechanism (CBAM), was to onshore industries, adversely affecting developing nations.
While India, South Africa, and the EU negotiated for the proposal’s inclusion in the outcome document, differences in language led to its exclusion. The EU expressed regret over the lack of agreement, stating that the blockage weakens the role of the WTO in addressing contemporary challenges.
Another agenda opposed by India was the EU’s push for “inclusivity,” including incentives for MSMEs and women-owned enterprises. India argued that the definition of inclusivity can vary, and addressing domestic disparities should be handled domestically rather than through international trade rules.
Despite five days of intense negotiations, MC13 concluded without significant breakthroughs, with divergences remaining on issues like curbing fishery subsidies, public stockholding for food security, and the restoration of the two-tier dispute settlement mechanism at WTO. The e-commerce moratorium was extended by two years, maintaining duty-free trade in online services.
