India to oppose carbon tax at WTO.

New Delhi: India is gearing up to strongly oppose any move by developed countries to impose a carbon tax on developing economies in the next World Trade Organisation (WTO) meeting. According to a senior government official, India is preparing to take on the West on this contentious issue, something that he says is bound to be raised by the US and EU in the WTO.

“There is no question of lying low and accepting demands by the West to impose a carbon tax. We are doing our due diligence on the matter to counter such demands...we will put forth our stand clearly in the next WTO round of meetings,” a commerce ministry official said who did not wish to be named.

At the backdrop of the Copenhagen summit on environment, the developed countries led by US and EU have been demanding an imposition of carbon tax on emerging economies, such as India and China. “Their argument is that just because companies in the West are taxed for environment it gives an unfair advantage to companies from the developing countries since there is no provision here of such a tax,” the official added. He said that in per capita terms carbon emissions in the Western countries was far higher than in India.

A Delhi-based independent trade analyst said India should take into account concerns among Western countries that if no carbon tax is imposed then those companies functioning in the developed world will shift their production base to emerging economies thereby not solving the crux of the issue which is to cut emissions.

In a recent interview with FE the Canadian finance minister Jim Flaherty said following the Copenhagen summit environment and trade issues went hand-in-hand and could not be separated, thereby hinting that Canada could insist on making environment an important aspect of the Comprehensive Economic Partnership Agreement (Cepa). He said, “In all of these issues now one does not separate environmental concerns from economic concerns. They are both relevant. The commitments coming out of Copenhagen make it necessary that countries look at environmental issues and economic issues at the same time.”

KT Chacko former director general of foreign trade and currently director at the Indian Institute of Foreign Trade (IIFT) argued that till the time a clear framework did not come about in the WTO any attempts to impose a carbon tax should be resisted by India.

Source : Financial Express