Precuationary Principle Usages and ECs Endocrine Disruptors: Market Access Implications for Indian Trade

Abstract

Tariff liberalisation under the WTO led to positive sentiment for India by creating enhanced opportunities of market access to one of the traditional markets like the EU. Is increasingly challenged by regulations by the developed countries (EU), by the notifications of non-price based measures, like the S-DoC, REACH, CLP and latest notifications on endocrine disruptors.

In this context, report finds the losses and challenges that India’s exporter may face under the newly proposed EC legislations, notified to the SPS and TBT committees of the WTO, putting restrictions and limitations on the use of chemicals and some non-chemicals that have properties of endocrine disruptions. European Commission notified three separate notifications, one under the SPS committee and two under TBT committee of the WTO.

The Reports uses the actual exports of India to EU-27 countries to assess the impact of EC legislation on endocrine disruptors and the subsequent notifications to WTO. The actual impact is measured as the average exports for three recent years 2013 to 2015. In the Report impact on India’s exports is presented under the three segregated lists of products at six-digit level.

Highest impact on India’s export is seen in the segregation of ‘biocidal products’, which recorded US$ 37.5 billion with a share of 89 percent of India’s total exports. This is followed by the segregation of ‘chemicals as endocrine disruptors’ with US$ 2.8 billion and share of 6 percent and the last segregation is the product list of ‘plant protection products’ with US$ 2 billion at a share of 5 percent of the India's export.

To summarise, there are evidences of higher shares of total Indian exports to EU-27 countries at 74 percent when compared to its exports to global at 62 percent shares. It suggests that India's exports to EU-27 is more vulnerable when it comes to its exports to World; under the proposed legislation on endocrine disruptors.

Executive Summary
 Tariff liberalisaiton under the WTO led to positive sentiment for India by creating enhanced opportunities of market access to one of the traditional markets like the EU. It is increasingly being challenged by developed countries like the EU, by the notifications of non-price based measures, like the S-DoC, REACH, CLP and latest notifications on endocrine disruptors.
 In this context, report finds the losses and challenges that India’s exporter may face under the newly proposed EC legislations, notified to the SPS and TBT committees of the WTO, putting restrictions and limitations on the use of chemicals and some non-chemicals that have properties of endocrine disruptions.
 European Commission notified three separate notifications, one under the SPS committee and two under TBT committee of the WTO.
 The complete impact analysis is carried-out for three segregated products lists, analysing the impacts on products as per the understanding on the legislations like: plant protection products (Agricultural goods), chemicals as endocrine disruptors (CAS Chemicals) and biocidal products (Manufacturing goods). Report analyses the impact by classifying the total exports by India (HS six-digit level) into three product segregations in accordance to the legislation of EU on regulating edocrine disruptors.
 This Report performs both free on board (f.o.b) and cost insurance and freight (c.i.f) analysis to understand India's export impact to EU-27 countries.
 Clarity of understanding of the EC legislations and the sectoral coverage is a complex issue for the analysis of trade impact. The Report used the braod information provided under the legislations and with the help of three other set of informations (‘Global MRL database’, ‘ECHA’ and ‘CAS to HS codes’) arrived at some broad measure of the impact on exports of India.
 The Report has third segregations based on the clarity of EC legislations; ranging from clear, moderate and completely unclear understanding. The clearest understanding is in the case of ‘chemicals defined as endocrine disruptors’, moderate understanding is in the case of plant protection products (MRL-based SPS Standards on agriculture goods) and least is in the case of biocidal products (manufactured goods), the results also indicated these differences.
 The Reports uses the actual exports of India to EU-27 countries to assess the impact of EC legislation on endocrine disruptors and the subsequent notifications to WTO. The actual impact is measured as the average exports for three recent years 2013 to 2015. In the Report impact on India’s exports is presented under the three segregated lists of products at six-digit level.
 Highest impact on India’s export is seen in the segregation of ‘biocidal products’, which recorded US$ 37.5 billion with a share of 89 percent of India’s total exports. This is followed by the segregation of ‘chemicals as endocrine disruptors’ with US$ 2.8 billion and share of 6 percent and the last segregation is the product list of ‘plant protection products’ with US$ 2 billion at a share of 5 percent of the India's export.
 To check for the consistency of the impact, the report carried out a separate analysis using the mirror data (EU-27 as reporter). The c.i.f analysis (EU-27 imports from India) of the impact on India's exports predicted at marginally higher levels across all three segregations.
 The c.i.f. analysis of EUs import from India in the segregation of biocidal products is US$ 40.2 billion, suggesting US$ 2.7 billion difference and recording 78.2 percent share of India’s average exports during 2013 to 2015.
 The segregation of chemicals as endocrine disruptors has indicated an impact on EUs import from India to the tune of US$ 3.1 billion with a 6.03 percent share and lastly the segregation of plant protection products with US$ 2.3 billion at a share of 4.5 percent.
 The lack of clarity in the understanding of sectoral coverage is one of the reasons for the wide variations in the impact from US$ 40 billion to US$ $ 2 billion. A better and more specific assessment would be possible if the EU can provide the HS codes, which are impacted by the endocrine disruptor legislations.
 To summarise, there are evidences of higher shares of total Indian exports to EU-27 countries at 74 percent when compared to its exports to global at 62 percent shares. It suggests that India's exports to EU-27 is more vulnerable when it comes to its exports to World; under the proposed legislation on endocrine disruptors.

Keywords: WTO, SPS Precautionary Principle, SPS, MRL, Endocrine Disruptors

JEL Classification: F68, F0, F13, F14, F15, F19