Identification of ESGs - The Key Issue Emerging Challenges for India

Identification of ESGs - The Key Issue Emerging Challenges for IndiaS. K. MohantySenior Fellow, RISTrade and Climate Change in Emerging EconomiesThe Competitiveness, Technology and IPR DimensionsRIS and ICTSDMarch 30-31, 2010New Delhi

Trade policy consistent with the sustainable growthIdentification of Environmentally Sensitive Goods (ESG)APEC and OECD listsAlternative approach to identify ESGsRelevance of these products for the global and domestic trade sector

Scheme of the Presentation

Trade policy supports growth oriented development policyIndia followed ELG and DDLG approaches simultaneouslyExternal sector a major contributor to domestic growth Indias concern for climate change issuesPollution haven hypothesis- World Bank in the 1990sWork on Environmentally Sensitive Goods late 1990sAlternative Approach to Identify ESGsRelevance of ESG trade for India Magnitude of Indian trade in ESGsCoverage of ESGsTrade Protection: TBs Vrs NTBs (Mohanty & Manoharan, 2002)Trade opportunities in the region (Mohanty & Chaturvedi, 2006)Background

How to identify ESGs?

Growing consumer expectations for green products

Volume of global trade in ESGs

Size of the ESG market in India

Technology intensity of ESGs

Implications for the domestic employmentKey Issues in ESGs

ESG lists: APEC, OECD, India, etc.Emerging gaps between theory and PracticeEntire industry can not be attributed as environmentally Sensitive World Bank StudyClassification to be based on current practicesNegotiation Requirements: Production and trade classification (ISIC/HS)

Alternative ApproachDeveloped countries: sensitive to environment- Environmentally Sensitive Measures base on scientific developments- Assumption: approach of developed countriesUNCTAD databaseComprehensive list based on ES NTBs in six DCs/RegDefinition of ESG: Alternative Approach

Number of ESG products

Technology Intensity of ESGs in different ListsTrade and technology concordance (Mohanty, 2003)

Structure of Trade in ESGs

Agricultural sector live animals and vegetables Industrial sector: Main sectors - Chemicals & auto sectors Other sectors: Fats and oils, prepared food, wood products, machinery, etc Incidence of multiple NTMs Protection using other instruments: Specific tariff, peak tariff, etc.Structure of Globally Traded ESGs

Trends in Global ESG Exports

Composition of Global ESGs Exports: RIS List

ESG exports form large part of total Exports

Constant market share but growing at 21.6% CAGR

Certain sectors are affected more than others

Significant impact on employment

ESG Trade in India

Size of ESG Exports in India: RIS List(Mil US$)

Section2004-52005-62006-72007-82008-9Others6804084904105061134550154304ESG1539018098211392835828708ESG in total%18.417.616.817.415.7

Sectoral Composition of ESGs in Indian Exports (US $ Mn.)

Employment Effects of ESGs in Manufacturing Sector: Distribution across Sectoral

Employment effects of ESGs in Manufacturing Sector: Share of Direct Employment in Total

Need for a comprehensive definition and identification of ESGsESGs lists prepared by APEC and OECD - not completeRIS list could be an alternative oneTrend in Global exports of ESGs Growing fast and sharing more than 20% of global exportsESGs covering large part of the agriculture and selected sub-sectors of the manufacturing sectorIndias exports of ESGs lower than global averageCritically affected sectors- Fruits & Vegetables, Chemicals & auto Employment will be affected in various tech-intensive sectorsSumming Up

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