1. Identification of ESGs - The Key Issue Emerging Challenges for India S. K. Mohanty Senior Fellow, RIS Trade and Climate Change in Emerging Economies The Competitiveness, Technology and IPR Dimensions RIS and ICTSD March 30-31, 2010 New Delhi

2. 1 Trade policy consistent with the sustainable growth Trade policy consistent with the sustainable growth Identification of Environmentally Sensitive Goods (ESG) APEC and OECD lists Alternative approach to identify ESGs Relevance of these products for the global and domestic trade sector Scheme of the Presentation

3. 2 Trade policy supports growth oriented development policy Trade policy supports growth oriented development policy India followed ELG and DDLG approaches simultaneously External sector a major contributor to domestic growth India’s concern for climate change issues ‘Pollution haven hypothesis’- World Bank in the 1990s Work on Environmentally Sensitive Goods – late 1990s Alternative Approach to Identify ESGs Relevance of ESG trade for India Magnitude of Indian trade in ESGs Coverage of ESGs Trade Protection: TBs Vrs NTBs (Mohanty & Manoharan, 2002) Trade opportunities in the region (Mohanty & Chaturvedi, 2006) Background

4. 3 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 employment Key Issues in ESGs

5. ESG lists: APEC, OECD, India, etc. Emerging gaps between theory and Practice Entire industry can not be attributed as environmentally Sensitive – World Bank Study Classification to be based on current practices Negotiation Requirements: Production and trade classification (ISIC/HS) Alternative Approach Developed countries: sensitive to environment - Environmentally Sensitive Measures base on scientific developments - Assumption: approach of developed countries UNCTAD database Comprehensive list based on ES NTBs in six DCs/Reg Definition of ESG: Alternative Approach

6. Number of ESG products SectionDescriptionAPECOECDRIS 1Animal Products 141 2Fruits & vegetable 231 3Fats & Oils 36 4Prepared Food1240 5Minerals & metals 42 6Chemicals 2795 7Plastics241 8Skin & Leather 48 9Wood Products1 45 11Textiles & Clothing2181 12Footwear 16 13Cement, plaster, etc1035 14Gems & Jewel 1 15Base Metals 28 16Machinery488364 17Vehicles, etc2127 18Photography422615 19Arms & Ammunitions 1 20Other Manufactures 16 21Works of Art 1 Total 108 153 874

7. Technology-IntensityAPECOECDRIS Primary12367 Resource based727180 Low Tech-intensive85153 Med. Tech-intensive4581141 High Tech-intensive473833 Technology Intensity of ESGs in different Lists Trade and technology concordance (Mohanty, 2003)

8. 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

9. Trends in Global ESG Exports Share in Global Exports (%) Growth (%) 200420052006200720082004-8 APEC2.22.1 2.32.215.0 OECD2.1 2.2 2.319.9 RIS20.720.619.720.220.614.7

10. Composition of Global ESGs Exports: RIS List SectionDescriptionExp08 (bil US$)Share%CAGR% 1Animal Products208.31.811.3 2Fruits & vegetable313.62.716.7 3Fats & Oils73.10.626.3 4Prepared Food105.40.914.5 6Chemicals591.3 5.0 15.1 7Plastics4.50.013.8 8Skin & Leather26.50.25.5 9Wood Products81.50.74.8 11T&C40.30.31.7 12Footwear49.40.48.2 13Cement Etc5.60.012.3 14Gems & Jewel1.50.014.0 15Base Metals8.90.19.9 16Machinery79.70.713.3 17Vehicles Etc797.76.89.6 18Photography13.70.111.0 19Arms & Ammunitions0.0 8.3 20Other Mnf22.10.225.9 21Works of Art0.60.010.0

11. 10 ESG exports form large part of total Exports 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

12. Size of ESG Exports in India: RIS List (Mil US$) Section2004-52005-62006-72007-82008-9 Others6804084904105061134550154304 ESG1539018098211392835828708 ESG in total%18.417.616.817.415.7

13. Sectoral Composition of ESGs in Indian Exports (US $ Mn.) SectionDescription2004-52008-9Share (%)2009 1Animal Products189927179.5 2Fruits & vegetable4794826028.8 3Fats & Oils3385692.0 4Prepared Food77123558.2 5Minerals & metals76100.0 6Chemicals2260556319.4 7Plastics5170.1 8Skin & Leather90613264.6 9Wood Products62670.2 11T&C95215245.3 12Footwear82614455.0 13Cement, etc18340.1 14Gems & Jewel471020.4 15Base Metals27210.1 16Machinery36610703.7 17Vehicles, etc1312355512.4 18Photography9130.0 19Arms & Ammunitions010.0 20Other Manufactures36640.2 21Works of Art120.0

14. Employment Effects of ESGs in Manufacturing Sector: Distribution across Sectoral HS SectionDescriptionTotal Share % 6Chemicals29.2 7Plastics0.0 8Leather18.9 9Wood Products1.5 11T&C18.3 12Footwear13.9 13Cement, etc0.5 14Gems & Jewel1.1 15Base Metals0.3 16Machinery6.9 17Vehicles, etc6.8 18Photography0.4 19Arms & Ammunitions0.7 20Other Mnf1.3 21Works of Art0.1

15. Employment effects of ESGs in Manufacturing Sector: Share of Direct Employment in Total HS SectionDescriptionDirect Employment (%) 6Chemicals51.4 7Plastics52.9 8Skin & Leather44.1 9Wood Products62.3 11T&C58.5 12Footwear51.5 13Cement, etc45.9 14Gems & Jewel50.0 15Base Metals48.2 16Machinery46.6 17Vehicles, etc60.3 18Photography50.4 19Arms & Ammunitions47.6 20Other Manufactures50.3 21Works of Art61.7

16. 15 Need for a comprehensive definition and identification of ESGs Need for a comprehensive definition and identification of ESGs ESGs lists prepared by APEC and OECD - not complete RIS list could be an alternative one Trend in Global exports of ESGs – Growing fast and sharing more than 20% of global exports ESGs covering large part of the agriculture and selected sub-sectors of the manufacturing sector India’s exports of ESGs – lower than global average Critically affected sectors- Fruits & Vegetables, Chemicals & auto Employment will be affected in various tech-intensive sectors Summing Up

17. 16 Thank you