No other country can match the uncanny knack of the United States in pushing its agenda for trade negotiations. Recent inclusion of issues like remanufacturing into current World Trade Organisation negotiations is a case in point.
Although the issue did not gain any prominence during the mini-ministerial at Geneva, it has all the possibility of figuring in its priority list. The course of negotiations at the mini-ministerial could only suggest that future trade negotiations will shift the focus from a 'development' round to a 'market access' one.
Trade in remanufacturing today is fast catching up a global scale, and would like to make a headway soon into developing markets. Developing countries, if intelligent enough to anticipate such a move, shouldn't be surprised with what is really coming.
It may be a non-priority issue currently for developing countries, but the criticality of it, especially for India, should not be undermined.
Remanufacturing is an issue which has or can have tremendous impact on India as it will affect severely its burgeoning industry and large-based consumers. Before India makes any binding commitments in the WTO, the issue needs to be widely debated across the country. In that context it is pertinent to discuss the issue in detail.
The issue of remanufacturing has gained prominence only in the recent past. It essentially means a used product, which has served its required amount of use and whose core is in a perfectly usable condition, can be utilised for commercial use by transforming it through cleaning, testing and other industrial processes to convert it into a new product with most sophisticated packaging available to the industries.
The new product is certified to meet all technical, environmental and safety norms along with a warranty similar to that of a new product. Industry in developed countries has been successful in enticing other countries and consumers on the reliability and performance of such products.
Today a broad range of firms, like Caterpillar, GE and others, are engaged in remanufacturing of products. Earthmoving, automotive parts, electronics, medical devices and information technology are major industries in this sector which have made a mark globally.
The process has experienced so much trading that global trade has already crossed $100 billion in remanufacturing, and has established production facilities in Europe, Latin America, Asia and Africa, in addition to the biggest market, the United States.
Keeping such prospects in view, the US argues, the process of remanufacturing offers great opportunities to all in terms of maximising their gains. Trade in these goods has the potentiality to contribute significantly to the economies of developed and developing countries.
In a period of global climate change, when all countries have a moral duty to contribute towards green environment, such products can reduce carbon emission and provide better environmental safety to countries and consumers.
For large global consumers, such companies are taking adequate measures to produce remanufactured products which are generally of a high quality with a similar life expectancy as new goods.
It further insists that such a process would offer consumers and businesses worldwide greater access to low-cost, high quality products; facilitate less consumption of energy and materials during production, and reduce waste; extend the life of cores that would otherwise be consigned to landfills, thereby contributing to sound solid waste management and environmental stewardship; create jobs, ranging from entry level positions to those requiring high skilled workers; and further economic growth and development among the members by expanding opportunities to purchase advanced products at reduced prices; facilitating investment; and encouraging the transfer of technology and skills.
All these noises by industrialised countries are made to open up the markets, especially in developing countries like India as its consumer base is far more wide compared to their own markets.
While pushing this agenda to the on-going negotiations, the US observed that market access on trade in remanufactured goods on a global scale is considerably hampered due to the presence of various non-tariff barriers (NTBs) such as import bans, higher tariffs and fees, or stringent regulation, certification and inspection requirements.
Such barriers merit immediate attention as liberalisation of trade in remanufactured goods would result in protection of environment and substantial trade gains for developing countries.
To facilitate this objective, the US argues that each member's trade regime should evolve in a manner that enhances market access opportunities for remanufactured goods.
Members should review their non-tariff measures with a view to ensuring that they do not impose prohibitions or restrictions on the importation of remanufactured goods that are proscribed by the Multilateral Agreements on Trade in Goods.
Developing countries argue that trade in remanufacturing means trade in used products which would only promote trans-boundary movement of waste from the industrialized countries to developing countries, or in other words it is one way of shifting the environmental and safety burden from developed to developing countries.
Whatever may be the game plan of the US, since the issue suggests serious implications for various sections of Indian society such as consumers and industry, India needs to take a well considered position on whether it should make binding commitments under the WTO for allowing barrier free import of remanufactured and refurbished products.
Besides, in a negotiation of this nature, it is essential that Indian industry participation is secured as they could be a sole loser in this trade.
Because a sinister move seems to be in the offing for the simple reason that at a time when the Indian industry is looking up, robust and ready to take on the global challenge, such designs could make it unproductive and meet its natural death.
Companies like BEML, L&T and major auto industry should show their concern. For, it is the American industry which has the last word in any US government trade negotiations.
The author is with Indian Institute of Foreign Trade, New Delhi.
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