NEW DELHI: India has pushed for diversification of global supply chains and production capacities at the G20 Trade Ministers’ Meeting, rather than focusing narrowly on industrial “overcapacity,” as consensus on the contentious issue remained difficult to achieve.
Commerce and Industry Minister Piyush Goyal, speaking at the concluding day of the G20 Trade Ministers’ Meeting in Milwaukee, said industrial capacity by itself was not the problem, but distortions could arise when production becomes geographically concentrated because of hidden subsidies and other forms of support.
Overcapacity in the G20 and multilateral contexts refers to one country producing more goods than domestic or global demand can absorb, which could depress prices and displace producers in other nations. The issue has gained traction at G20 particularly over China’s alleged overcapacity in assorted industries, which puts manufacturers elsewhere at a disadvantage. Beijing stubbornly refutes the charges, and contends that comparative advantage and market demand are the deciding factors.
At a press conference on the conclusion of the G-20 meeting the host, US Trade Representative (USTR) Jamieson Greer said, “we couldn’t reach consensus on a statement on this issue to address structural excess capacity and production.”
Addressing excess production capacities built on the back of state support was one of the key agenda items of the meeting set by the US. Other issues were eliminating forced labor in global supply chains, updating the Most-Favored Nation (MFN) principle and denouncing the weaponization of trade in food.
On weaponisation of food the consensus was reached but on forced labour in global supply chains again no consensus could be reached. “Believe it or not we have countries in the G20 that do not want to commit uh to having a prohibition on the import of goods,” Greer said.
At the session on excess capacities Goyal said, “Diversification of production and supply chains is a legitimate objective but cannot be used as a pretext for measures outside World Trade Organization (WTO) rules or for shifting the burden of adjustment onto developing countries.”
Goyal said India did not have structural excess capacity in the sectors identified by the G20 presidency. He acknowledged concerns that trade-distorting support in some economies could result in dumping and predatory pricing, but said these should be addressed through WTO-consistent instruments such as anti-dumping and countervailing duties, based on evidence and subject to judicial review. “Industrial capacity in itself is not the issue,” Goyal said, adding that the focus should instead be on distortions arising from hidden subsidies and geographical concentration of production.
Goyal also mounted a strong defence of the Most-Favoured-Nation (MFN) principle, as the US pushes for a rethink of the WTO’s longstanding non-discrimination framework.
He said India’s trade with G20 members depended on a transparent, non-discriminatory and rules-based trading system, with MFN treatment serving as a key guarantee that the same terms apply to all trading partners.
The principle, he said, ensures that “the same terms apply to the smallest trader and the largest trader”, reinforcing predictability in international commerce.
Goyal also stressed that consensus-based decision-making must remain central to the WTO and that special and differential treatment for developing countries should be preserved to enable them to match up with developed economies.
He called for restoration of the WTO’s two-tier dispute settlement system which has been non-functional since December 2019 as the US has blocked the appointment of judges to the appellate body.
On forced labour in global supply chains, Goyal said India’s commitment to eliminating forced labour was “absolute and unconditional”. At the same time, he cautioned against trade measures based on broad assumptions about entire countries, regions or sectors. Border measures like trade curbs, he said, must be based on specific and verifiable evidence, follow due process and comply with WTO rules.
Source: The Financial Express
