Concerns of European consumers are fuelling demands on manufacturers that are likely to hit small Indian companies hard. Consumer demands for environment-friendly electronic and electrical products, for example, will compel European manufacturers to hand-pick suppliers who can meet the latest European regulations restricting use of certain hazardous substances in these products.
Vinod Sharma of Deki Electronics has voiced the fears of small Indian companies that risk being by-passed because they cannot meet the demands imposed on them by the European Union. ?Cost of implementing environmental-friendly measures needs to be shared, and we need more time to meet them,? he says.
Mr Sharma was speaking at the launch of the European Forum on Sustainable Trade (EFST) last week. The launch, convened by EU trade commissioner Pascal Lamy and the Sustainable Trade and Innovation Centre (STIC), focused on the electronics sector. The next meeting will deal with textiles and clothing, and the third with the agrifood sector.
The STIC is already active in India. Its recent programme on eco-design for Indian electronic component manufacturers (1) helped raise awareness of forthcoming legislative changes in key export markets and (2) improve management and interaction with agents along their supply chain, resulting in environmental and productivity gains, says STIC.
The STIC will be holding consultations in India from August 19-21 as part of its regional talks aimed at identifying services required from its and setting up regional hubs. Some 20 national hubs/modes are planned for Asia in the framework of a three-year project.
Ritu Kumar, representing the Commonwealth Science Council, presented the EU?s environmental and social legislation affecting the electronics industry. Problems being encountered by Asian firms were discussed by Vinod Sharma, a senior executive of Sony and representatives of Korean and Thai organisations. The participants at the launch meeting included company executives, trade and industry representatives and non-governmental organisations, consultants and numerous diplomats, many from Africa, perhaps because the STIC chairman is South African minister for science and technology Ben Ngubane, who chaired the meeting with Lamy?s director for Asia Robert Madelin.
The aim of the EFST clearly is to give companies in the developing countries that are most directly affected by Brussels? environmental and social legislation an opportunity to make their concerns known to those responsible for drafting the legislation, particularly Lamy.
The STIC sees itself a platform for bringing together stakeholders from the North and South to ensure that the Third World?s concerns are taken into account when environmental and social legislation is being drafted. But it also seeks to help Third World producers to benefit from growing market pressures ? reflected in company codes of conduct, for example ? to integrate environmental and social factors into their export strategies.
Vinod Sharma was reflecting on the very concerns that STIC has been set up to deal with ? the frustration felt by producers, who face extra costs in meeting additional requirements, arising from legislation which has often been designed without consultations and introduced with short lead-times. The national hubs, for example, will help local producers meet these requirements – at local costs.
The STIC sees its role, in other words, as helping producers and traders meet existing market realities. It is therefore not in the business of challenging existing regulations, on the contrary, it regards Europeans? demands for environmental and social legislation as an opportunity for companies in the developing countries to innovate and develop new skills. It certainly does not view such a legislation as protectionism in disguise, or an attempt by the the 15-nation bloc to impose its vision of sustainable trade and development on countries such as India.
Even so, there were dissenting voices at the launch meeting of the of EFST. A Malaysian diplomat challenged the very basis of the EU?s new legislation and claimed only 10 per cent of Europeans were interested in environmental and human rights issues.
Equally basic issues were raised by Unctad representative Ulrich Hoffman at the meeting. ?Sustainable for whom?? he asked. ?A lead-free economy is out of the question in Malaysia, for example, where the lead is to be found mostly in petrol and batteries,? he pointed out. Other forms of lead pollution were of marginal importance, eliminating them will impose too high a cost on Malaysian producers.
Lamy?s director for Asia Robert Madelin agreed that ?there cannot be a single answer to the question of what is sustainable development. We have our definition. The challenge is to see how to reconcile these differences in global trade so as to achieve sustainability in development and trade.? The STIC hopes to meet this challenge, and is working closely with the EU to this end. In fact, preparations for its launch were made possible by the support it received from Lamy and the Commonwealth Science Council. The first phase of STIC?s activities, due for completion by the year-end, is funded by the Dutch government. It?s being implemented jointly by the Commonwealth Science Council, London; European Partners for the Environment, Brussels; and Royal Tropical Institute, Amsterdam.
Demands for sustainable trade are here to stay, and will be reflected in EU trade legislation. Lamy has recognised the need to involve civil society from around the world in drafting such legislation. Hence the need for New Delhi on the one hand, and leading industry bodies such as the Confederation of Indian Industry and Federation of Indian Chambers of Commerce and Industry to make sure they are represented at the numerous meetings devoted to these issues in Brussels.