Thursday, September 1, 2011

EXCLUSIVE! EU-ETS- Coalition of the Unwilling

Neelam Mathews
Sept 1, 2011

The Directorate General of Civil Aviation (DGCA) has invited non-EU countries on Sept 28-29 to discuss EU’s Emission Trading Scheme (ETS) that will impose a mandatory tax on all airlines flying over or to EU countries,

According to DGCA Dr Nasim Zaidi, 28 countries are being invited.

Impact on air carriers and passengers will be substantial. As a result of the ETS, an additional $65 will be added to a ticket on the Delhi-London-Delhi sector.

“This is tantamount to a trade war under the garb of environment,” says an airline official.

While the U.S has protested formally in June to the EU and India is said to be watching the Congress Bill titled EU-ETS prohibition Act 2011 that needs to be cleared in the House of Representatives and then go through numerous stages before becoming an Act that will prohibit U.S carriers from giving taxes to foreign entities, there is concern that time is too short as the ETS comes into being on Jan 1, 2012.

The fact remains that India has not taken a leadership role in world bodies, say analysts. “It is not a leader in the G77, Kyoto Protocol, not a protector of lesser developed countries in the WTO….it has no voice,” says an aviation consultant. “The move by DGCA comes too late, though it is a good effort to set the dialogue moving.”

Some officials Aerospace Diary interacted with said it would have been a good idea if the DGCA dialogue would have been co-sponsored with the U.S or China that have protested vociferously against the ETS.

With many countries in Africa receiving subsidies from the EU, makes it highly likely that they will not attend the DGCA dialogue as they would not like to be seen as hostile. While attendance is expected to be thin, China, U.S, Singapore and UAE are likely to attend.

The time seems to have come for countries to get their act together as it is too late for knee jerk reactions. An analyst suggests that India should speak to each EU nation to bilaterally agree not to impose laws on each other.

“We should introduce a market-based mechanism to bilaterally agree not to impose our laws on each other or alternatively, look at revoking the air services agreement. The only way of countering a law is to impose your own law,” says a lawyer. The question is, does the DGCA have a solid backing from the Government of India that has its own agendas with the West and currently embroiled in its own set of bombastic issues?

Harsh and tough words?  Yet, something needs to be done to guard the nation’s interests, particularly given the  harsh economic climate that threatens to get rougher.

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