India, UK discuss ways to resolve CETA deadlock, Pg15

Key Highlights:

• India and the United Kingdom (UK) are engaged in discussions to resolve a deadlock concerning the operationalization of the Comprehensive Economic and Trade Agreement (CETA).
• The primary obstacles are the UK's newly introduced steel duties and its planned Carbon Border Adjustment Mechanism (CBAM).
• The UK announced new steel trade measures on March 19, 2026, which will take effect from July 1, 2026.
• These measures will limit tariff-free steel imports by 60% and impose a 50% tariff on imports exceeding these reduced quotas.
• Indian Commerce Minister Piyush Goyal and UK Secretary of State for Business and Trade Peter Kyle are leading the discussions.

Detailed Insights:

• The India-UK CETA was signed in July 2025 and was initially expected to become operational by April 2026, aiming to strengthen economic ties and boost bilateral trade.
• The UK's new steel measures significantly reduce the volume of steel that can be imported tariff-free, impacting India's steel exports, which amounted to $893.4 million in 2025-26.
• The proposed Carbon Border Adjustment Mechanism (CBAM), set to be implemented by the UK from 2027, is another major concern, potentially imposing a 14-24% carbon tax on imports like iron, steel, aluminum, and cement.
• India views these measures as undermining the spirit of the trade agreement and has indicated it may rebalance previously agreed-upon duty concessions.
• Such rebalancing could affect British exports to India, including Scotch whisky and automobiles, for which India had agreed to reduce duties from 150% to 75% initially, and further to 40% over ten years.

Key Concepts Involved:

• Comprehensive Economic and Trade Agreement (CETA): A free trade agreement designed to eliminate or reduce tariffs and non-tariff barriers, fostering increased trade and investment between signatory countries.
• Tariff: A tax or duty imposed by a government on imported or exported goods, influencing their price and competitiveness.
• Safeguard Measures: Temporary trade restrictions imposed by a country to protect a domestic industry from serious injury caused by a sudden surge in imports.
• Carbon Border Adjustment Mechanism (CBAM): A policy tool that imposes a carbon price on imported goods from countries with less stringent climate policies, aiming to prevent carbon leakage and promote global decarbonization.