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Countries may slap counter measures

Countries may slap counter measures

New Delhi: Countries opposed to a proposal by the European Union (EU) to levy a tax on their airlines for carbon emissions have lined up tough counter-measures, signalling a potential trade war in the coming months.

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The two-day conference in Moscow, which ended on Wednesday, was a follow-up to a meeting led by India in September when a Delhi Declaration was signed by two dozen governments on how to tackle the proposed EU scheme. Under the ETS, airlines using EU airspace will have to pay a fee for carbon emissions that exceed a set limit. They will also need to pay for the part of the journey covered by non-EU airspace.

According to the draft prepared by the countries opposed to the move, the “basket of counter measures" include “issuing appropriate state regulation to prohibit national airlines to participate in EU ETS, enacting appropriate state legislation to prohibit national airlines to participate in the EU ETS, mandating the EU carriers to submit similar flight details to the respective states as required by EU in their scheme."

Countries should assess the specific violations of WTO agreements by the scheme, consider a review of bilateral air service agreements, a possible freeze (restrictions, suspensions, embargo) on current and future discussions and/or negotiations as part of bilateral agreements.

They could also consider imposition of additional levies on European carriers using the airspace of non-EU states like Brazil, Russia, India and China. Existing trade agreements in other sectors may be reopened for exerting pressure on EU industries; ongoing negotiations on trade agreements may be halted.

Indian carriers that fly to Europe, including Air India Ltd, Jet Airways (India) Ltd and Kingfisher Airlines Ltd, will have to bear the burden of the proposed levy.

In Moscow, a Russian minister said each country will decide on the measures it would take. “Every state will chose the most effective and reliable measures that will help to cancel or postpone the implementation of the EU ETS," said Valery Okulov, Russia’s deputy transport minister.

Okulov said Saudi Arabia would organise the next meeting of the so-called “coalition of the unwilling" in the summer.

Connie Hedegaard, the EU’s climate action commissioner, said the Moscow meeting did not answer Europe’s concerns.

“Unfortunately, our question for Moscow meeting participants remains unanswered: what’s your concrete, constructive alternative?," she said in a posting on the social networking site Twitter

The document listing punitive counter-measures by countries opposing the EU proposal warned of ensuing “trade wars" if countries start coming up with their own versions of the ETS.

“Any attempts to create other regional ETS in order to compensate EU ETS without worldwide agreement under ICAO (International Civil Aviation Organization) auspice will lead to a deeper distortion of the international aviation market and as consequence to a series of trade wars, the document said.

Reuters contributed to the story.

tarun.s@livemint.com

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