A group of 14 WTO members formally launched negotiations last week for a new agreement aimed at liberalising trade in environmental goods.
Through this planned Environmental Goods Agreement (EGA), the group hopes to “achieve our shared goal of global free trade in environmental goods.”
While the group is aiming to reach agreement on an ambitious and broad range of goods, the selection would also be based on a product’s ability to meet environmental challenges e.g. goods related to energy efficiency, combating air pollution, providing clean drinking water, and scaling up renewable energy equipment.
Total global trade in environmental goods reached roughly US$955 billion in 2012, according to US data, with tariffs on some products as high as 35%.
With Australia, the EU, US, China, Canada, Costa Rica, Hong Kong, Japan, Korea, New Zealand, Norway, Singapore, Switzerland, and Chinese Taipei on board, the group represents some of the world’s largest importers and exporters of such products.
Bringing a deal to the WTO
Participants have committed to bring the agreement into the WTO as a most-favoured-nation style pact, which would extend the eventual benefits to the global trade body’s full membership.
“We would like to see more developing members in particular join this process,” said China’s WTO Ambassador to the WTO Yu Jianhua.
WTO Director-General Roberto Azevêdo also highlighted this point – “The topic of environmental protection is of utmost importance in the WTO and the liberalisation of environmental goods is also a significant element of negotiations under the Doha Development Agenda.”
According to a UN Environment Programme report released earlier this month, developing countries moved from being net importers to net exporters of certain green goods in 2007.
Tariff-only focus, for now
The negotiations will initially focus on tariff issues, but this does not preclude returning to issues such as environmental services and non-tariff barriers at a later stage.
Doha in the background
A commitment to negotiations towards lowering tariffs and NTBs in both environmental goods and services trade was included in the WTO’s original Doha Round mandate, launched in 2001.
Progress at the multilateral level in this area stalled, however, with members running into hurdles such as how to identify an environmental good and what products to put forward.
The overall Doha Round has itself been deadlocked for several years, despite the recent advance seen at the WTO’s latest ministerial conference in Bali, Indonesia, last December.
Initiatives such as the EGA have been raised by some WTO members as possible avenues for advancing trade liberalisation – and potentially to breaking the Doha Round deadlock – in line with the direction to pursue new, more flexible negotiating approaches.
The EGA group first announced its intention to pursue a green goods trade agreement in January, at the World Economic Forum’s annual meet in Davos. The group said it would use a list of environmental goods agreed to by the 21 economies that make up the Asia-Pacific Economic Cooperation (APEC) forum as a starting point.
In 2012, APEC members announced their plans to reduce applied tariffs on a list of 54 green goods – including wind turbines and solar panels – to 5% or less by the end of 2015.
Changing trade realities, balancing interests
Although pitted as a “win-win”, EGA negotiators will need to address tricky areas, such as how to make sure the deal keeps up with rapidly changing technological developments, consistent with their pledge to negotiate a “future-oriented” agreement. They will also need to strike a balance between the commercial interests of participants and the environmental aims of the agreement.
The plans for this new deal come as a number of participating members are engaged in spats over allegedly unfair trade practices in this sector. ome of the most high-profile rows have involved the US, EU, and China. These disagreements have highlighted the question of how to support renewable energy generation and innovation domestically, while also advancing the deployment of such goods at a global level and ensuring fair trade.
ICTSD reports that a group of 14 WTO members formally launched negotiations last week for a new agreement aimed at liberalising trade in environmental goods. Through this planned Environmental Goods Agreement tariffs will be cut on an ambitious range of goods, selected on their ability to meet environmental challenges e.g. improving energy efficiency, combating air pollution, providing clean drinking water, and scaling up renewable energy equipment.