The 21-nation Asia-Pacific Economic Cooperation (APEC) meeting in Kazan, Russia, discussed two very important issues in the context of the ongoing negotiations under the Doha Development Agenda of the World Trade Organisation (WTO): trade facilitation and tariff reduction on environmental goods.
It is understood that despite some initial opposition from China, APEC trade ministers have managed to get an agreement to bring down tariffs on a list of environmental goods to be decided to five per cent in the next three years. The countries have also agreed to liberalise trade in environmental services.
Interestingly, APEC countries have chosen to move towards a list approach for reduction of tariffs on environmental goods. The debate on this issue at the WTO has been whether there should be a list approach or a definition approach to identifying environmental goods for tariff liberalisation.
The list approach, according to industry analysts in India, may not help since it would not assist developing countries and it would be difficult to identify products of interest to them. It is feared that adopting a list approach may only help high technology products being produced in developed countries.
It would, therefore, be important to follow the list of products that will be identified for tariff liberalisation under the Asia-Pacific agreement. It may provide a way forward for the discussions at the WTO since AEPC members account for more than half of world trade. The US has already identified solar panels, wind and hydraulic turbines, air pollution filters and sewage treatment pumps as goods they would like included on the list of products for which tariffs need to be cut by member countries of the trade agreement.
It is understood that APEC members have also agreed to eliminate domestic content requirements that distort environmental goods and services trade by the end of the year. The first list of environmental goods is expected to be ready by September this year.
Moreover, APEC countries have also agreed to attempt to cut their aggregate energy intensity by 45 per cent by 2035. Energy intensity is a measure of a country’s energy use and efficiency. However, this pact would not be binding on member countries but will remain voluntary.
APEC ministers, who were also briefed by WTO Director General Pascal Lamy, agreed to look at the possibility of having an early harvest in the area of trade facilitation at the WTO. APEC ministers are hoping that they would come up with a solution on the issue by the time they meet again in September this year.
However, India and some of the other developing countries are not in favour of taking this issue out of the Doha Development Agenda and having an agreement before the other issues are also sorted out.
Trade facilitation, as an issue, has been going forward in the WTO Doha Round and some of the countries have been in favour of taking this issue out of the single undertaking of the Doha Development Agenda and announcing an agreement.
Trade facilitation certainly has a very important role in ensuring that trade remains transparent and free. However, it is a matter of debate whether there is a need to take this issue out of the host of other issues that are tied together for an agreement at the WTO.
However, what is encouraging is that despite the growing protectionism across the globe owing to the economic slowdown, APEC trade ministers have been able to move forward on some important issues.
Member countries have identified four issues, which they believe will help overcome the pessimism that is currently prevalent across the globe. The priority issues that are critical to promoting economic recovery and sustainable growth, according to the APEC ministers include, trade and investment liberalisation as also regional economic integration, establishing reliable supply chains, intensive cooperation to foster innovative growth and strengthening food security.
World trade certainly needs a booster dose to help countries that are impacted by the slowdown. However, trade blocs need to be careful that in their bid to move the WTO agenda forward, they keep the spirit of the development agenda in mind.