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WTO Negotiations Aim to Eliminate Tariffs on ‘Environmental Goods’ by End of 2015

Posted July 11, 2014

Representatives from 14 countries began negotiations at the World Trade Organization (WTO) in Geneva for two days earlier this week aiming towards a deal that would eventually cut tariffs on almost $1 trillion of environmental goods. The talks are a continuation of the Green Goods Initiative launched by the participants in January this year.
Global Green
“The global challenges we face, including environmental protection and climate change, require urgent action,” said a joint statement issued by the Office of the U.S. Trade Representative. According to the release, participating WTO members will “engage in intensive negotiations, meeting regularly in Geneva” as they “work towards the timely and successful conclusion of the agreement.”

“This initiative is a win-win for the economy and the environment,” said EU Trade Commissioner Karel De Gucht in remarks at the outset of the plurilateral talks. “It is an excellent example of how trade policy can have a positive impact on green growth, green jobs, sustainable development, and climate change.”

The proposed Environmental Goods Agreement (EGA) would cover 86 percent of trade in goods such as solar panels and wind turbines for producing energy, filters for wastewater treatment and catalytic converters for air pollution control. U.S. exports of environmental goods reached $106 billion last year, and have grown 8 percent a year since 2009.

Along with the United States, China and the European Union, the negotiations also include Australia, Canada, Costa Rica, Hong Kong, Japan, Korea, New Zealand, Norway, Singapore, Switzerland, and Chinese Taipei. They are meant to build on a list of 54 environmental goods put together by members of APEC (the Asia-Pacific Economic Cooperation for Pacific Rim economies) for which the governments hope to reduce tariffs to five per cent or less by the end of 2015.

The Harper government stated that participation in the talks “is consistent with the government’s leadership on the world stage in support of freer and more open trade” and that an agreement “would give Canadian companies — already leaders in the sustainable-technologies industry — a significant commercial advantage in exporting a broad range of environmental products.”

U.S. Trade Representative Michael Froman said an agreement would eliminate tariffs of up to 35 percent on dozens of items and fulfill a key part of President Barack Obama’s climate-change agenda. “By eliminating tariffs on the technologies we all need to protect our environment, we can make environmental goods cheaper and more accessible for everyone,” Froman told reporters.

The talks were strongly endorsed by the U.S. business community, which this week launched a new lobby group called the Coalition for Green Trade to “educate” policymakers about the importance of lowering trade barriers to environmental technologies. Headed up by the National Association of Manufacturers (NAM), National Foreign Trade Council (NFTC), and the United States Council for International Business (USCIB), the new group also comprises numerous other trade and business associations including the powerful U.S. Chamber of Commerce.

While the coalition supports the current list of environmental goods eligible for duty reduction or elimination, it sees it as being far too limited. “It is critical that the EGA negotiations substantially broaden the list of 54 goods agreed upon by the APEC forum in 2012 in order to more accurately reflect the substantial breadth and significant growth in the green goods sector,” said Jessica Lemos, director of international trade policy at the NAM.

Another U.S. lobby group, the Coalition for Affordable Solar Energy (CASE), also welcomed start of the talks, but warned it will not solve existing anti-dumping actions. “While we would welcome a broad trade agreement on environmental goods, it does not address the current countervailing duty and anti-dumping solar trade cases at the department of commerce,” said CASE president Jigar Shah. The initial scope of the talks does not extend to punitive trade remedies but stakeholders hope that if the talks on eliminating tariffs are successfully concluded this could open up areas such as services, non-tariff barriers, government procurement and trade remedies to be covered in a second stage of negotiations.

Not everyone is supportive of the initiative however. Various environmental groups and opponents of global trade liberalization are openly skeptical about the process. “From our perspective, we think increasing trade in and use of environmentally beneficial products is incredibly important. But we have really serious concerns about the approach the WTO is taking,” said Ilana Solomon, the director of the Responsible Trade Program at the Sierra Club.

“This approach is about removing tariffs on a list of products that are supposedly beneficial to the environment. But there is no definition yet of what actually constitutes an ‘environmental good’, and many of the goods being considered are actually harmful to the environment.” This includes, for instance, waste incinerators, centrifuges, gas turbines, sludge compactors and a variety of technical machinery that can potentially be used in ways that could be environmentally negative.

Critics are also concerned that lowering tariffs would impede the ability of poorer countries to develop their own domestic renewable energy industries. They also fear the proposed EGA could be “a backdoor attempt to achieve liberalisation on a broad range of goods,” according to Solomon — a view actually shared by proponents of the deal, although of course seen by them in a positive light. “In addition to its intrinsic commercial importance and desirability, a well-designed EGA can act as a stepping stone to lowering tariffs and other trade barriers in other sectors and associated value chains,” said a global industry letter to WTO negotiators signed by nearly 50 major business groups and trade associations.