WTO environmental goods pact vs climate change accord

Ongoing plurilateral talks to free up trade in “environmental goods” are not quite the climate-change-tackling initiative they are touted to be, writes D. Ravi Kanth.

GENEVA: After blocking efforts to resume the Doha market access negotiations for industrial goods (non-agricultural market access or NAMA), a group of countries led by the United States, the European Union and Australia has accelerated negotiations for a plurilateral tariff elimination agreement on environmental goods through the backdoor at the WTO, several trade envoys told the South-North Development Monitor (SUNS).

Astonishingly, the proposed deal is being showcased as an attempt to combat climate change, even as the drivers of the agreement at the WTO are putting up numerous hurdles in the way of developing countries’ efforts in the UN climate change negotiations to obtain commitments for transfer of climate-friendly technologies.

The 13th round of negotiations for the plurilateral initiative on an Environmental Goods Agreement (EGA), which took place here on 18-22 April, also raised some delicate questions about China’s role and how it intends to pursue the special and differential treatment architecture, trade envoys maintained.

China, according to several trade envoys, remained silent during the April meeting. Beijing did not circulate its list of environmental goods that would be subjected to tariff elimination, said an EGA trade envoy.

Countries involved in the EGA initiative include Australia, Canada, China, Chinese Taipei, Costa Rica, the European Union, Hong Kong, Iceland, Israel, Japan, New Zealand, Norway, Singapore, South Korea, Switzerland, Turkey and the United States.

Prior to the 13th round of negotiations, the chair of the EGA talks, Andrew Martin of Australia, circulated a draft list of around 350 tariff lines which represent 10 categories of environmental goods.

The 10 categories include solid and hazardous waste management, water waste management and water treatment, air pollution control, renewable energy generation, energy efficiency, environmental remediation and clean-up, noise and vibration abatement, environmental monitoring and analysis, environmentally preferable products and resource efficiency. Further, the 10 categories were expanded into as many as 50 sub-categories.

During the April negotiations, the participants discussed the chair’s list as well as their lists based on commercial and environmentally justifiable criteria. Several countries maintained that the chair’s list of 350 products is far too expansive and will make it difficult for countries to have such an ambitious commercial agreement under the pretext of addressing environmental issues, according to participants.

The final landing zone, according to a developed-country envoy, will be at around 200 products. Out of these 200-odd products, there will be many items that would be subjected to immediate tariff elimination, while sensitive environmental products will be subjected to different staging periods for tariff cuts. “There will be no special and differential treatment other than those two categories for the developing countries,” the envoy told SUNS.

Except for China, Chinese Taipei and a few other members, other EGA members had submitted their draft schedules ahead of the April meeting, the negotiator added.

Chinese concerns

Despite the week-long meeting, the EGA talks faced a major hiccup as China privately conveyed its sharp concerns over several issues. China has made it clear that the final list of products cannot number more than around 140.

China has raised four specific concerns for engaging in the EGA negotiations:

(i) China wants tariffs on environmental goods to be suitably reduced but not eliminated altogether. It argued that the agreement must keep tariffs above zero.

But China’s demand is not acceptable to major industrialized countries, particularly the US and the EU. The trans-Atlantic nations have rejected the Chinese demand on the ground that the EGA initiative is premised on a tariff elimination framework but not formula-specific reduction commitments.

(ii) China has called for systematic application of special and differential treatment (S&DT) flexibilities in the EGA that would include less-than-full-reciprocity commitments.

Here again, the US, the EU and other industrialized countries in the EGA have opposed China’s demand for S&DT, maintaining that there will be two lists for developing countries containing products for immediate tariff elimination and products with different staging periods for removing the tariffs. The S&DT principle will not be applicable for the EGA, the industrialized countries told China.

(iii) China has indicated it is much more positive about the Doha Development Agenda negotiations and also drew a linkage between the negotiations for a Trade in Services Agreement (TiSA) and the EGA. China has subtly indicated that its participation in the EGA will much depend on its entry into the TiSA negotiations, according to EGA negotiators.

China’s overtures for entering into the TiSA talks are not acceptable to the US and Japan while the EU and many other countries remain open. The EU is ready to facilitate China’s entry but will do so only if Beijing is ready to accept the existing negotiated disciplines, an envoy said.

(iv) There is no clarity yet on the level of critical mass – the percentage of products that are going to be covered in the agreement and their share in the global trade – of the EGA and on what will happen if the number of products falls short of the critical mass.

China has indicated that the final product list of the EGA must not include more than 140 tariff lines. Major industrialized countries, however, want the EGA deal to cover close to 200 products depending on the issue of critical mass, an EGA envoy said.

The entire plurilateral EGA initiative makes a mockery of the participants’ commitment to addressing climate change as it is based only on commercial considerations within a mercantilist framework, a non-EGA envoy maintained.

Under the pretext of environmental goods, the EGA participants are bringing a sectoral tariff elimination agreement through the backdoor as it was not possible to do so in the Doha Work Programme, the envoy said.

Further, the developing countries will have to undertake costly commitments for technology-sharing, the envoy suggested.

In short, a genuinely global developmental plan to address climate change, which is a problem facing the global commons, is not possible because of the continued domination of WTO-based mercantilist commitments. (SUNS8230)                                        

Third World Economics, Issue No. 615, 16-30 April 2016, pp9-10