Info Service on WTO and Trade Issues (Feb21/14)
Geneva, 18 Feb (D. Ravi Kanth) – The WTO Director-General Ms Ngozi Okonjo-Iweala’s call to “reactivate and broaden the negotiations on environmental goods and services” has bolstered attempts by the European Union and other developed countries to accelerate “trade and environmental sustainability structured discussions (TESSD)”, said people familiar with the development.
The proposed objectives of the TESSD include aggressive trade liberalization by bringing down tariffs on environmental goods and removing barriers on environmental trade in services in developing countries, who would be required to make a huge payment, said a developing country trade envoy, who asked not to be quoted.
At a time when the developing countries are reeling under multiple crises as a result of the COVID-19 pandemic, it is unfair for the developed countries to force an aggressive round of tariff and regulatory liberalization of environmental goods and services in the garb of “environmental sustainability”, the envoy suggested.
WTO DG’S ACCEPTANCE SPEECH
In her acceptance speech delivered at a special meeting of the General Council on 15 February (JOB/GC/250), the new director-general Ms Ngozi called on members “to ensure that the WTO best supports the green and circular economy and addresses more broadly the nexus between trade and climate change.”
“Trade and environmental protection can be mutually reinforcing, both contributing to sustainable development,” Ms Ngozi said, emphasizing that “it will be important for Members to re-activate and broaden the negotiations on environmental goods and services.”
“This would help promote trust and encourage Members to explore further ways in which trade can contribute positively to an improved climate,” the new DG said.
She suggested that “care must, however, be taken to ensure that any disciplines are not used arbitrarily or as a disguised restriction on trade, and that they take into account the need for developing countries to be assisted to transition to the use of greener and more environmentally friendly technologies.”
Incidentally, the issues of trade and environment along with trade and labour are among the top multilateral trade priorities for the new Biden-Harris administration, according to news reports in the American media.
PROPOSALS ON TRADE AND ENVIRONMENT
So far, eight countries – New Zealand, Japan, Canada, Switzerland, Iceland, the United Kingdom, the European Union and South Korea – have submitted proposals on the issues to be discussed as part of the trade and environment structured discussions.
In a restricted paper (Inf/TE/SSD/W/1) issued on 5 February, and seen by the SUNS, New Zealand has proposed that fossil fuel subsidy reform must be part of the TESSD agenda.
In its proposal contained in the restricted document Inf/TE/SSD/W/2, issued on 15 February, Japan emphasized “the importance of facilitating the WTO’s role in realizing carbon neutrality all over the world. Japan is interested not only in addressing the promotion of tariff liberalization for environmental goods but also in working on the rules for non-tariff barriers, in order to facilitate trade in goods that will contribute to climate neutrality. Japan is also interested in exploring discussions to specify environment-related services.”
In its proposal (Inf/TE/SSD/W/3) issued on 8 February, Canada has called for addressing trade-related aspects of climate change mitigation and adaptation, particularly border carbon tax adjustments and tariff and non-tariff barriers to environmental goods and services.
In its proposal (Inf/TE/SSD/W/4) issued on 15 February, Switzerland wants the following issues to be tackled within the TESSD. These include: (1) Liberalization of Environmental Goods; (2) Fossil Fuels Subsidies Reform; (3) Greening Aid for Trade; (4) Circular Economy; (5) Plastic Pollution; (6) Climate Adaptation; and (7) Biodiversity.
In its proposal (Inf/TE/SSD/W/5) issued on 15 February, Iceland called for “WTO Members and relevant stakeholders to explore methods and best practices for realising environmental sustainability within a framework of international trade policy.”
“Iceland favours a TESSD process that is well defined and focused on real challenges and actual results. Emphasis should be given to topics that fall within the mandate of the WTO and can be linked to actual trade policy tools”.
Iceland said that it “supports negotiations of agreements to eliminate barriers to trade in environmental goods and services. Further liberalisation of goods and services with environmental benefits will support international commitments to combat climate change and contribute towards a more sustainable world economy.”
In its proposal contained in document Inf/TE/SSD/W/6 and issued on 16 February, the United Kingdom has called for tariff liberalization as well as the need to promote the deployment of renewable energy generation.
In its proposal contained in document Inf/TE/SSD/W/7 and issued on 16 February, the European Union has called for: “(1) the liberalisation of trade in green/climate-friendly goods; (2) the liberalisation of trade in green/climate-friendly services; (3) looking into how we can gather developing countries around the topic of environment and tackle issues such as greening aid for trade; (4) looking into the transparency of domestic measures such as fossil fuel subsidies, carbon border mechanisms; and (5) how we can improve the role of the CTE (Committee on Trade and Environment).”
The EU’s third goal of “looking into how we can gather developing countries around the topic of environment and tackle issues such as greening aid for trade” appears to be a method to attract developing countries, which are already burdened with excruciating trade commitments, said a person, who asked not to be quoted.
In its restricted proposal issued on 17 February, Korea said that “although TESSD is not a multilateral forum, it needs to produce results in MC-12, however small they may be, to show the WTO is still alive.”
“For this, TESSD should explore deliverables, building on issues already discussed, rather than totally new issues,” Korea argued in its proposal, adding that “it should narrow down the agenda to discuss rather than put various topics on the table given the time limit. Above all, the deliverables must contribute effectively to global ambitions on environment protection and sustainable development.”
KOREA’S COMPREHENSIVE PROPOSAL
Korea’s proposal, contained in document Inf/TE/SSD/W/8 and issued on 17 February, is the most comprehensive proposal on liberalization of environmental goods and services.
Korea suggested that “three deliverables are worth exploring” as part of the TESSD. The deliverables include “resumption of the environmental goods agreement negotiations, initiation of the environmental services agreement negotiations, and initiation of reviews regarding compatibility between environmental measures and multilateral trade rules.”
Korea says that “the environmental goods agreement negotiations can be one of the most feasible fruits for MC-12,” suggesting that “trade in environmental goods was already discussed in regional and plurilateral channels such as Asia-Pacific Economic Cooperation (APEC) and the Environmental Goods Agreement (EGA) negotiations.”
According to Korea, “in 2011, APEC Leaders resolved to reduce APEC economies’ applied tariff rates to 5% or less by the end of 2015. Following the resolution, in 2012, APEC economies agreed to an APEC List of 54 Environmental Goods on which they would reduce applied tariff rates, and they voluntarily reduced the tariff rates of those goods.”
Korea provided a brief history of the stalled Environmental Goods Agreement (EGA) negotiations launched in 2014 based on this APEC list.
“While the EGA negotiations came to a halt in 2016, environmental goods on the table were converged to a list of 304 environmental goods in the final stage of these negotiations. Both the APEC list and the EGA list can be useful guidelines to restart discussion on environmental goods,” Korea said.
Seoul has argued that “the APEC list could be a starting point to reduce TESSD participants’ applied tariff rates in environmental goods. In addition, considering that EGA participants and TESSD participants overlap (41 Members of 46 EGA participants), the EGA list can be a reference which TESSD will consider. TESSD can also widen the scope of participants to EGA participants and APEC economies which do not join TESSD yet.”
Simultaneously, “the environmental services agreement negotiations can be another feasible fruit for MC-12,” Korea argued.
“The WTO Members have experience to discuss market access in service sectors including environmental services in the DDA (Doha Development Agenda) negotiations, and 51 WTO Members joined Trade in Services Agreement (TiSA) negotiations,” Korea argued.
“Therefore, although there were no negotiations on environmental services in the past, this is an area where TESSD can produce deliverables,” Korea maintained, suggesting that “TESSD is able to start the environmental services agreement negotiations.”
Further, Korea argues that “the commitments offered in DDA negotiations can be a good starting point to open discussion on enhanced environmental services’ market access opportunities. Also, environmental services commitments offered in TiSA can be also a useful reference for these negotiations, considering TESSD participants and TiSA participants mostly overlap (41 Members of 51 TiSA participants). TESSD can widen the scope of participants to TiSA participants which do not join TESSD yet. Environment-related services which TESSD agrees can be included in the negotiations.”
Lastly, Korea proposed that “structured reviews regarding compatibility between environmental measures and multilateral trade rules can be considered as a deliverable for MC-12. There were long discussions on relationship between Multilateral Environmental Agreements and WTO rules in the late 1990s and the early 2000s.”
In short, with the arrival of the new DG, it appears that developed countries have secured the “green light” for accelerating the trade and environment discussions, focusing on the liberalization of trade in environmental goods and services, said a negotiator, who asked not to be quoted.