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Info Service on WTO and Trade Issues (Apr24/20) Geneva, 24 Apr (D. Ravi Kanth) — The World Trade Organization’s Committee on Trade and Environment (CTE) is set to become a battleground for several controversial trade and climate change issues being floated without any prior ministerial mandate, with the United States seeking multilateral discussions on the trade aspects and implications of certain environmental measures, said people familiar with the development. In sharp contrast, many developing countries have tabled proposals that challenge the adoption of unilateral and protectionist trade-related environmental measures while seeking a developmental dimension in addressing global environmental challenges, said people, who asked not to be quoted. Starting on 24 April, the CTE is expected to debate for two days a raft of proposals being tabled by several members. After trade ministers at the WTO’s 13th ministerial conference (MC13) in Abu Dhabi failed to include trade and climate change issues in the Abu Dhabi Ministerial Declaration on 2 March, the chair of the CTE, Ambassador Jose Valencia from Ecuador, wants members “to share their thoughts on further ways to improve the functioning of the CTE and the relevance of the work to address global environmental issues.” In a restricted agenda (Job/TE/87) sent to members on 17 April, seen by the SUNS, the chair said the discussion would be “a follow-up to the work accomplished by the CTE up to MC13,” which appears to indicate that whatever that happened at the Abu Dhabi meeting will not be taken into consideration. It may be recalled that despite not having any agreement on trade and climate change issues at MC13, many developing countries issued a “Ministerial Declaration on the Contribution of the Multilateral Trading System to Tackle Environmental Challenges” in Abu Dhabi on 29 February to set some ground rules. The countries that signed onto this declaration (WT/MIN(24)/28) include Argentina, Bangladesh, Barbados, Bolivia, Brazil, Cabo Verde, Colombia, Ecuador, Egypt, Honduras, Indonesia, Kazakhstan, Panama, Paraguay, Peru, South Africa, Uruguay, Venezuela, as well as the African Group. They have proposed the following ground rules on how environmental challenges ought to be addressed in the Multilateral Trading System (MTS): * Call on all Members to refrain from imposing unilateral trade-related environmental measures that create unnecessary obstacles to trade or arbitrary or unjustifiable discrimination between countries. * Encourage enhanced transparency of trade-related environmental measures applied by Members. * Intensify our collective work in the Committee on Trade and Environment to analyse the key principles of international environmental law that are relevant to the design and implementation of trade-related environmental measures, with the aim of enhancing coherence and mutual supportiveness between international environmental regimes and trade regimes in the design and implementation of trade-related environmental measures. * Intensify efforts to work on all items of the Committee on Trade and Environment, particularly the agreed items of focus. * Work together to foster a dialogue on how to promote trade that supports sustainable development and just transitions, including by considering how positive trade incentives, designed, and implemented cooperatively, as well as WTO Agreements could facilitate trade of sustainably produced products, and provide developing countries with necessary means of implementation in this regard. * Promote a coherent, open, member-driven, consensus-based, and inclusive approach in the discussion of trade and environment issues that arise across WTO bodies. * Strengthen discussions in the CTE and other relevant bodies of the WTO on how the multilateral trading system can best contribute within its mandate to global responses to the environmental crisis, taking into account the principles and provisions of relevant international environmental treaties and norms of international environmental law. * Reinvigorate the discussions on trade and technology transfer, including environmentally sound technology across multiple WTO bodies, including the Committee on Trade and Environment and the Working Group on Trade and Transfer of Technology. * Work together to promote, within the WTO mandate, cooperation on trade, innovation, and climate finance. Against this backdrop, two recent proposals – one circulated by the ACP (African, Caribbean, and Pacific) group of countries and the other by the United States – seem to advance differing goals. Of the two proposals, the US proposal (WT/CTE/W/260) is the latest one, as compared to the ACP proposal, which was circulated before MC13. US PROPOSAL In its proposal dated 4 April, Washington said that “trade policy can play an important role in incentivizing decarbonization and reducing GHG emissions in our economies, spreading technological innovations that enable lower- or zero-emission production and transport, and greening international supply chains.” It argued that consequently, WTO members are “putting in place and implementing trade-related climate measures (TrCMs) at a growing rate.” The US suggested that “WTO Members have already notified through various WTO committees over a thousand trade-related measures on climate change mitigation and adaptation, and thousands more environmental measures and regulatory policies that relate to climate change and environmental protection (such as ozone layer protection and the protection of forests).” Against this backdrop, according to the US, “WTO Members would benefit from conversations to understand latest developments and work on how to assess the effectiveness and impact, including on trade, of various TrCMs domestically and internationally.” The US wants members to share their TrCMs, as “the WTO is an important space for sharing these trade-related experiences and discussing how to maximize the effectiveness and coherence of various TrCMs for achieving Members’ climate ambitions, complementing important discussions and analytical work taking place in other fora.” According to the US proposal, “WTO Members have already undertaken significant engagement on trade and climate issues in the WTO, as well as in other multilateral and regional organizations.” As part of the ongoing work by several WTO members, the US cites the European Union’s initiative – Trade and Environmental Sustainability Structured Discussions (TESSD) – that was started in 2020 and now includes 76 WTO members. The TESSD, according to the US, “also includes discussions on topics that directly relate to climate change, including deforestation, circularity and the circular economy.” At a time when more than half of the WTO members remain sceptical about the real intentions of the TESSD, the US said that it “supports the continuation of discussions under the TESSD and the valuable, informal incubation space it provides WTO Members to engage and explore emerging environmental issues in an open and inclusive format.” More importantly, the US wants “to harvest discussions that began in the TESSD, broaden them, and develop, where possible, concrete and practical policy options and tools that can support WTO Members’ needs.” The US maintained that other WTO committees are also discussing “TrCMs and the relationship between trade and climate.” Stemming from the TESSD development, the US wants to “identify specific topics that are ripe for bringing back into the regular work of the relevant WTO committees, and deepen the discussion on those more mature areas with the goal of informing WTO Members interested in developing data-driven, science-based, practical policy options and tools.” The US said “greater coherence and interoperability between different TrCMs could improve their effectiveness in addressing climate change, while also reducing unnecessary costs and trade tensions.” The US has proposed that “WTO members consider a range of options”, including “WTO Member retreat(s)” for discussing several issues. The issues to be discussed include: a. Interoperability of TrCMs: understanding ongoing work and Member experiences to identify common elements across different types of TrCMs, including on options and strategies to support interoperability and coherence among different measures. This would include discussion of interoperability between different carbon price and non-price measures and outcomes from the two approaches. b. Capturing embodied emissions: understanding ongoing work and Member experiences related to data and methodologies used for calculating embodied emissions. The US said that the “intent of this communication is to recognize that WTO Members are already designing and implementing TrCMs to respond to the climate crisis, and that a great deal of important discussion and analysis has already taken place at the WTO and elsewhere.” The US said, “The time is ripe to pull some aspects of this work into a deeper discussion that is data- and fact- driven and could help inform WTO Members considering practical policy options and tools to address climate change while recognizing potential trade-related impacts.” The US proposal on TrCMs seems somewhat akin to what Washington had done when it brought the controversial TRIPS Agreement into the Uruguay Round negotiations, said a former trade envoy, who asked not to be quoted. “In the Uruguay Round, the US told developing countries that they should accept the TRIPS issue in return for doing away with the Multifibre Arrangement,” the envoy said. ACP PROPOSAL In contrast, the ACP proposal (WT/CTE/W/259) on the trade aspects and implications of certain environmental measures, circulated on 9 February, suggested that “the reinvigoration of the CTE can be buttressed through active outreach and synergies with other relevant WTO bodies and WTO processes to develop coherent policy recommendations to support each WTO Member and operate a fair and just transition towards a net zero future in line with national priorities and needs.” The ACP proposal drew attention to “capacity constraints” faced by many small delegations “to engage in every trade policy discussion and deliberation at the WTO, due to conflicts of schedule and overlapping meetings.” To provide transparency concerning the discussions to be held in the various thematic groups and various configurations of the CTE, the ACP members called for “regular updates by the Chair of the CTE to the Chair of the General Council during regular or informal sessions open to all Members.” “This could also provide an additional spotlight on the various issues covered in the CTE and send a strong signal to the international community of the trade community’s resolve to tackle climate change,” the ACP group argued. It has suggested that the WTO develop a “new process or re-launch climate change conversation within the CTE with the support of the (WTO) secretariat.” According to the ACP group, “the new process should provide a platform for WTO Member States to share their experiences on the nexus between trade and climate and what could be the focus of the WTO in terms of addressing the climate challenges.” In short, the stage appears to be set for what seems like a new round of negotiations on trade and climate change at the WTO. The only exception this time around is that there is no prior ministerial mandate to bring in some of these controversial issues, said people familiar with the development. +
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