TWN Info Service on WTO and Trade Issues (Jun16/01)
6 June 2016
Third World Network

Trade: US and G7 allies' pressure on China for zero tariff EGA

Geneva, 31 May (D. Ravi Kanth) -- The United States and its G-7 allies are planning to pile up pressures on China to agree at the forthcoming G-20 summit on a trade agreement to eliminate tariffs on a broad range of environmental goods or face international criticism they will engineer for blocking efforts to combat climate change, trade envoys told the SUNS.

Last week, at their annual summit gathering (in Japan this year), the G7 leaders said they "aim to conclude an ambitious Environmental Goods Agreement (EGA) that eliminates tariffs on a broad range of environmental products by the G20 Summit in September in Hangzhou, having in mind a future oriented agreement."

The proposed EGA is being projected as an attempt to combat climate change, even as the drivers of the proposed mercantilist-environmental goods agreement at the WTO are creating numerous hurdles in the way of developing countries' efforts to obtain commitments on financing and for technology-transfer in the post-Paris agreement negotiations.

The G7 leaders have turned their backs on the financing and technology-sharing commitments for complying with the Paris Climate Change agreement. For example, they did not even mention what they intend to do on the US$100 billion financing commitment and proposed technology-sharing disciplines to enable the developing countries to implement the Paris agreement.

The seven developed countries, however, exhorted the developing countries to agree to bring the Paris agreement on climate change into force by the end of this year and implement the nationally determined contributions. They want the developing countries to comply with onerous "transparency" provisions in the climate change agreement.

The statement issued by the seven developed countries from Tokyo maintained: "the G7, continuing to take a leadership role, commits to taking the necessary steps to secure ratification, acceptance or approval of the Paris Agreement as soon as possible, and calls on all Parties to do so striving for a goal of entry into force in 2016. We commit to take the lead by early, transparent and robust implementation of our nationally determined contributions, and promoting increased ambition over time. We also commit to actively participate in the regular review of global stock-take progress every five years. We commit to formulate and communicate ambitions mid-century long-term low greenhouse gas (GHG) emission development strategies well ahead of the 2020 deadline."

Prior to the latest G7 leaders' meeting in Japan, the United States has already created a small group of seven countries - the US, the European Union, Japan, Canada, Australia, New Zealand, and Korea - in Geneva to isolate China in the ongoing negotiations for a plurilateral agreement on environmental goods because of Beijing's opposition to completely eliminate tariffs.

China had stated unambiguously at a meeting of the heads of delegations at the WTO that the proposed EGA is not a multilateral agreement and that it cannot be concluded at the G20 summit as demanded by the US, according to trade envoys familiar with the development.

In an attempt to isolate China in the bigger plurilateral group which was established in early 2015, the US and its coalition of willing allies have now drawn up a list of 150 environmental goods that would be further subjected to negotiations. The seven countries are required to indicate which items among the 150 can be agreed for immediate tariff elimination, which items can be placed in the list of staging-period, and which items cannot be negotiated at all, according to trade envoys familiar with the development.

Following intense negotiations among the technical experts and negotiators of the seven countries during 31 May and 1 June, the trade ministers of the US, the EU, Japan, Canada, Australia, New Zealand, and Korea will meet on Thursday (2 June) in Paris to issue a ministerial statement. That ministerial statement will emphasize the need to conclude the EGA agreement at the G20 leaders' meeting in September.

Effectively, the US is resorting to divide-and-rule policies in the EGA negotiations because of opposition from China which is maintaining that countries must have enough policy space before eliminating tariffs.

At the heart of the divide between the US on the one side and China on the other is whether the tariffs have to be fully eliminated or maintained close to five per cent as agreed in the APEC (Asia-Pacific Economic Cooperation). The US and its allies have maintained that the EGA requires members to eliminate tariffs on the basis of what was agreed in the Asia-Pacific Economic Cooperation (APEC) agreement.

But the APEC list of environmental goods had stated that only those environmental goods "that directly and positively contribute to green growth and sustainable development objectives on which we will reduce applied tariff rates to 5 per cent or less by the end of 2015 taking into account economies' economic circumstances and without prejudice to their positions in the World Trade Organization (WTO), as we committed in 2011."

The 21-member APEC had agreed to cut most-favoured nation applied tariffs to five percent or less by 2015 on environmentally-friendly goods contained under 54 product categories. The APEC list of green goods include a range of goods from wind turbines and solar panels, to water filtering machinery and oceanographic, hydrological, or meteorological surveying equipment.

Out of 350 environmental goods outlined by the chair for EGA negotiations, Mr Andrew Martin of Australia, negotiators from over a dozen EGA countries agreed to submit their list of products based on national, commercial, and environmentally-justifiable criteria.

In all probability, the landing zone for the final list of products would be hovering around 200 products that would include products for immediate tariff elimination and those with a transition period for bringing the tariffs to zero. The transition period would include different staging periods for sensitive environmental products.

But China has not submitted its list of products until now because of the pronounced differences with the US.

"We hope China becomes more open to the concerns raised during the consultations and members need to cover lot of ground," a European trade envoy told the SUNS.

Privately, several countries of the EGA group expressed sharp concern over attempts by the United States and a few other allies to create a small group for pressing ahead with an ambitious zero-for-zero tariff elimination of over 200 environmental goods, another trade envoy of the friends of the system group told the SUNS.

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

The US wants China to agree to zero duties on the APEC list of environmental goods. But China maintained firmly that the APEC commitments do not require members to bring tariffs to zero.

In short, the erstwhile colonial strategies of "divide-and-rule", "double-standards" and "shifting-the-goal-posts" are in full display as the seven countries ratchet up pressure on developing countries to agree on a mercantile market-capturing environmental goods agreement under the guise of combating climate change, trade envoys said. +