TWN Info Service on WTO and Trade Issues (Apr16/16) 
29 April 2016
Third World Network

WTO environmental-goods pluri vs climate change accord
Published in SUNS #8230 dated 27 April 2016

Geneva, 26 Apr (D. Ravi Kanth) -- After blocking efforts to resume the Doha market access negotiations for industrial goods (NAMA), a group of countries led by the United States, the European Union, and Australia among others has accelerated negotiations for a plurilateral tariff-elimination agreement on environmental goods through the backdoor at the World Trade Organization, several trade envoys told the SUNS.

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

The 13th round of negotiations for the plurilateral initiative on the environmental goods agreement (EGA) which was concluded last week 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 of the proposed environmental goods agreement group, remained silent during the meetings last week. 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, South Korea, New Zealand, Norway, Switzerland, Singapore, the United States, and Turkey among others.

Prior to the last round of negotiations, the chair for the EGA talks, Mr Andrew Martin of Australia, circulated a draft list of around 350 tariff lines which represent ten categories of environmental goods.

The ten 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 ten categories were expanded into as many as 50 sub-categories.

During the negotiations last week, 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 remain around 200 products. Out of those 200-odd products, there will be many items that would be subjected to immediate tariff elimination while the remaining products will include different staging periods for tariff cuts. The transition period would include different staging periods for sensitive environmental products. "There will be no special and differential treatment other than those two categories for the developing countries," the envoy told the SUNS.

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

Despite week-long meetings, 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 be more than 140-150 range.

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

(i) China wants that tariffs on environmental goods must be suitably reduced but not eliminated altogether. China 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 China's 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 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 trade in services agreement (TISA) and the EGA. China has subtly indicated that its participation in EGA will much depend on its entry into the TISA negotiations, according to EGA negotiators.

China's overtures for entering into TISA negotiations 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 - i. e. the percentage of products that are going to be covered in the agreement and their share in the global trade - of the EGA and what if the number of products fall 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 be close to 200 depending on the issue of critical mass, an EGA envoy said.

The entire plurilateral EGA initiative makes a mockery of the participants' commitment to address climate change as it is based only on commercial considerations based on 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 program, 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 the WTO-based mercantilist commitments. +