|
||
|
TWN
Info Service on WTO and Trade Issues (Nov23/07) Geneva, 14 Nov (D. Ravi Kanth) — Amidst growing fears and opposition to unilateral tariffs or carbon border adjustment measures that are currently being implemented in the European Union and the United States, China has called for substantial discussions on all issues concerning these measures in different committees of the World Trade Organization from different perspectives, said people familiar with the development. In a proposal (WT/CTE/W/258, G/C/W/839, G/MA/W/184, G/TBT/W/777) circulated on 10 November, China sought discussions from different perspectives in the Council for Trade in Goods, the Committee on Market Access, the Committee on Technical Barriers to Trade and the Committee on Trade and Environment. Earlier, China had circulated two proposals titled “A Proposal for Dedicated Multilateral Discussions on the Trade Aspects and Implications of Certain Environmental Measures” (Job/TE/81) and “Further Elaboration on Dedicated Multilateral Discussions on the Trade Aspects and Implications of Certain Environmental Measures”, which deal with the preamble of the Marrakesh Agreement, particularly on environment. China’s latest proposal comes close on the heels of the upcoming COP28 (Conference of the Parties to the United Nations Framework Convention on Climate Change, to be held in Dubai towards the end of this month). The WTO Director-General, Ms Ngozi Okonjo-Iweala, appears to be trying hard to include the controversial issue of trade and environment in the climate change negotiations. “The WTO Secretariat is co-leading with the United Arab Emirates COP28 Presidency the first ever “Trade Day” at a COP on 4 December in cooperation with UNCTAD [United Nations Conference on Trade and Development], ICC [International Chamber of Commerce], the World Economic Forum (WEF) and the Abu Dhabi Department of Economic Development,” says a WTO press statement posted on its website. However, the DG’s efforts apparently failed to come to fruition at COP27 held in Sharm-el-Sheikh, Egypt last year, after many developing countries rebuffed the DG’s attempts, said people familiar with the development. It remains to be seen how far the DG will be able to succeed in her efforts at the upcoming Dubai meeting, as many developing countries seem to fiercely oppose the carbon border measures, said people, who asked not to be quoted. Against this backdrop, China raised some very pertinent and challenging issues to be discussed in the specific WTO committees. The issues mentioned in China’s proposal include “one specific policy instrument, i.e. the border carbon adjustment (BCA).” It also proposed the following topics for dedicated multilateral discussions, to be held under the respective committees, as mandated, or under the multilateral deliberative mechanism on environmental sustainability, as proposed by several members. It said that the proposed discussions are intended to strengthen the linkages between the multilateral trading system and sustainable development, so as to seek “both to protect and preserve the environment and to enhance the means of doing so in a manner consistent with their (Members’) respective needs and concerns at different levels of economic development”, and ensure that “there should not be, nor need be, any policy contradiction between upholding and safeguarding an open, non discriminatory and equitable multilateral trading system on the one hand, and acting for the protection of the environment, and the promotion of sustainable development on the other.” QUESTIONS ON BASIC OPERATING MECHANISM In its proposal, China posed a series of questions on “Carbon Leakage”, “Attribution,” and “Extra-territorial implementation.” For example, on carbon leakage, China sought to know: “What is carbon leakage in the context of environmental policy? If there is a gap in explicit carbon price between members, does it necessarily mean that there is a gap in the overall stringency of their respective carbon emission control policies? Can carbon leakage be used as a basis to justify the BCA?” As regards attribution, China wants a thorough discussion on: “How to objectively estimate the changes in the total amount and regional composition of global carbon emissions caused by the relocation of industries or import substitution? How to distinguish them from the changes in global carbon emissions caused by structural factors such as changes in the stage of economic development, the transition of the energy structure, and the differences in factor endowments?” Finally, on the issue of extra-territorial implementation, China said that members should address the issue as to “When a Member imposes BCA on imports, is it regulating domestic carbon emissions or extra-territorial carbon emissions?” In terms of “policy design”, China sought to know: “Which types of domestic policy measures related to carbon emission controls are suitable to be adjusted at the border? Which types are better suited to international coordination through multilateral approaches rather than a unilateral BCA? Are emission control measures on production facilities suitable for border adjustment?” More importantly, as regards conformity of border carbon adjustment (BCA) with WTO rules, China asked: “When implementing BCA, how to ensure the basic WTO principles of MFN (most-favored-nation) treatment and national treatment? Where there are differences in the policy designs between domestic carbon emission control measures and their corresponding BCA, how to ensure that the policy burden imposed by the BCA on imported products does not exceed that imposed by domestic measures on the like domestic products, so as to avoid distorting market competition?” On the complicated issue of “default values,” China asked what would constitute default values “for carbon emissions of imported goods” in the policy design of the BCA. “Regarding setting the default values for extra-territorial carbon emissions,” China sought to know “how to ensure the reliability of and minimize the time-lag in the database through effective cooperation with the members having appropriate jurisdiction, so as not to constitute arbitrary or disguised trade restrictions? What would be the basis to use the average emission intensity of the X% worst performing domestic enterprises plus certain markup as benchmark default values for emissions associated with imported goods?” Finally, on the issue of carbon price under BCA, China sought clarity on what would constitute a reasonable benchmark “against the carbon price in emission trading market, when such carbon market has the attribute of a financial market and the resulting carbon price embeds a financial premium?” On the unilateral BCA and its trade impacts on WTO members, China asked: “In what ways and what areas will unilateral BCA impact other members’ international trade and macro-economy? How can the impacts of BCA on members’ trade be measured in an objective manner?” In the midst of “carbon clubs” that are being discussed by a group of major industrialized countries, China said somewhat emphatically that “If a so-called Carbon Club, one that agrees to impose punitive tariffs on non-club members on grounds of differences in carbon intensity or carbon price, were formed to coordinate the implementation of BCA, what would be the impact on international trade?” ENVIRONMENTAL EFFECTS As regards the nationally determined contributions (NDCs) in the Paris Climate Change Agreement, China asked the EU, the US, and other industrialized countries that are on the verge of imposing BCAs, “What role will BCA play in a Member’s achievement of its NDC under the Paris Agreement? In terms of extra-territorial carbon emissions, would targeted financial and technical assistance be better suited for reducing carbon intensity of imported goods?” On a related issue concerning the revenues collected from the BCA, China sought to know: “How should the revenues from BCA be used to better achieve the environmental goal of global carbon emissions reduction? For example, should it be used to compensate developing members whose trade are affected by BCA, in order to enhance their capacity to reduce carbon emissions?” On the issue of inclusiveness in the developments on BCA and other punitive measures, China posed questions on “effective policy dialogues,” “diversity and flexibility”, and “data reporting and mutual recognition.” For example, China sought to know, “In designing and implementing BCA, how to make better use of multilateral platforms, such as the WTO, to promote effective policy dialogues with other members, on top of enhanced transparency? How should important factors identified in the course of the policy dialogues be taken into account in policy adjustments?” As regards “diversity and flexibility”, China asked, “When designing and implementing BCA, how should a member fully acknowledge and take into account the diverse range of mitigation efforts of other members, including but not limited to carbon pricing, effective carbon taxes, and other mechanisms that impose a price on carbon emissions?” In a similar vein, on the issue of data reporting and mutual recognition, China said: “As members have notable differences in the energy and industry structure, production processes, carbon accounting methods, reporting cycles and so on, how can the differences in data reporting be accommodated in an inclusive manner when implementing BCA, so as to avoid additional and unnecessary costs to international trade? How can the mutual recognition of carbon emission data be realized in a scientific and reasonable manner?” Most importantly, on the principle of Common but Differentiated Responsibilities (CBDR), which is one of the key tenets of the Paris Climate Change Agreement, China asked how CBDR can be reflected in the design and implementation of BCA. China also underscored the need to address the issue of the disproportionate impacts of BCA on developing countries and SMEs (small and medium enterprises). “How can the undesirable and disproportionate impacts of BCA be avoided for developing members that lack the infrastructure of carbon accounting, as well as for SMEs that have challenges in bearing the costs associated with data submission and third-party verification?” On the issue of protection of submitted data, China said, “BCA requires enterprises to submit carbon emissions and facility-specific data, some of which might be business sensitive or business confidential. If not duly protected, there is a high risk of leaks, misuse, or other types of data security issues. How to set a reasonable boundary for the data required? How to ensure the security of submitted data through institutional guardrails?” Lastly, China said that it welcomes “contribution from other members with respect to additional policy issues regarding BCA as well as answers and solutions to these policy issues”, in the form of written submissions by members. It also proposed that the WTO Secretariat circulate a compilation of members’ written submissions with a view to informing further multilateral discussions. “We believe that multilateral, structured and engaged discussions on such policy issues would be conducive to collectively strengthening the multilateral trading system and enhancing the complementarity of trade policy and environmental sustainability,” it said. +
|
||
