APEC talks “green goods,” trade remedies in background

22 August 2014

The 21-member Asia Pacific Economic Cooperation (APEC) forum confirmed that work is moving forward on the implementation of its landmark agreement to boost trade in over 50 environmental goods categories.

Delegates and experts gathered in Beijing, China as part of a two-week forum meet reportedly focused on building technical capacity among member economies in order to respect an upcoming deadline on reducing tariffs in the sector.

At a state leaders’ meeting in Vladivostok, Russia, in late 2012 APEC economies agreed to reduce tariffs on a list of 54 green goods – including wind turbines and solar panels – to five percent or less by the end of 2015, following up on a commitment they made in 2011. (See Bridges Weekly, 12 September 2012)

 “Member economies are working hard to implement this tariff reduction commitment,” said John Larkin, Chair of APEC’s committee on trade and investment, charged with coordinating the trade liberalising initiative.

“Implementation requirements between economies vary in nature and scope,” he explained on Thursday. “We are stepping up our technical discussions to enhance transparency and consistency in how member economies implement the commitments in their tariff schedules.”

Progress made in this area over the last fortnight was reported on Thursday at the third APEC Senior Officials’ meeting, part of a series of sessions held over the year to prepare for the forum’s annual leaders’ summit, due to be held in November in the Chinese capital.

“Average tariffs on the products on the APEC environmental goods list are below or close to the five percent target in many cases, but they are still higher for selected goods such as solar water heaters,” remarked Carlos Kuriyama, a senior analyst with the APEC Secretariat.

Global trade across the agreed-upon APEC "green goods" list is estimated to weigh in at around US$500 billion. APEC economies number among the world’s largest players in this sector, including half of the top exporters, according to the International Trade Centre.

The 2012 APEC decision was welcomed at the time as a positive regional step forward where multilateral talks in the same area had stalled and is now being closely monitored by trade and environment watchers alike.

July saw also further action in a separate forum as a group of 14 WTO members – counting the EU member states as one – launched plurilateral talks towards realising “global free trade” in environmental goods and held their first discussion round. The group have said they will use the APEC list as a starting point for their negotiations on what sorts of products to liberalise. (See BioRes, 10 July 2014)

The total trade for environmental goods in 2012 reached roughly US$955 billion. Environmental Business International expects the green goods and services market to double to US$2 trillion by 2020.  

Tariffs on some goods nevertheless remain up to 30 percent, according to US data. Other issues such as non-tariff barriers (NTBs) and trade remedies have also been singled out by industry and observers as important areas to tackle in any trade liberalising talks.

On Thursday the APEC Secretariat said that the need to “keep a lid” on NTBs was an added consideration for the regional initiative.

Last week, as part of a public-private partnership dialogue held during the meetings, China presented its proposal for an “APEC Beijing Accord” to foster trade of renewables and clean energy. The proposal highlighted a need to address tariff and non-tariff measures, continue work around the prevention of trade friction, and enhance regulatory coherence and cooperation.

Trade remedies

The developments came even as several of the participating economies are engaged in another round of trade spats over solar panel trade.

According to media reports the Chinese Ministry of Commerce plans to temporarily prohibit the import of solar-grade polysilicon – a fundamental component in the production of solar cells – in an effort to tackle evasion of punitive duties due to “trade processing” rules.

The rumoured move comes hot on the heels of preliminary US anti-dumping duties on certain Chinese and Taiwanese solar products confirmed by the US Commerce Department at the end of July, pending final determinations in December.

The US agency launched a probe into crystalline silicon photovoltaic (PV) cells, and the modules, laminates, and/or panels that use them, after a complaint from SolarWorld Industries claimed that Chinese producers were avoiding an existing set of duties on these goods by using cells made abroad, primarily from Taiwan. (See BioRes, 7 February 2014)

Preliminary anti-subsidy duties on such products were also announced earlier in July in a separate probe by Commerce.

In response China requested additional time at the beginning of August to submit a proposed suspension agreement, an arrangement that could defer initial anti-dumping and anti-subsidy tariffs until an alternative settlement is reached.

The US Department of Commerce granted China’s request permitting an extension until 15 August, although no further news of a settlement was available at the time of writing.

Domestic disputes

Some US suppliers argue that the proposed tariffs have the potential to hurt the domestic solar industry’s competitiveness as well as create uncertainty for the sector. (See BioRes, 4 August 2014)

“It’s going to kill the demand,” stated Ocean Yuan president of US solar retailer Grape Solar.   “The trade issue is not driving the cost down – rather it’s driving the cost up,” he continued.

In support of the newly-proposed tariffs, SolarWorld, a German-owned photovoltaic (PV) manufacturer with significant stake in the US solar industry, argued that demand for solar products is primarily driven by government policies requiring utilities to employ renewable energy, rather than price.

According to the US Census Bureau, the US has witnessed a significant increase in the quantity of solar panel imports from Taiwan and China in the past few years, up from US$1.8 billion in 2010 to US$2.6 billion in 2012.

The US branch of SolarWorld has also recently become entangled in yet another dispute, this time with Solar Energy Industries Association (SEIA), an organisation representing the US solar industry.

In response to an industry-wide plea to reach a settlement regarding the ongoing solar trade war, SolarWorld President Mukesh Dulani wrote a letter to SEIA, criticising the organisation for favouring Chinese manufacturers.

“That you sanction the actions of some of your Chinese members to break U.S laws and World Trade Organization rules raises serious questions about the interests and intentions of SEIA,” wrote Dulani referring to SEIA’s media statement addressing the US Department of Commerce’s preliminary decision on anti-dumping duties on Chinese and Taiwanese solar imports.

Dulani confirmed “SolarWorld’s openness to alternative remedies,” and called for SEIA to “reformulate and resubmit its proposal”.

ICTSD reporting; “APEC Continues Work to Reduce Green Goods Tariffs,” TAX-NEWS, 22 August 2014; “Chinese government, companies blast US anti-dumping tariff decision,” PV MAGAZINE, 30 July 2014; “China granted more time to find US solar trade deal,” PVTECH, 15 August 2014; “SolarWorld fires shot at SEIA over China trade case, but leaves settlement possibility open,” THE ENERGY COLLECTIVE, 17 August 2014; “Obama’s Green Dilemma: Punish China, Imperial US Solar,” BLOOMBERG, 18 August 2014. 

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