Trade negotiators focus on refining list for Environmental Goods Agreement

28 September 2015

Delegates from 17 WTO members hoping to secure a deal liberalising environmental goods trade examined a list of 450 possible tariff lines for inclusion, covering over 1000 products, during a recent negotiation round held in Geneva, Switzerland from 16-22 September.

The meeting reportedly saw participants identify interests and sensitivities – both during a number of bilateral sessions and in plenary – with regard to the list, as well as focus on clarifying and streamlining “ex-outs,” trade jargon for descriptions of specific products or product groups that are not fully identified by the World Customs Organization’s Harmonised System tariff lines. Ex-outs are captured only by national tariff codes that may vary from country to country.

The list was outlined in mid-August by the chair of the Environmental Goods Agreement (EGA) talks. It is based on some 650 tariff line nominations put forward by participants, and reflects the chair’s understanding of products that have gained most consensus during the negotiation rounds held since the initiative’s launch in July 2014, alongside some with strong environmental credibility.

In some instances participants’ proposals included a variety of ex-outs spelling out specific environmental goods, sometimes to a fine degree of detail, within the tariff line. As a result the chair’s list reportedly includes several similar and competing ex-outs for some products. The September negotiations therefore served to help consolidate and streamline these nominations.       

Based on September’s discussions the chair will shortly circulate among participants a revised list reflecting the latest progress made on ex-outs. The list will likely not specifically remove items but will ensure that the potential scope is clearer, trade sources said.

EGA negotiators will review this revised list during the next round scheduled to be held from 29 October-4 November, after which the chair will generate a draft final list of products that look to be gaining broad support, for consideration during a meeting scheduled from 30 November-4 December.

Securing the scope

While the latest round of talks remained positive and the next steps have been initially identified, securing an agreed list of goods by a targeted end of year delivery date will require some further heavy lifting, several sources confirmed.

This will include additional technical work over the coming months around ex-outs as well as navigating trickier product nominations, for example, those strongly supported by some participants but strongly opposed by others. The latter may require political guidance from the level of ambassadors and ministers.

Some examples of the types of products reportedly identified in the chair’s list to date include those related to water treatment, solar and wind energy, electrical machinery and equipment linked to energy efficiency, as well as mechanical appliances with relevant environmental uses.

In addition, the list reportedly includes all 54 tariff lines and products descriptions targeted for applied tariff reductions to five percent or less by the 21-nation Asia-Pacific Economic Cooperation alliance by the end of this year. EGA participants at the talks’ launch signalled an intention to build on this list. 

Given that the APEC list also uses a number of “ex-outs,” however, the latest round saw some discussion around exactly how to transplant it into the EGA. For example, some participants have identified products that are not covered by the specific APEC ex-outs but are within the broader associated HS code, which may or may not be relevant for inclusion.  

A couple participants also reportedly flagged potential concerns with the full elimination of the APEC tariff lines in the context of the EGA, highlighting that the original commitment had not been taken with the intention of lowering tariffs to zero.

Delegates will continue to hammer out in the coming months precisely how to use the APEC list, a process that will likely need to be coordinated with officials implementing that commitment.

Among other recent developments, China has now finalised its official mandate for the EGA talks, which allowed its negotiators to signal support for certain products during the latest round. Some sources noted, however, that the Asian giant has not yet unveiled the full extent of its mandate at this stage. 

While China’s engagement in earlier rounds had already proved constructive, the absence of a clear mandate from Beijing had limited a clearer understanding of its position with regard to potential products, according to several commentators close to the negotiations. The nation is among the world’s largest traders in several of the environmental goods relevant to the talks.

Environmental integrity

Just ahead of the latest round, Brussels-based environmental group Transport&Environment (T&E) leaked a list of product nominations dating from April, claiming that around 100 or so were not environmentally-supportive. However, some of the more “controversial” nominations cited by T&E have since been dropped from the chair’s list, sources have said.

The group also criticised the EGA process for not using specific criteria to identify relevant environmental goods. While officials have refused to comment on the leaked nominations, trade watchers have confirmed that environmental credibility remains a key priority for negotiators, and continued to be at the forefront of discussions in the latest round.

Some other experts have suggested that defining an “environmental good” might have bogged down the process, as seen in past multilateral efforts to liberalise environmental goods and services within the context of the WTO’s Doha Round.

Other commentators examining the leaked list said that EGA participants appeared to have taken a “value-chain approach,” in other words, including both upstream and downstream parts relevant to particular goods.

Stakeholders such as the Sustainable Energy Trade Initiative (SETI) Alliance, meanwhile, pushed back against T&E’s claim that the EGA negotiations have not been transparent.

“Many EGA participants conducted public outreach efforts during the preparation of the nominations and public stakeholder events have also been held both at the multilateral level and domestically,” said Peter Brun, Managing Director of the SETI Alliance at the International Centre for Trade and Sustainable Development (ICTSD). [Editor’s note, ICTSD is the publisher of Bridges Trade BioRes]

More work ahead

A number of EGA participants have indicated a preference for securing a list in time for the WTO’s 10th Ministerial Conference due to be held from 15-18 December in Nairobi, Kenya.

With the WTO’s gathering following hot on the heels of a pivotal UN climate meet in Paris, France ­– designed to hammer out a post-2020 climate regime that should help set the world on a low carbon pathway – December will see an unusual confluence of high-profile events relevant to this particular negotiation.

In a speech delivered last Thursday at the Peterson Institute in Washington D.C., WTO Director-General Roberto Azevêdo suggested that the pursuit of sectoral deals among smaller groups of countries within a multilateral context could help to advance the global trade body's negotiating arm in the face of the long-stalled Doha Round trade talks, as well as address key emerging issues. 

Negotiators also briefly discussed in September a draft ministerial declaration to adopt the EGA, and furnish it with institution modalities, put forward by the 28-members of the EU during a round held at the end of July. (See BioRes, 3 August 2015)

Although the major focus of efforts currently remains on scope, a number of participants have signalled the importance of including a review mechanism to regularly update the list as well as some sort of work programme on environmental services and non-tariff barriers (NTBs) to trade in environmental goods.

Some sources expect that the EU’s text will at some point be handed over to the chair, Andrew Martin, Counsellor at the Australian mission to the WTO who leads the talks in his personal capacity, to steer it through a centralised process of discussion among the group as a whole.

Discussions will also need to be had further down the line on modalities for the timing of tariff cuts, known as “staging,” as well as how to bring the deal into the WTO’s architecture.

EGA participants have indicated plans to ensure the agreement is an open plurilateral applied on a most-favoured nation (MFN) basis, which would mean the tariff cuts are extended to the global trade body’s membership as a whole. However, in order to do so participants would need to ensure that they hold a “critical mass” in trade in products covered by the deal, in order to avoid so-called “freeriding” on the lowered tariffs by non-participants.    

EGA participants continue to remain open to other WTO members joining the agreement in due course, although, additional product nominations at this stage seem unlikely.

ICTSD reporting.

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