Environmental Goods Agreement trade talks eye August list

3 August 2015

The chair of talks designed to liberalise environmental goods trade will compile and circulate a draft consensus list of products slated for tariff cuts in the coming weeks, trade sources confirmed at the close of a negotiating round held last week in Geneva, Switzerland.

Andrew Martin, Counsellor at the Australian mission to the WTO who chairs the talks in his personal capacity, will reportedly not use specific criteria to filter through some 650 plus goods currently tabled by the 17 WTO members participating in the plurilateral negotiations towards an Environmental Goods Agreement (EGA).

The chair will instead take a flexible approach and seek to list products that have gained most consensus in the negotiations to date. In addition, the chair may also include some products with strong environmental credibility, even where these have not gained comprehensive support. EGA participants will review the chairs’ consensus list during the next negotiating round scheduled for 16-22 September.

Since the talks formally launched in July last year, EGA participants have held five “discussion rounds” focused on the environmental credentials of potential goods to include in the deal, followed by three rounds geared towards reviewing product nominations put forward by most players since April. (See BioRes, 25 March 2015)

July round

Negotiations during the latest EGA round held from 27-31 July continued to make good progress both in bilateral sessions and in plenary, according to trade sources, with the chair asking delegates to focus on product nominations where more clarity on support levels was required. A core group of products has already received backing from a wide range of participants during previous rounds. (See BioRes, 24 June 2015)

Key areas of discussion last week subsequently included products related to cars and their parts, large-scale hydropower, bicycles, waste and scrap, as well as certain ceramics, plastics and fibres, trade sources said. Certain natural products also reportedly surfaced as potentially tricky items, with some participants questioning the environmental credibility around the nomination of certain wood and bamboo products.

Bamboo is part of a list of 54 goods targeted for tariff reductions to five percent or less by the end of this year by the 21-nation Asia Pacific Economic Cooperation (APEC) alliance. According to APEC, renewable bamboo-based products may be substituted for other wooden necessities, and are more environmentally-friendly due to a short growing cycle.

At the talks’ launch last July EGA participants had signalled plans to build on the APEC list of environmental goods. However, although several sources have reported that the full APEC list is likely to be included in the EGA, others have explained that the shape of the final deal is not yet fully clear at this stage.

Thirteen EGA participants are also members of APEC, with exceptions including the EU, Costa Rica, Norway, and Switzerland. The APEC environmental goods commitment targets applied tariffs, however, while a number of experts have suggested the EGA could lower bound tariffs and go for a full elimination. Applied tariffs are the actual duty a country levies on goods at the border, while bound tariffs represent the maximum duty ceiling levels WTO members can potentially set.

Some sources have suggested the final EGA list could target 200 or so products in addition to the APEC 54 list. Ballpark estimates for the chair’s August consensus list, however, were not divulged by sources at the time of reporting. 

Goods on the table, ITA overlap

Goods nominated so far by EGA participants include products relating to cleaner and renewable energy, energy efficiency, air pollution control, environmental monitoring and analysis, as well as solid and hazardous waste management, among others.

However, several EGA participants have nominated the same tariff line under the World Customs Organization’s Harmonised System (HS) subheadings but attached different descriptions pertaining to specific products or product groups captured only by national tariff codes, known in trade jargon as “ex-outs.” In some instances different environmental justifications have also been attached to similar nominations. 

EGA participants have been engaged in bilateral work and efforts with customs officials over the last few months to clarify these areas. The chair reportedly urged all participants at the close of the July round to refine these nominations over August.

China and Costa Rica are the only players not to have tabled a finalised list of nominations to date, trade sources have confirmed, due to mandate reasons. Beijing will reportedly receive a full mandate for the EGA negotiations around September and has already put forward indicative product nominations.

Meanwhile, a separate plurilateral trillion dollar deal to expand the WTO’s Information Technology Agreement (ITA) was struck in mid-July, just ahead of the latest EGA round. Some sources have said that there is an overlap of around 50 products between the EGA nominations universe and the ITA expansion. Trade negotiators will therefore likely need to consider how to manage consistency between the two talks moving forward including, for example, on timing for tariff cuts.

The ITA expansion experience, however, has raised some concerns among trade watchers over the fate of the EGA talks. Originally finalised in 1996, efforts to expand the former’s coverage in the face of rapid technological advancements were stymied last year after China and South Korea came to a stalemate over the inclusion of several items such as liquid-crystal displays (LCDs), with Seoul arguing for their inclusion. (See Bridges Weekly, 23 July 2015) [Editor’s note: Bridges Weekly is ICTSD’s publication on international trade news]

Some observers have mooted concerns that Beijing may again prove difficult to work with in the EGA context, although other sources have said that the Asian giant has engaged positively so far. The ITA dynamics have, however, led a number of stakeholders to push for the inclusion of a review mechanism in the EGA’s core framework to avoid lengthy re-negotiations in the face of new technologies.

Draft declaration

The latest round also saw the 28-nation EU bloc – counted as one participant in these talks – distribute a draft ministerial declaration for the eventual adoption of the EGA deal.

The EU’s draft text includes several sections outlining the deal’s structure, coverage, timing in brackets, and institutional arrangements, trade sources said. The EU would see tariffs eliminated on all goods listed by January 2017 with no staging envisioned.

Efforts would also be made, under the EU’s vision, to liberalise trade on certain environmental services relating to cross-border supply and consumption abroad by January 2022. EGA participants would also undertake some consultations on the possibility of liberalising certain environmental services related to the temporary movement of workers.

Sources said that the EU envisages the establishment of a committee to help manage future work on services as well as areas such as non-tariff barriers (NTBs) to environmental goods trade. A number of stakeholders have said that NTBs can act as a significant brake on green goods commerce. 

The committee would work to regularly review the list of environmental goods annexed to the EGA deal starting from January 2018.

According to sources, the EU’s draft text would also include language recognising the role of environmental goods trade for environmental protection, the fight against climate change, and green growth, as well as recognising the deal’s contribution to the UN Framework Convention on Climate Change (UNFCCC) and other multilateral environmental agreements.

EGA participants have previously signalled that the negotiations could make a “significant contribution” to the UN climate talks. Nearly 200 nations are hoping to ink a new, universal emissions-cutting deal to come into effect at the end of the decade during a meeting scheduled for 30 November to 11 December in Paris, France.

Several officials have suggested aims to hammer out key points of the EGA deal in time for the WTO’s tenth ministerial conference (MC10) to be held in Nairobi, Kenya from 15-18 December, back-to-back with the UNFCCC meet.

A number of delegates last week did raise technical questions on the scope of the EU’s draft text. Brussels has reportedly offered all EGA members the opportunity for bilateral consultations before the next round to further discuss its proposal.

ICTSD reporting. 

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