Environmental Goods Agreement Participants Prepare Final Push

29 September 2016

A group of 17 WTO members negotiating a tariff-liberalising Environmental Goods Agreement (EGA) are ramping up efforts to finalise the deal later this year, following another round of talks last week that reportedly saw good progress. However, many sources also acknowledge that the pace would need to intensify in order to deliver in the coming months.

EGA participants reportedly continued to focus on the types of products that should be included in the deal, holding numerous bilateral meetings during the 19-23 September round in Geneva, Switzerland.

These discussions used a so-called “L-list,” short for “landing zone list,” reflecting efforts through the G-20 process to identify a “landing zone” for the agreement this year. Non-G20 EGA participants have also endorsed the end of year goal. (See Bridges Weekly, 7 September 2016)

The list includes some 300 tariff lines and related “ex-outs” put together by the chair of these talks, Andrew Martin of Australia, based on extensive consultations. Items on the list relate to a variety of environmental objectives, including clean energy deployment and energy efficiency, air pollution control, environmental monitoring and analysis, among others.

The list identifies products nominated by EGA participants that have drawn a greater level of consensus since the launch of talks in July 2014. However, approximately 15 groups of products remain particularly challenging, either from a commercial perspective or due to the perception among some participants of limited environmental credibility.

However, while last week’s talks reportedly helped to narrow outstanding differences on coverage and clarify participants’ positions, sensitivities remain. Several sources suggested there were still various areas to address before the list could be handed over to ministers for bargaining on the final deal.

Some EGA ministers will meet informally at an event, chaired by the US and the EU, on the sidelines of a “mini-ministerial” gathering being held in Oslo, Norway, on 21-22 October. That occasion will immediately follow the next EGA round, which is planned for 16-20 October.

More formally, a meeting of all EGA ministers is scheduled for 3-4 December, with a negotiating round due to be held directly before. 

Discussion on text

Last week’s round also saw participants discuss a draft text for the agreement in plenary, which was held under the chair’s guidance.  Sources reported positive engagement with this process, with many EGA participants drawing on their experience of implementing the recent expansion of a separate tariff-liberalising deal for information and communication technology products, known as the Information Technology Agreement (ITA-II). 

Like the ITA, the EGA is envisaged as an “open plurilateral” deal within the framework of the WTO, which means that the benefits of tariff reductions by the participants will apply to all of the global trade body’s members on a most-favoured nation (MFN) basis.

This feature, however, has raised concerns among some EGA participants. Sources reported that challenging areas still to resolve through the text include “critical mass” participation and associated free-rider concerns.

China, for example, in previous rounds has proposed several options to manage a situation where the critical mass in world trade in products covered by EGA participants dropped below a significant threshold.

These proposals included the idea of a “snap-black” clause – where participants could restore tariffs under certain circumstances – or a WTO waiver to exclude clear free riders from receiving MFN treatment. (See BioRes, 30 June 2016)  

During last week’s talks, China suggested that it was open to proposed solutions from other participants, following earlier pushback on its own suggestions. Other participants have floated options such as conducting additional outreach to new potential participants.

The textual discussions also reportedly touched on the inclusion of a periodic review of the product list, following the deal’s implementation. Supporters of this type of provision have said it could, among other things, help ensure the EGA remains supportive of environmental objectives over the long term, particularly in a world characterised by rapid technological innovation.

Sources suggested that there was a clear willingness among participants to include a review mechanism, although some divergences exist on its format and requirements.

The text will also likely include a work programme covering related environmental services, along with non-tariff barriers (NTBs) to environmental goods trade. The move has been backed by the EU, among others, and has also been identified as part of the deal’s “landing zone.” Discussions remain ongoing, however, as to what this might involve and the level of detail.

Several EGA participants at the end of last week asked the chair to provide a summary of the textual discussions. Trade watchers expect talks on the text to continue during the next round.

Implementation

Another element to iron out as a core feature of the agreement will be the timing of the eventual EGA tariff cuts. This will include determining whether some products might see tariffs eliminated over longer time periods – a concept known as “staging.”

Sources said that staging modalities were not directly discussed during last week’s talks, although some participants in bilateral meetings did signal degrees of flexibility on the inclusion of specific products.

EGA participants in previous rounds had grouped products identified on an earlier December 2015 draft chair’s list into the following categories: those suitable for immediate liberalisation; those where tariffs might be phased out over a period of years; and items deemed sensitive or unclear how to treat. The current chair’s L-list does not include such categories.

In terms of general staging modalities, several participants are interested in following the model used in the ITA expansion, while acknowledging that further talks are needed on the specifics.

Under the ITA-II, tariffs on an additional 201 information and communication technology goods are eliminated either immediately or over a three-year period. In exceptional cases some tariffs can be eliminated over a period of five or seven years. (See Bridges Daily Update, 16 December 2015)

ICTSD reporting.  

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