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Liberalizing Trade in Environmental Goods is Aim of New Negotiations

Friday, July 11, 2014
Sandler, Travis & Rosenberg Trade Report

Negotiations on a new agreement designed to eliminate tariffs on international trade in environmental goods were launched July 8 by 14 World Trade Organization members representing 86 percent of global trade in these products. The Environmental Goods Agreement talks will initially involve Australia, Canada, China, Costa Rica, the European Union, Hong Kong, Japan, Korea (which is still completing its domestic procedures for participation), New Zealand, Norway, Singapore, Switzerland, Taiwan and the U.S. However, because additional countries will be needed to achieve the critical mass of WTO members necessary for the agreement to take effect on a most-favored-nation basis, the talks are open to others who are “similarly committed to liberalization [and] interested in joining our ambitious efforts.” Participants said they will “engage in intensive negotiations” and meet regularly in Geneva in an effort to achieve a “timely and successful conclusion.”

The EGA will build on commitments by members of the Asia-Pacific Economic Cooperation forum to reduce tariffs on a list of 54 environmental goods to five percent or less by the end of 2015 and will explore a wide range of additional products. The APEC list includes a variety of environmental technologies used in a number of environmental applications, including renewable and clean energy generation (e.g., solar panels and gas and wind turbines), wastewater treatment (e.g., filters and ultraviolet disinfection equipment), air pollution control (e.g., soot removers and catalytic converters), solid and hazardous waste treatment (e.g., waste incinerators and crushing and sorting machinery), environmental monitoring and assessment (e.g., air and water quality monitors).

Global trade in environmental goods totals nearly $1 trillion annually and more than doubled from 2001 to 2007, with exports by developing countries increasing as fast as those by developed countries. According to a fact sheet from the Office of the U.S. Trade Representative, U.S. exports of environmental goods have been growing at an annual rate of eight percent since 2009, and in 2013 the U.S. exported $106 billion worth of environmental goods. However, tariffs on these products can go as high as 35 percent, posing challenges for exporters and limiting access by consumers.

The government of Canada noted that it has unilaterally reduced tariffs on machinery, equipment and inputs used in industrial manufacturing (including numerous environmental goods) in recent years and that it capped its import tariffs on the APEC list of 54 goods at five percent in March 2013, two years ahead of the deadline. Canadian exports of environmental goods totaled more than $5 billion in 2011 and 44 percent of export sales went to non-U.S. markets.

The EU added that while tariff elimination will be the initial focus of the EGA negotiations, a second stage will address non-tariff barriers and environmental services. Lowering the cost of purchasing environmental goods will be beneficial, the EU indicated, but “companies also need to have access to the maintenance and engineering services necessary to keep [those goods] running smoothly.”

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