THE TTALK QUOTES 

On Global Trade & Investment

 

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No. 65 of 2014 

FRIDAY, SEPTEMBER 26, 2014     

 

   

Filed from Portland, Oregon  

     

Click here for Wednesday's quote on the
Canada-Korea Free Trade Agreement.
 
TRADE IN ENVIRONMENTAL GOODS

"The NAM believes that, in order to address and eliminate trade barriers, the United States must leverage all available tools,
by securing ambitious, high-standard commitments in on-going trade agreement negotiations, including in the WTO EGA [Environmental Goods Agreement] Negotiations."

Jessica Lemos
July 9, 2014
CONTEXT
Jessica Lemos is a the director for international trade at the National Association of Manufacturers, NAM.  Today's quote is from her "Shopfloor" blog of July 9.  We assume she wrote this from Geneva.  We know she was there the day before, July 8.  The first sentence of her report reads:

"I was pleased to attend yesterday's official launch of the Environmental Goods Agreement Negotiations at the World Trade Organization here in Geneva."

With help from several key hyperlinks, Ms. Lemos has managed to pack an enormous amount of useful material into just a few paragraphs.

Of course, there is some history here.  A lot of that history is in APEC, but the declaration from the 2001 ministerial conference in Doha, Qatar, also has language on this topic.  A note on the WTO website summarizes the relevant portion of the Doha mandate this way:

"The 2001 Doha Ministerial Declaration instructs members to negotiate on the reduction or, as appropriate, elimination of tariff and non-tariff barriers on environmental goods and services.  It has been emphasized that these negotiations should aim at achieving sustainable development by creating a triple win situation for trade, the environment and development."

We are not sure of the status of those environmental talks within the Doha Round.  Our understanding is that the EGA negotiations that were launched on July 8 are for a separate, plurilateral agreement.  They are taking place under the auspices of the WTO, but they are not part of the Doha Round.
The participating countries are:  

Australia                  Canada
China                      Costa Rica
European Union       Hong Kong
Japan                      Korea
New Zealand,          Norway
Singapore               Switzerland
Taiwan                   The United States

In the WTO, of course, Taiwan is officially Chinese Taipei.  And reportedly, those 14 already account for 86 percent of the roughly $1 trillion in the relevant trade.

But just what is the relevant trade?  What products are covered?  We noted the Doha language on this issue, but the more relevant work was done in APEC (the Asia-Pacific Economic Cooperation forum).  In that setting, a list of some 54 "environmental goods" was developed, and that list is the starting point for the current EGA negotiations.   There are many, however, including NAM, who hope it won't be the last word. 

As Ms. Lemos said in her blog:

"The NAM supports APEC's list of 54 environmental goods....; however, we believe that list is far too limited given the breadth and significant growth in this sector."
 
NAM is not alone here.  An impressive open letter from business associations around the world argued for "an ambitious international agreement to eliminate tariffs on a broad range of environmental goods and services."   Issued on July 8, its 48 signatories included groups from Australia, China, Japan, the EU, the United States, and several other countries.   And a number of those groups are GBD members, including NAM, the Coalition of Service Industries, the Information Technology Industry Council, and the U.S. Chamber of Commerce.

Finally, while Trade Promotion Authority, TPA, is not our subject, it is worth pointing out that the TPA legislation introduced last January did include a reference to negotiations on environmental goods and services.   That was the Bipartisan Congressional Trade Priorities Act of 2014 - S. 1900 in the Senate and H.R. 3830 in the House.  In listing Congress's priorities for labor and the environment, the authors of that legislation said one priority should be:
 
"... to seek market access, through the elimination of tariffs and non-tariff barriers, for United States environmental technologies goods and services."

COMMENT
Different Perspectives. We have two comments.  The first is that there are two very different but not at all incompatible ways of looking at these negotiations.  One is to focus on the environment and what a successful EGA negotiation could do to advance environmental objectives.  USTR Michael Froman talked about those goals back in January, when he announced the proposal for the EGA talks.  He said:

"President Obama announced his support for free trade in environmental goods as part of his Climate Action Plan last year [2013], because he believes that by eliminating tariffs on renewable and clean energy technologies, we can make them cheaper and more accessible for everyone, and support our efforts to combat climate change."

Using the example of the Coca Cola company, which operates in 200 countries, Ms. Lemos too highlighted the potential for positive environmental benefits from these talks.   She wrote:

"A global trade agreement on 'green goods' will allow The Coca-Cola Company and many others to build out supply chains that bring environmentally friendly technologies to markets and consumers that might not otherwise find them cost-effective.  Three priorities in these negotiations for The Coca-Cola Company are:

1) systems that help to provide clean drinking water;

2) lower emission, more efficient refrigeration units; and,

3) plant-based PET plastics for their bottles."

That is all fine.  Fine too is the argument, implicit in today's featured quote, that those in favor of trade liberalization generally should seize on the EGA negotiations as an opportunity to move that ball forward - perhaps the best one available.  The letter from the 48 associations touched on that broader idea, saying: 

"In addition to its intrinsic commercial importance and desirability, a well-designed EGA can act as a stepping stone to lowering tariffs and other trade  barriers in other sectors and associated value chains."

Not everyone, however, is quite so enthusiastic or comfortable with trade liberalization beyond purely environmental objectives.  Ilana Solomon of the Sierra Club, for one, is skeptical:  "There is no definition yet of what actually constitute an 'environmental good," she said, "and many of the goods being considered are actually harmful to the environment."

Connecting the Dots.  Our second comment - a hope really - is that the world needs to connect the dots between the EGA and the speech Roberto Azevêdo gave in Geneva on Monday.  Addressing the board of the UN Conference on Trade and Development, the Director-General of the WTO talked about the need to address quickly the impasse over trade facilitation, which now threatens the Bali package.   If the trade facilitation problem is not solved quickly, he said, "Many areas of our work may suffer a freezing effect." 

With apologies, the image is a chilling one.  And yet, though separate from the Bali-Doha imbroglio, the EGA talks offer some hope.   If the 14 countries negotiating that agreement could skate quickly to the finish line of a deal,  the result would be a boost to the WTO as well as a boon to those who trade in the affected products.  But it will take political will, which in this case means facing down the inevitable chorus of critics.   There is no such thing as an easy trade deal.  Not any more.  Not even this one.
SOURCES & LINKS
Lemos on the EGA is a link to the blog post by Jessica Lemos that was the source for today's quote.

From the Doha Mandate is the page from the WTO website that describes the Doha mandate on environmental goods and services.

From 48 Associations takes you to the open letter to the EGA negotiators from business associations around the world.

A TPA Bill is a link to the Library of Congress entry on the Bipartisan Congressional Trade Priorities Act of 2014, introduced this last January by Senators Baucus and Hatch in the Senate and by Chairman Dave Camp and others in the House.

Ambassador Froman's Announcement is the statement issued by USTR Michael Froman last January in Davos, when the United States and others publicly announced their goals for the EGA negotiations.
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