There is significant progress to report from the last two rounds of Environmental Goods Agreement (EGA) talks – at least at the technical level – since our last newsletter in January.
We kicked off 2016 with a strong wish and recommendation from the Sustainable Energy Trade Initiative (SETI) Alliance to the 17 EGA participants to make an effort to finalise a first tariff agreement this year. There are several reasons for this.
First, participants have now held a considerable number of sessions since the EGA’s launch in July 2014, and most issues have been thoroughly analysed at a technical level. It is fair to assume we are closing in on the final negotiation end-game. Second, if the EGA is not concluded by late summer, it is likely that the US presidential election cycle will significantly curtail its delegation’s decision-making power. A year might easily be wasted as a result. Finally, as often-repeated, industrial tariffs are only a minor trade barrier. After securing a first tariff agreement, all technical and political attention should be given to other issues like services and non-tariff-barriers (NTBs), in order to deliver further progress in time for the WTO’s next ministerial meeting in December 2017. No time should be wasted standing still on tariff negotiations.
The SETI Alliance and its members therefore clearly sees a window of opportunity for governments to clinch a deal in 2016. Delivery around the G-20 leaders’ summit in September would also deliver a win for Chinese global leadership.
It became clear talking informally to many delegations during the latest EGA round in Geneva last week that talks have progressed significantly on the basis of the chairman’s 350 product list. Delegations have begun negotiation so-called “staging,” in other words, which products could be ready for immediate tariff elimination and those that might need a “delay” in eliminating the tariffs. Most EGA participants have divided the 350 product into three baskets where a) is items on which they can support immediate elimination, b) is for products needing staging, and c) are products regarded as sensitive and as such might not make the cut for the final EGA list.
Listening and talking to many delegations it is my personal observation that there is nothing technically significant standing in the way for a tariff agreement. Political divisions do exist on some key issues, however, including China’s awkward position of trying to roll-back the negotiation mandate on free trade in goods selected for liberalisation, reported lacklustre engagement in this round, and suggestions that things might run smoother in the EGA if it joined the separate Trade in Services Agreement (TiSA) talks. Some commentators consider that, if it were not for China’s current position, a deal could probably be struck soon or during the next round in June.
China’s position prompts some reflections. It seems ironic that one of the world’s largest carbon dioxide emitters biggest would not want to be part of an ambitious environmental trade agreement. Further, looking at the huge involvement of Chinese industry players in the world trade of environmental technologies and its strong position in global supply chains, it is difficult to understand why Beijing would not want to secure the greatest possible market access the EGA could deliver for Chinese companies. China must also surely have read the negotiation mandate that refers to “building on” a list of 54 product categories slated for tariff reductions to five percent or less by the 21-nation Asia-Pacific Economic Co-operation group. This implies making the EGA broader and deeper. The mandate also sets a goal of “global free trade in environmental goods” suggesting the elimination of tariffs.
The green and clean industry behind the SETI Alliance has consistently requested the need for ambitious agreements covering as many credible environmental technologies as possible with the view to full tariff elimination. In many markets today tariffs are already low and it simply does not make any sense to maintain “nuisance tariffs” for this area. The EGA’s big impact would be to deliver full elimination. This could then open up discussion on other trade barriers beyond industrial tariffs. Several markets do also maintain high bound tariffs on some environmentally-critical goods. Liberalisation would help spur deployment and uptake to tackle some of the pressing environment and climate challenges at hand today.
Finally, let me emphasise that aside from the inevitable final challenges in closing a sectorial, plurilateral agreement like the EGA, we should not forget that the initiative may also serve as a test case multilateral negotiating approaches moving forward. If such a strong normative case for liberalisation as we have with the environmental goods agreement cannot make it, with all its shared benefits for consumers in developed and developing countries, then there is reason to be seriously concerned!
All things considered, dear EGA parties, do keep in mind what is at stake with your negotiations. It is not only an effective approach to climate change mitigation through facilitating the deployment of and access to game-changing technologies. It is also about harnessing plurilaterals to secure new multilateral trade agreements that add to the WTO’s function as a global public good to be enjoyed by all members, consumers, and businesses worldwide.