Trade and climate change

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The US and EU have jointly proposed priority action on climate change and energy related technologies as part of the Doha Round negotiations on the use of environmental goods and services. They have proposed a new environmental goods and services agreement (EGSA) at the WTO that seeks the removal of technical barriers to trade (TBT) in a specific set of climate-friendly technologies with a higher level of commitment to the green cause.

“WTO members have an unprecedented opportunity to address in a concrete and meaningful way the global environmental challenge of climate change,” said US Trade Representative Susan C Schwab, while announcing the proposal on December 1, 2007. “By eliminating tariff and non-tariff barriers to environmental goods and services, particularly clean energy technologies, we can lower their costs and increase global access to and use of these important products,” she said.

The joint proposal seeks to eliminate tariff and non-tariff barriers to environmental technologies and services through a two-tiered approach starting with an agreement on worldwide elimination of tariffs on a specific list of 43 technologies recently identified by the World Bank. The second tier suggests “a higher level of commitment on the part of developed and the most advanced developing countries to eliminate barriers to trade across a broader range of other environmental technologies and an array of environment-friendly services”.

The initiative was prompted by President George W Bush’s initiative earlier this year to seek an agreement with major economies, including India and China, on a new international climate agreement. Describing it as a groundbreaking proposal, White House press secretary Dana Perino said, “‘By eliminating these tariffs and non-tariff barriers to environmental goods and services—particularly clean energy technology such as solar panels, wind turbines, fuel cells — we can lower their costs and increase global access and use of these products around the world.”

One of the Commerce Department’s agencies, the International Trade Administration (ITA), led a Clean-Energy Technologies Trade Mission to India and China in April 2007 to promote American clean technology goods and services that can help improve the environment.

The proposal underscores the importance of liberalising trade in environmental goods and services in parallel by recognising, for the first time, how the market works in this sector — how goods are bundled with services, according to Schwab. For example, designing more energy efficient buildings requires consulting, design and construction services, as well as solar panels for heating.