United States And EU Join 11 Other Countries In Launching Negotiations To Liberalize Trade In Green Goods


On the margins of the annual World Economic Forum, U.S. Trade Representative Michael Froman announced that the United States will take part in the negotiation of a multilateral agreement to eliminate or reduce tariffs on environmental goods. The United States will be joined by Australia, Canada, China, Costa Rica, the European Union, Hong Kong, Japan, Norway, New Zealand, Singapore, South Korea, Switzerland, and Taiwan.

The negotiations will build upon the 2012 Asia-Pacific Economic Cooperation (APEC) agreement to reduce tariffs on 54 environmental goods by the end of 2015. (A list of the goods subject to the APEC agreement is available here.) This new initiative will seek to expand the number of goods covered and to further support the protection of the environment, green growth, and sustainable development.

It is estimated that annual global trade in environmental goods totals over $1 trillion. Ambassador Froman indicated that the negotiations would cover approximately 85 percent of that trade. While tariffs in the negotiating countries are already low on most environmental goods, import tariffs on certain environmental goods—including solar panels, gas and wind turbines, wastewater treatment technologies, air pollution control technologies, hazardous waste treatment technologies, and environmental monitoring equipment—can be as high as 35 percent.

China's participation in the negotiations, while significant in terms of trade volume, may also complicate the negotiations. A similar initiative aimed at liberalizing trade in information technology products—the Information Technology Agreement expansion negotiations—collapsed in November of last year after the United States objected to China's attempt to scale back the coverage of the new agreement by more than half.

It appears that the new initiative will not include liberalization of trade in environmental services. In 2007, then-U.S. Trade Representative Susan Schwab, along with her EU counterpart, proposed an Environmental Goods and Services Agreement as part of the Doha Round of World Trade Organization negotiations. The scaled-back ambition of this and the previous APEC initiative may reflect a more realistic assessment by the participants of the level of ambition that can be delivered, or it may simply reflect the participants' deference on services issues to the ongoing Trade in Services Agreement negotiations.

No timetable has been set for the negotiations.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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