Plurilateral Environmental Goods Agreement: How Close is the Conclusion?

Smart Meter, EU product suggestion for the Environmental Goods Agreement © Dwight Burdette, Wikimedia Commons (CC BY 3.0)

17 WTO members seek to promote the use of environmentally friendly products through an abolition of tariffs. A conclusion of negotiations in 2016 is likely. However, a comprehensive agreement which covers all sectors along the whole value chain could have a far greater effect.

Talks on the so-called Environmental Goods Agreement (EGA) are still seeking a breakthrough after the 14th round in mid-June 2016. The objective is to abolish tariffs on environmentally friendly products, and thus to stimulate trade in and use of environmental technologies.

The European Union, the United States, China, and 14 other parties started negotiations in July 2014, but in the past year milestones have repeatedly been missed. Already in the WTO Doha Round that began in 2001 the parties were unable to agree on a definition of “environmental goods”. For that reason the EGA talks are not seeking clear definitions. The basis of the negotiations is a list of 54 so-called environmental goods prepared by the Asia-Pacific Economic Cooperation (APEC), to which all involved parties have proposed additions. The consolidation process is slow, most recently after China proposed removing 140 goods from the current list of 350. Although now a major trading power, China insists on its status as a developing country. Agreement on a final product list at the next round of talks in July 2016 is not excluded, and a conclusion of the talks in 2016 is regarded as likely. As soon as the parties to the agreement account for a critical mass of world trade in these products, the benefits of the EGA will be extended to all WTO members.

The EGA could also have negative effects, including new bureaucracy in customs clearance and discrimination between products with similar uses and environmental benefits. As far as possible, these should be avoided in the design of the agreement. The biggest contribution to the dissemination of environmental technologies would be a comprehensive agreement in the WTO framework to abolish trade barriers across all sectors and along the entire value chain. A rapid and where possible comprehensive abolition of tariffs on industrial goods should therefore remain a priority for WTO members.