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Perhaps it’s a coincidence that Friday is Earth Day, but trade officials representing several dozen countries gathered in Geneva this week for the latest round of World Trade Organization (WTO) negotiations for an Environmental Goods Agreement (EGA).
This proposed accord promises to lower the cost of environmental goods and make them more widely available. These are technologies that help keep clean the air we breathe, the water we drink and the land we farm for today and future generations.
The United States, China, the 28 members of the European Union and 11 other members of the WTO launched negotiations for this multilateral trade agreement to eliminate tariffs on environmental goods in July 2014. The 44 countries taking part today account for nearly 90% of global trade in environmental goods.
This proposed agreement has drawn the Chamber’s enthusiastic support because it is both pro-environment and pro-growth. Just last week we led a business delegation to Geneva and made the case for the EGA in meetings with two dozen national delegations. Negotiators are considering the inclusion of such products as catalytic converters, clean-running turbines, and products to control air pollution and treat wastewater.
It’s not all glamorous, but these are important products. The WTO reports: “For instance, wastewater management includes the removal, treatment and disposal of household, commercial and industrial sewage and other waste water. These services require in most cases the use of goods, such as waste pipes, sewers and drains, cesspools or septic tanks, etc.”
The Office of the U.S. Trade Representative has noted that global trade in environmental goods approaches $1 trillion annually. However, some countries apply tariffs to these goods as high as 35%, discouraging their use.
According to a report by Australia’s Institute of Public Affairs, “in Asia and Latin America the average tariff on environmentally sensitive technologies is between 15 and 20 per cent.” If governments want to promote the wider use of environmental goods, “they can do something immediately -- remove their tariff barriers.”
The negotiations aim to build on the Asia-Pacific Economic Cooperation (APEC) Leaders’ agreement to reduce tariffs on a list of 54 environmental goods. The United States implemented this accord in December. However, we are keen to expand the list to additional products as well, as the Chamber has suggested in comments submitted to the Office of the U.S. Trade Representative.
The EGA is also an opportunity to strengthen the global rules-based trading system embodied by the WTO. Recent steps forward such as the WTO’s Trade Facilitation Agreement and the expansion of the Information Technology Agreement bode well for the organization. A successfully negotiated EGA would add to this momentum at the WTO.
In today’s generally low-tariff world, these duties stand out as excessive. If governments want to promote the wider use of environmental goods, they can do something immediately — remove the tariff barriers they face.
It’s worth saying twice: Eliminating barriers to trade in environmental goods is both pro-environment and pro-growth.