Major trade powers pledge free trade in green goods

The world’s biggest trading powers pledged on Friday to work toward a global agreement on free trade in environmental goods, but they gave no timeline for talks intended to support the fight against climate change.

The United States, European Union, China, Japan and several other developed economies said in a joint statement that the agreement would take effect once there is participation by a critical mass of members of the World Trade Organization.

That gets around the WTO’s requirement for unanimity on trade deals. The initiative is in line with new WTO chief Roberto Azevedo’s drive to break a decade-old deadlock in world trade negotiations by first tackling the most promising areas for agreement. Last month, the WTO reached its first trade reform agreement at talks in Bali, potentially adding hundreds of billions of dollars to the global economy.

The WTO estimates that the global market in green goods, technologies and services – ranging from solar panels to wind turbines and water recycling plants – at some $1.4 trillion.

U.S. Trade Representative Michael Froman put the value at $1 trillion, noting that the signatories of the initiative jointly represented 86 percent of world trade.

“We announce our commitment to achieve global free trade in environmental goods and pledge to work together, and with other WTO members similarly committed to liberalization, to begin preparing for negotiations in order to advance this shared goal,” the statement said.

“We are convinced that one of the most concrete, immediate contributions that the WTO and its members can make to protect our planet is to seek agreement to eliminate tariffs for goods that we all need to protect our environment and address climate change.”

But it mentioned no date for an agreement and Froman said: “Ultimately the timetable will be determined by the negotiations themselves.”

This was just the start of the process and governments now had to consult stakeholders, including the U.S. Congress, before negotiations begin, he said.

Asked whether he hoped to reach a deal in the lifetime of the Obama administration, which leaves office in January 2017, he said: “Yes.”

Few developing nations were among the signatories with the exception of Costa Rica, which urged others to join the group. Trade experts said it was particularly encouraging that China was part of the initiative.

“I think it’s a significant development in what’s now been over a decade-long effort to liberalize trade in these products,” said Jennifer Haverkamp, a former head of the environmental section at the U.S. Trade Representative office.

“Environmental goods and services were part of the Doha round … and basically since then have been held captive to those broader negotiations and the idea of springing them forward and trying to make progress plurilaterally is encouraging.”

But some environment groups said including products like incinerators, steam generators, and centrifuges, used in the production of fossil fuels, sent the wrong message.

“If you dig in to the list of products whose tariffs would be reduced or eliminated in this approach, you’ll see that many would actually cause more environmental harm than help,” said Ilana Solomon, director of the Sierra Club’s Responsible Trade Program. Azevedo did not attend a joint news conference by trade ministers in an apparent sign of the political sensitivities with some WTO members. However, a WTO official said he strongly supported the initiative.