G-20 Ministers Seek End Game for Environmental Goods Pact

By Bryce Baschuk

July 12 — A multibillion-dollar agreement to cut tariffs on an array of environmental products made headway during this weekend's group of 20 (G-20) trade ministerial meeting in Shanghai when officials agreed to pursue completion of the deal.

G-20 trade ministers “provided important political momentum for completing the Environmental Goods Agreement (EGA) this year and identified a clear path to do so,” U.S. Trade Representative Michael Froman said in a July 10 statement. “Ministers agreed to finalize a landing zone by the G-20 leaders meeting in September in Hangzhou and to hold a final ministerial meeting to conclude the agreement before the end of the year.”

U.S. and European Union negotiators had sought to complete the deal at the Sept. 4-5 G-20 leaders summit, but China opposed such a commitment despite two all-night negotiating sessions, according to participants at the meeting who spoke on the condition of anonymity.

G-20 trade ministers also agreed to pursue policies to prevent excess production of steel and other products and complete their ratifications of the World Trade Organization's Trade Facilitation Agreement.

‘Landing Zone.’

The G-20 trade communique said members would address core concerns, find a “landing zone” at the Hangzhou leaders summit, and then reach a deal before the end of 2016.

The EGA trade accord, among 44 countries, would reduce tariffs on environmental products such as solar panels, water filters, electric motors and hydraulic turbines. Once completed, the deal could increase global exports of such goods by $119 billion per year, according to U.S. trade officials.

The Chinese made a significant concession and agreed to eliminate all tariffs on a range of EGA goods in line with the 2014 joint statement in Davos, participants told Bloomberg BNA. China had previously sought reductions of 5 percent or less in line with the terms of the 2012 Asia-Pacific Economic Cooperation environmental goods agreement.

China also softened the language of its EGA critical mass proposal to require certain non-participating countries to seek a waiver that prevents them from benefitting from the tariff cuts on a most favored nation basis, participants said.

Excess Capacity

Trade ministers at the Shanghai ministerial agreed to a consensus statement regarding global overcapacity and overproduction of products like steel, aluminum, concrete and ceramics, among others.

The communique said the overcapacity is a “global issue which requires collective responses” and acknowledged that government subsidies could lead to harmful market distortions and contribute to global overcapacity.

“The G-20 took an important step in the right direction by recognizing that excess capacity is a global issue,” Froman said.

Those G-20 members that produce steel products will gather for this year's second Organization for Economic Cooperation and Development (OECD) steel committee meeting Sept. 8-9 to address the issue of global overcapacity, the communique said.

A group of 25 nations, including the U.S. and the EU, clashed with China during the April OCED steel meeting over its overcapacity in steel production, which, coupled with weak global demand, has flooded world markets with cheap Chinese steel.

2 Percent Growth

Trade ministers agreed to renew the mandate of the 2014 Brisbane G-20 declaration and provide “political leadership” to pursue policies to increase global GDP growth by 2 percent, according to the communique. The communique acknowledged that international trade growth is slowing and 2015 was the fourth consecutive year that global trade grew a rate below 3 percent.

In response, G-20 trade ministers reiterated their 2008 pledge to resist protectionism in all its forms and rollback their existing protectionist measures, which collectively stand at 1,196 measures, according to WTO statistics.

Ministers also reaffirmed the centrality of the WTO's role in the global economy and said they would work to further strengthen the multilateral trading system.

TFA Ratification Urged

G-20 trade ministers unanimously agreed to promote the implementation of the WTO's Trade Facilitation Agreement as soon as possible, and to provide capacity-building and technical assistance to developing countries.

The TFA seeks to reduce 15 percent of global trade costs by instructing WTO members to improve their customs procedures and expedite the movement, release and clearance of goods, among other commitments.

To contact the reporter on this story: Bryce Baschuk in Geneva at correspondents@bna.com

To contact the editor responsible for this story: Jerome Ashton at jashton@bna.com

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