Early next week, plurilateral negotiations on liberalization of trade in green goods will be launched at the WTO. The negotiations are based on an agreement between a sub-set of WTO Members that was announced at Davos, and represent a new beginning for the treatment of environmental goods and services at the WTO, after the many impasses in the multilateral talks based on the Doha Declaration. The Obama Administration deserves real credit; Obama made the achievement of a deal on green goods liberalization an element of his overall environmental policy. As I discuss in this oped, the core idea was to begin with the APEC list of environmental goods and build from that to a more ambitious outcome. There are some difficult issues lurking. First of all, addressing non-tariff barriers such as standards is probably as important if not more so, as removing tariffs, and yet it is not clear how these matters will be brought in-so far green goods trade liberalization has been conceptualized largely in terms of tariff reductions. Second, to make significant gains, given the way global value chains in these goods work, it would be highly desirable to include components of goods that ultimately have as finished products desirable green properties as among the products trade in which is liberalized. But this raises the whole "dual use" issue-one that has probably been greatly exaggerated. As long as the alternative use is not environmentally negative, why should one care so much if there is some surplus liberalization, as it were? On the other hand one could imagine versions of duty-drawback as an alternative to deal with dual use, enabled by today's information technology. Indeed, enabling a deal on green goods that entails tracking the use that an imported product is put to could be added to the trade facilitation agenda at the WTO. Another question is the inclusion of services and the relationship between the plurliateral green goods negotiations and the plurilateral services negotiations, also happening now in the WTO.
Supporters of the green goods plurliateral negotiations rightly point out that the participants represent 86% of world trade in the list of products that represents the starting point for the talks; thus, this is a deal can be MFN-friendly, given the small size of the free rider problem. It is particularly encouraging that China is participating.
A very important challenge has been raised by trade analyst Aaron Cosbey, who questions whether the selection of goods really will reflect the life-cycle environmental impacts of the goods, rather than commercial or mercantilist considerations.
For those based in Geneva, ICTSD is doing a major conference this coming week on the occasion of the launch of the negotiations.