Publications

Trade and Investment Rules for Energy

IV. Promoting Trade in environmental Goods and Services

Analysis

Whatever transpires in the WTO, the Task Force believes that agreement on a list of goods and services to be subsumed under the EGS umbrella would be a positive step forward toward a comprehensive agreement in this area. As noted, some measure of consensus on EGS had emerged in the Doha Round, given the heightened international concern over climate change and related environmental issues. At the same time, the WTO negotiations have been fraught with complexities linked to movement on NAMA and agriculture, making it difficult to move ahead on the EGS front.

Recognizing the hurdles in restarting Doha Round negotiations, it would seem propitious for interested parties - governments and international organizations - to maintain the initiative on EGS, outside the WTO framework if necessary, until such time as multilateral negotiations are resumed. This effort could begin through informal talks to capture consensus on an agreed EGS package.

The Task Force appreciates that moving forward on EGS alone at this point, even in terms of seeking consensus on a list of goods and technology, faces challenges. Several important WTO governments take the position that resolving the modalities for NAMA and agriculture in the WTO is an essential precondition to restarting negotiations on any of these other issues. However, this makes resumption of the Doha Round under the original 2001 mandate increasingly unlikely. Added to this is the ongoing global financial and credit crisis with no clear end in sight. This has taken the attention of governments off of the WTO agenda as they grapple with huge challenges in the global capital and credit markets.

While not minimizing these challenges, the Task Force has concluded that circumstances warrant a WEC initiative on EGS trade. An important element is that EGS as a category has gained a large measure of acceptance as a separate category with its unique set of issues. The EGS concept has been endorsed by the G-8, with regional organizations such as APEC voicing support in principle. Achieving some form of consensus on the classification and treatment of EGS should be achievable, and could be a positive development in moving the WTO and UNFCCC negotiating processes forward.

The advantages of consensus on EGS are clear. It could speed deployment of cleaner technologies, give developing countries access to these technologies at reduced cost, and move the global community one step further on a wider path to free trade in energy products. It will narrow the cost differential between the more expensive, cleaner technology and the more polluting, traditional sources of energy. It will help create economies of scale, further reducing sector-wide costs. It could lead to increased investment flows into high technology manufacturing and research in lower cost countries.