Trade Commissioner Peter Mandelson has called for a 0%-tariff deal on environmentally friendly technologies as part of the Doha Round, saying that such an agreement could help provide a global solution to climate change.
Trade Commissioner Peter Mandelson said, in a speech made on 9 February 2007, that a WTO-wide deal eliminating all tariffs on trade in green technologies and energy-saving equipment would be the key to finding a business-friendly global solution to climate change.
Scrapping tariffs on green products would foster their development by making them more easily available to all nations, he said, adding that such a pact would also create opportunities for European industries. The EU is currently a world leader in alternative energy technologies, such as solar panels and wind turbines.
His remarks come after Enterprise and Industry Commissioner Günter Verheugen suggested that EU members should be allowed to impose a ‘green tax’ on imports from countries that are not part of the Kyoto Protocol. According to Verheugen, this would cancel the competitive advantage that foreign companies are gaining over the EU from not implementing costly emission-reduction schemes. But Mandelson is sceptical.
Both proposals have their limits.
While doubts remain over the legality, practicality and economic wisdom of imposing “border tax adjustments”, nor would negotiating a global 0% tariff pact on green goods be an easy task.
It remains unclear how such an agreement would fit in with the WTO prohibition to discriminate between “like products” or close substitutes.
Furthermore, when the Doha Round was suspended in July 2006, ministers were still very much divided over how to define which products the concept of “environmental goods and services” (EGS) should cover.
The main concern is that countries could use the concept to protect their markets from imports of alternative technologies or to import at a lower cost products that have multiple uses, such as pipes, which could serve non-environmental purposes.
Differences also remain over how to deal with the relativity of environmentally friendly products, especially in the context of changing technology. The concern is that, if tariffs are fully eliminated on relatively green products, such as natural gas, even cleaner technologies that are already available (or become so in the future) will lose the possibility of enjoying any special trade advantages.