On March 21, 2014, the United States Trade Representative (USTR) notified Congress of its intent, within the next 90 days, to enter into negotiations for a new multilateral trade agreement on environmental goods in the World Trade Organizations (WTO). The USTR also stated that it will publish a notice in the Federal Register seeking comments from the public and announcing a public hearing at which interested parties may testify.
The proposed WTO agreement aims to include a broad range of “green trade” products and services, including the 54 items agreed to in APEC’s List of Environmental Goods (for more information, see our September 14, 2012 Legal Update “APEC Members Agree to Reduce Tariffs, Promote Green Growth and Boost Regional Trade for Approved List of Environmental Goods”). These products include (i) machinery used in the generation and conversion of renewable energy and their component parts; (ii) industrial machinery and components that promote energy efficiency; (iii) equipment used to process, filter and purify wastewater, seawater and groundwater; (iv) industrial equipment that reduces or eliminates byproducts embedded with hazardous pollutants; (v) air pollution control equipment and solid and hazardous waste management and processing equipment; (vi) laboratory and industrial instruments used to measure, record, analyze and assess environmental samples; and (vii) quality control equipment used to assess food processing, agriculture, air emissions and water treatment. At the 2012 APEC meeting, members agreed to cap tariffs on these products at 5 percent or less.
The USTR stated that it expects any such agreement to enter into force only after a “critical mass” of major global traders join, thereby reducing concerns that some exporting countries would benefit from the tariff reductions of others without having to remove their own tariffs—i.e., “free riders.” The USTR anticipates a threshold requirement similar to that of the WTO Information Technology Agreement, which required a minimum of WTO members that represented 90 percent of global trade in the sector for the agreement to take effect. According to the USTR, the following WTO Members account for approximately 86 percent of global trade in environmental goods and have expressed interest in participating in these negotiations: Australia, Canada, China, Costa Rica, the European Union, Hong Kong, Japan, Korea, New Zealand, Norway, Singapore, Switzerland, Chinese Taipei and the United States.