On April 14, 2010, the Office of the US Trade Representative (USTR) issued a request pursuant to 19 U.S.C. § 1332(g) seeking advice from the US International Trade Commission (USITC) on the economic effects of reducing trade barriers in the environmental goods market. Specifically, the USTR requested that the USITC produce two written reports – one on the probable economic effect on US industries and consumers of reducing US tariffs to zero on dutiable imported environmental goods, and a second on how US environmental goods exporters might benefit from trade liberalization. USTR asked that the first report be issued by October 2010 and the second report be delivered by February 2011.
USTR’s request for this report is part of a long-standing effort by the United States and several other countries to negotiate a multilateral environmental goods and services agreement (EGSA) that would eliminate or reduce duties on specifically identified environmental goods and remove non-tariff barriers to environmentally friendly services. For years, these negotiations have stalled as they were part of a larger effort to negotiate a broader set of multilateral trade agreements under the World Trade Organization’s Doha Round negotiations. However, during the latter months of 2009, several US business organizations began to advocate for a stand-alone environmental goods and services agreement, one that was not tied to the ongoing Doha Round negotiations (although would still likely be done via binding WTO commitments). While the Obama administration has not stated definitively that it intends to follow this path, USTR’s request for the USITC study may be the launching point for an effort to pursue a stand-alone agreement in this sector.
An EGSA negotiation would most likely be modeled on the successful Information Technology Agreement (ITA), where a core group of WTO member countries in the late 1990s eliminated tariffs on information technology products. Importantly, unlike the Doha Round, a sectoral negotiation such as EGSA would not require the concurrence of all WTO members; it would only require a “critical mass” of countries that account for a high proportion of global trade in the sector (although tariff cuts would apply to exports of all WTO members equally). In this case, that likely means the necessary members to conclude an agreement would include the United States, China, the European Union, India and Japan.
The private sector plays an important role in providing information during the course of the USITC’s investigation. Once initiated, the USITC will seek information from US environmental goods producers, exporters, importers and consumers that will inform the USITC on the relative costs and benefits of opening the environmental goods market. A significant issue in this report will be which particular environmental goods may be benefited or harmed by lower duties on imports, and which US manufacturers have the greatest opportunities in export markets. For this reason, US companies that will be effected positively or negatively by a reduction in trade barriers have an interest in providing the USITC with information throughout the investigatory process.