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April 22, 2014

Behind the Veil: The Truth About Trade in 'Environmental Goods'

The United States might be part of another disheartening trade deal veiled with a false promise of environmental protection. As I wrote about before, on Jan. 25, a group of World Trade Organization (WTO) members including the United States, the European Union, Australia, and Canada, want to eliminate tariffs on a set of supposedly “environmentally beneficial” products.

At first blush the idea makes sense. Eliminate the taxes, or tariffs, on a set of environmentally beneficial products and they’ll be traded and used more. The problem, however, comes when the so-called environmental goods that governments want to trade more of actually harm the environment.

Here’s a bit of background. The WTO negotiations will build on the work of the 21 countries that make up the Asia-Pacific Economic Cooperation (APEC). In 2012, these countries agreed to reduce or eliminate tariffs by the end of 2015 on a list of 54 "environmentally beneficial" products.  Unfortunately, a number of products on APEC’s list could actually do more harm than good.  Incinerators, for example, are used to burn waste material and release toxic chemicals and byproducts into the water we drink and the air we breathe. Steam generators are found in equipment used in producing dirty fuels such as coal and nuclear power. And, centrifuges, which are used to filter and purify water for a variety of reasons, can also be used in the production of oil and tar sands — dirty fuels which should stay in the ground as more clean energy comes online in America. Yet each of these products is considered “environmentally beneficial” according to the APEC.

Sounds bad, but it might just get worse.

According to Inside U.S. TradeU.S. Trade Representative (USTR) Mike Froman sent a letter in April requesting that the International Trade Commission provide a report containing its advice as to the “probable economic effect of providing duty-free treatment for imports of environmental goods for all U.S. trading partners” on industries in the United States and on consumers.  Because there is no universally accepted definition of an “environmental good,” the USTR requested that the Commission analyze the effect of increased trade on a set of products attached to the letter.

Here’s where things get ugly.

The list attached to the letter contains hundreds of so-called environmental goods—many of which could be described as nothing other than destructive for our air, water, and environment. According to Inside U.S. Trade, a USTR spokeswoman said that the products listed comprise "all environmental goods" proposed for trade liberalization during past WTO and APEC meetings, in addition to "products we anticipate other WTO members may propose in the course of the forthcoming environmental goods negotiations.”

Here are just a few of the products listed:

  • Liquified natural gas, which is an extremely energy-intensive fossil fuel that, when exported, incentivizes more fracking;

  • Crude palm oil, which is made from the fruit of an oil palm tree and can be used to produce a variety of products from cosmetics to margarine to biofuels, and which, when exploited and exported, increases deforestation and habitat loss for endangered species;

  • Wood pellets, which the United States is increasingly exporting to Europe to be burned in power plants, and which, when cut and burned, are carbon intensive and associated with deforestation and habitat loss;

  • Nuclear reactors, which facilitate expensive and dangerous nuclear energy projects;

  • Ethylene, a flammable gas used to produce ethylene oxide, which the Department of Labor says is associated with cancer, reproductive risks, and other health hazards.

Vacuum cleaners and digital cameras also appear on the list. These items aren’t necessarily bad for the environment, but they also aren’t good – which raises the question of why any of these products are classified as “environmental goods.”

The answer to that question is increasingly apparent. This is merely a front for expanding free trade under the guise of environmental protection. In fact, these WTO members are considering tariff elimination without any analysis (that we know of) on the environmental impact. What we need for the health of the planet is not an expansion of the WTO or our current model of free trade. Instead, we need fair and responsible trade to sustainably manage natural resources and confront the climate crisis.

--Ilana Solomon, Director, Sierra Club’s Responsible Trade Program

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