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January 24, 2014

Trade in Environmental Goods May Not Actually Be So Good

Ship-84139_640Trade can help spread environmentally friendly technologies, but if the products we’re trading harm the environment, everyone loses.

Today, a group of World Trade Organization (WTO) countries including the United States, the European Union, Australia, and Canada, launched a new set of negotiations to eliminate tariffs on a set of supposedly environmentally beneficial products.  

According to a statement put out by the countries involved in the initiative, the negotiations will build on the work of the 21 countries that make up the Asia-Pacific Economic Cooperation (APEC). In 2012, these 21 countries agreed to reduce or eliminate tariffs by the end of 2015 on a list of 54 "environmentally beneficial" products. The theory is that if governments reduce or eliminate tariffs, the products will be more frequently traded.

While the APEC commitment was non-binding and not legally enforceable, a WTO agreement on environmental goods and services, if one is reached, would be.

So, it sounds like a good thing, right? Well, while the goal of increasing use of and trade in environmentally beneficial products is certainly noble, I have serious concerns about the approach taken up by APEC, and now the WTO.

In fact, if you dig into the list of products whose tariffs would be reduced or eliminated—the starting point for the WTO negotiations—you'll see that many would actually harm the environment.

Nuclear steam generator (Wikimedia Commons)

Incinerators, for example, are used to burn waste material and release toxic chemicals and byproducts into the air, water, and ground. Secondly, steam generators are found in equipment used in dirty fuel-production processes such as nuclear and coal-fired power plants that pour harmful toxic chemicals into the air we breathe and emit climate-disrupting carbon pollution. Also, 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 be on their way out as more clean energy comes online in America.

Many developing countries, like India, see this approach as an expansion of “free trade” that will benefit the corporations in developed countries, but it could end up harming our already-fragile climate. India—which is not one of the countries that launched the initiative—has  proposed a different, potentially more promising approach that would essentially allow for temporary tariff cuts on specific goods that are needed in environmental projects, therefore making sure the products will actually benefit the environment.

As we transition to a clean energy economy, we should increase the use of and trade in environmentally friendly technologies. But unlocking the clean energy revolution should not be under the thumb of the WTO or through a purely "free-market approach." Instead, the key to unlocking clean energy is developing home-grown approaches to renewable energy production and manufacturing that lift up and protect workers within and outside of the U.S.

If countries in the WTO want to truly help the environment and climate, there are a number of other critical steps they must take. For one, these countries should stop negotiating trade agreements that include the harmful investor-state dispute settlement process that has increasingly allowed foreign corporations to bodyslam clean energy and climate policies in other countries. For example, Swedish energy firm Vattenfall is currently suing Germany for its phase-out of nuclear energy, and U.S.-incorporated Lone Pine Resources is suing Canada over a moratorium on fracking in Quebec’s St. Lawrence River.

WTO countries could also allow local job-creating clean energy policies to flourish -- but they’re not, in some cases. Last year, as examples, Japan and the EU challenged Ontario’s clean energy and green jobs program at the WTO; the United States is investigating whether India’s national solar program bumps up against WTO rules; and China is investigating whether to take WTO action against certain EU countries over their clean energy programs.

If we’re going to face this climate crisis together, developed nations—those historically responsible for producing the greatest amount of climate-disrupting pollution—must also provide finance and clean technology to developing countries. Discussions on the transfer of finance and technology are already ongoing at the United Nations Framework Convention on Climate Change. Developed countries like the U.S. must step up and share resources that actually help the environment and communities. After all, we all share the same planet.

--Ilana Solomon, Sierra Club Responsible Trade Program Director



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