Bridges Weekly Trade News DigestVolume 16Number 30 • 12th September 2012

APEC Leaders Clinch Environmental Goods List


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Asia-Pacific Economic Cooperation (APEC) leaders’ meeting in Vladivostok, Russia last week agreed on a list of over 50 environmental goods for liberalisation by 2015, following up on a commitment made in 2011. The summit of leaders and ministers, which wrapped up on Sunday, also saw the 21-country grouping issue language discouraging protectionism - including export restrictions - amid discussions over the need to focus on growth in the Asia-Pacific during the ongoing eurozone crisis. On the sidelines, ministers and leaders of the proposed Trans-Pacific Partnership agreement also met to review progress in the negotiations.

Environmental goods list

In the 2012 Vladivostok Declaration, leaders - in line with the Honolulu Declaration agreed at last year’s summit (see Bridges Weekly, 16 November 2011) - outlined a list of 54 environmental goods - including solar panels and wind turbines - where applied tariff rates would be cut to five percent or less by the end of 2015, “taking into account economies’ economic circumstances and without prejudice to their positions in the World Trade Organization.”

Sources note that the list under discussion was originally much smaller, telling Bridges that the increase to 54 items occurred just days prior to the final leaders’ discussions on 8-9 September. Like any other trade negotiation, it was a “bumpy process,” one source familiar with the talks said, adding that the final count of 50-plus products is what officials saw as a “respectable number” for now.

The source added that the final result reflects the interests of all APEC economies, with any good that was deemed sensitive by any of the 21 countries being excluded from the final tally.

There is the potential for other items to be added to the list in the lead-up to 2015, sources commented to Bridges, noting that the list could eventually become a “living exercise.”

While the commitment is technically non-binding - APEC members face no penalties for non-compliance - country officials stressed openly that the list is key toward meeting the region’s green growth goals, and trade sources noted privately that the

declaration’s non-binding nature might actually have helped negotiators in being more adventurous in their liberalisation.

“Tariff cuts on these environmental goods not only advance our own green growth goals by making these environmental goods cheaper and more accessible, but also will have a meaningful impact on trade and job creation in the region,” Deputy US Trade Representative (USTR) Demetrios Marantis said, noting that over US$1 billion in his country’s environmental goods exports to the Asia-Pacific region faced tariffs greater than five percent.

The topic of liberalising environmental goods and services has struggled to make headway within the WTO, a fact that leaders acknowledged at the gathering.

“Ladies and gentlemen, let me note that under the umbrella of WTO similar efforts have already been proceeding for over 10 years - and so far they have brought no results,” Russian President Vladimir Putin told reporters at the end of the summit. “Meanwhile, we were able to accomplish this list in just a few months, and this list of environmental goods was finalised during the meeting.”

While the APEC list is not tied to the WTO discussions, observers note that the conclusion of such a list might send a positive signal to the talks in Geneva.

APEC leaders are next expected to address non-tariff measures, trade sources say, as notifications of these by the group’s members have steadily increased in recent months; the regional grouping is also likely to work on building momentum toward liberalising trade in services.

Export restrictions discouraged

The 21-country grouping also issued notably strong language on the thorny topic of export restrictions, which food security experts have long argued contribute to price spikes and should therefore be avoided.

“Recognising that bans and other restrictions on the export of food may cause price volatility, especially for economies that rely on imports of staple products, we reiterate our pledge against protectionism,” APEC leaders said in their final communiqué.

“We are determined to ensure fair and open markets, reduce price volatility, and establish greater regional and global food security and confirm our commitment to develop food markets infrastructure, reduce post-harvest losses along the entire food supply chain.”

The language, observers note, despite being non-binding given the nature of the APEC grouping, is particularly timely given the drought facing various major grain producers, such as the US. During the meeting, WTO Deputy Director-General Rufus Yerxa stressed the importance of avoiding a repeat of such policies, which, he argued, exacerbated the 2007-2008 food crisis.

“This is the time to avoid making things worse,” Yerxa said. “This is the time to avoid making export restrictions,” he continued.

Ahead of the meeting, questions had been raised as to whether host Russia - also among those affected by drought - would be reviving its controversial 2010 wheat export ban, which was scrapped last year. (See Bridges Weekly, 1 June 2011)

However, Putin was quick to dispel this notion during public comments at APEC, telling business leaders that Russia “will continue its substantial contribution to stable food supplies, including on the Asia-Pacific markets.”

Putin noted that Russia currently has the capability to export grains at the level of 15 to 20 million tonnes annually, a number that is expected by some specialists to reach 30 to 40 million tonnes by 2020, should production levels reach the anticipated 120 to 125 million.

Currency, protectionism

In their final declaration, Asia-Pacific leaders also included language regarding exchange rates, a topic that is often difficult within the group due to tensions over China’s valuation of its currency - particularly with the US as a fellow APEC member. Globally, the discussion over exchange rates has also put developed economy policies in the spotlight over the past year, with the US and the EU - the latter of which is not an APEC member - being accused of “exporting the crisis” to developing nations due to excessively loose monetary policy.

“We reaffirm our commitment to move more rapidly toward market-determined exchange rate systems and enhance exchange rate flexibility to reflect underlying fundamentals, avoid persistent exchange rate misalignments, and refrain from competitive devaluation of currencies,” leaders said. However, the currency issue, while addressed by APEC negotiators, appeared to take a less high-profile role this year, having at last year’s summit captured headlines due to US President Barack Obama’s then-uncharacteristically harsh public criticism of the renminbi.

In a nod to the increasing fears of protectionism in light of the ongoing eurozone crisis, APEC leaders also reaffirmed their pledge to refrain from implementing new barriers either in investment or in goods and services trade through the end of 2015, along with avoiding the above-mentioned export restrictions, and to rollback protectionist measures.

Eurozone crisis leads shift in focus to Asia-Pacific growth

Much of the APEC discussions focused on the ongoing eurozone crisis, with leaders noting in their declaration that “the events in Europe are adversely affecting growth in the region.” With Europe’s struggles in the background, various APEC leaders commented publicly that the Asia-Pacific region could be key to boosting global economic recovery.

“It is absolutely clear that the most important region for economic growth this decade - and probably the next decade - will be the Pacific,” Mexican President Felipe Calderón said, comments that were echoed by Russia and other countries.

The APEC region currently accounts for 44 percent of world trade and 54 percent of global economic output, according to Reuters. APEC exports are, according to PricewaterhouseCoopers, expected to triple to US$14.6 trillion in the next ten years, while non-APEC countries are likely to only see their exports double to a fraction of that amount during the same timeframe.

Doha

Leaders also stressed the “value and centrality of the multilateral trading system as embodied in the WTO,” adding that their officials in Geneva should continue exploring “different, fresh, and credible negotiating approaches” toward concluding the Doha Round of trade talks. They particularly noted APEC economies’ commitment to advancing the discussions on a possible trade facilitation agreement - which has been lately suggested in Geneva as a possible ‘early harvest’ Doha Round deliverable - and advancing other development-related issues.

However, questions over the future of the Doha Round also were raised by some APEC leaders, with Chilean President Sebastián Piñera openly declaring during a visit to Australia following the Asia-Pacific summit that the trade talks are “dead.”

“Everybody knows that it’s dead but nobody wants to kill it,” he said. “That’s why I think APEC has been good,” adding that the regional grouping was helping move global trade forward despite the Doha impasse.

The summit marked the first since APEC host Russia’s entry into the WTO became formalised last month, a fact that was not lost on event attendees. Putin, in a speech during the week’s activities, stressed that “mutual trust and clarity” would be Moscow’s approach in the now 157-member global trade body.

“As a full-fledged member of this organisation we will play an active part in drawing up fair rules for international trade,” Putin said. “We think it essential in this respect to set the special norms that will enable countries to support particular economic sectors that are most vulnerable and sensitive to global instability.”

TPP update released; former end-2012 goal date appears no longer in sight

Ministers from countries currently negotiating the Trans-Pacific Partnership Agreement (TPP) - all of which are APEC members - also released a report to TPP leaders updating them on the progress made in the nine-country negotiations since last year’s APEC gathering in Honolulu.

In a joint statement, TPP leaders on Sunday stressed that the advances made during the past year’s negotiating rounds made them “confident” that the possibility of concluding “a comprehensive, next-generation regional agreement” was within reach.

However, no mention was made of a deadline for concluding the trade deal, and US officials - who have been the most vocal advocates for finalising the negotiations this year - similarly avoided suggesting any concrete date.

“Substance will drive timing - that’s what’s really important,” Deputy USTR Marantis told Reuters last week. “If you look at how much progress we’ve been able to make in such a short amount of time, we’re looking to wrap up as much as possible over the course of 2013.”

Current TPP members include Australia, Brunei, Chile, Singapore, New Zealand, Malaysia, Peru, the US, and Vietnam. Canada and Mexico, which were formally invited to join the discussions in June, will be permitted to join the talks next month, bringing the total number of TPP countries to eleven. (See Bridges Weekly, 20 June 2012) Japan, however, has yet to officially request an invite to be admitted into the negotiations due to domestic controversy over the pact, and did not do so during this year’s APEC meet.

With Russia serving as APEC host, questions were raised as to what interest Moscow might have in joining the TPP. However, responses to this idea among Russian officials have been lukewarm, with First Deputy Prime Minister Igor Shuvalov telling reporters before the summit that Moscow does not currently “share the conviction of the Americans of the need to build a trans-Pacific trade zone.”

The 14th round of TPP negotiations are currently underway in Leesburg, Virginia, ending this Saturday 15 September; Bridges will provide an update on the results of this current round in next week’s edition.

ICTSD reporting; “APEC trade boost for growth facing challenge from territorial rows, other tensions,” ASSOCIATED PRESS, 7 September 2012; “Russia, looking east for business, cool on US-led Asia trade group,” REUTERS, 28 August 2012; “WRAPUP 2-Asia-Pacific nations pledge growth, fret over economy,” REUTERS, 9 September 2012; “Asia-Pacific nations agree to slash duties on ‘green’ technology,” REUTERS, 7 September 2012; “Asia-Pacific Forum to Cut Import Duties for Green Technologies,” NEW YORK TIMES, 7 September 2012; “Doha talks ‘dead’: Chile president,” THE WEST AUSTRALIAN, 10 September 2012.

One response to “APEC Leaders Clinch Environmental Goods List”

  1. Mauricio López Dardaine

    I have been writing on this key issue of Environmental Goods Negotiations in our blog these days http://lopezdardaine.blogspot.com.ar/ I have now added to our blog BRIDGE’s comment from up here, regarding what effect this might have on WTO (similar) negotiations, that have been dragging their feet for a decade, with which comment I fully agree. Some of you may remember we worked with ICTSD on this subject -with Mahesh Sugathan- in 2006, 2007 and 2009, and some of the key recommendations of said studies are reflected when you look at the APEC recent List in detail, which is indeed a long and welcome step from the way things were tackled at the start; probably one reason for the failure faced at the WTO level.

  2. Anonymous

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