International Trade Discussion on Environmental Goods Picks Up With Great Potential for SEMI Members

International Trade Discussion on Environmental Goods Picks Up With Great Potential for SEMI Members

On September 9th, 2012, officials from 21 pacific-rim nations reached an agreement to reduce tariffs on a list of 54 environmental goods.  Nearly two years later, that list has become the impetus to a green growth strategy that seeks to revolutionize the international trading regime.  Last month many of the same economies met in Geneva, Switzerland for the formal launch of negotiations on the Environmental Goods Agreement (EGA), a trade agreement which hopes to achieve global free trade in environmental goods.  The EGA will be negotiated under the framework of the World Trade Organization (WTO) and seeks to strengthen the rules-based multilateral trading system while supporting the WTO’s overall mission to liberalize trade.

The EGA offers a unique opportunity for U.S. companies producing environmental items and technologies to penetrate foreign markets.  Global trade in environmental goods is estimated at nearly one trillion dollars annually, and some WTO Members impose duties as high as 35 percent on certain products.  In 2013, the U.S. exported $106 billion in environmental goods, including items such as PV cells and modules.  The U.S. and thirteen other nations at the table for the launch of EGA negotiations account for 86% of the global trade in the sector.  These economies include Australia, Canada, China, Costa Rica, the EU, Hong Kong, Japan, Korea, New Zealand, Norway, Singapore, Switzerland and Chinese Taipei.

Chinese participation in the talks is significant from both an economic and political perspective. The tariffs that have systematically impeded U.S. renewable energy equipment installation in the Chinese market would be significantly reformed with a high-standard EGA. These negotiations could also help facilitate a removal of non-tariff barriers such as the local joint venture policy, which requires foreign companies to set up a business on the ground and cede 51% ownership to Chinese partners in order to sell equipment in the country.

Having committed to begin negotiations to liberalize trade in environmental goods, negotiators now have the much harder task of defining the term “environmental good.”  The list of 54 items from the 2012 APEC meeting will serve as the foundation for discussions but trade officials from each country will now seek to include a multitude of domestic products that can be loosely defined as serving an environmental purpose. 

As part of SEMI’s trade activities, we are working to identify those equipment and materials items which meet this very broad classification. For more information on identifying such products, please contact Taylor Sholler, Manager of Public Policy at Tsholler@semi.org

August 5, 2014