Reducing Trade Barriers to Innovation and Sustainability

Reducing Trade Barriers to Innovation and Sustainability

This piece was originally published in the March 2016 issue of ei, the magazine of the electroindustry.

By Craig Updyke, Manager, Trade and Commercial Affairs

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Readers of this magazine are aware of international talks underway on eliminating customs import duties on goods with environmental benefits. When those negotiations toward an Environmental Goods Agreement (EGA) in the World Trade Organization (WTO) were launched in 2014, many also had in mind the global talks on reducing emissions to mitigate climate change and the December 2015 COP-21 in Paris. COP-21, also known as the Paris Climate Conference, is an abbreviation for the 21st session of the Conference of Parties (COP) of the United Nations Framework Convention on Climate Change (UNFCCC).

The 17 parties (16 countries and the European Union) negotiating the EGA aimed to conclude the agreement in time for COP-21 so their governments would have something concrete to show for their efforts, since the prospects for a global climate agreement appeared dim. Like a Hollywood script, however, the reality turned out to be the opposite of what had been expected. A climate change agreement, the Paris Agreement, was reached at COP-21. Meanwhile, the EGA talks continue and as of this writing were scheduled to reconvene in Geneva in mid-February.

What does this mean for trade policy, innovation, and sustainability? In terms of the Paris Agreement, the results are positive. In summary, the agreement emphasizes the role of present and future innovation in solving the climate change puzzle. Article 10 states, in part, that the parties “share a long-term vision on the importance of fully realizing technology development and transfer in order to improve resilience to climate change and to reduce greenhouse gas emissions.”

Notably, U.S. officials have pointed out, any mentions of forced technology transfer or compulsory licensing of patented technologies—demands that burdened earlier UNFCCC talks—were omitted from the final Paris text. Respect for and protection of intellectual property rights are important for companies in developing countries, as well as developed ones.

“Accelerating, encouraging, and enabling innovation is critical for an effective, long-term global response to climate change and for promoting economic growth and sustainable development,” reads Article 10, paragraph 5, of the Paris Agreement. To that end, future UNFCCC talks will tackle how to link the convention’s current “technology mechanism,” which is intended to help countries develop and deploy climate technologies, with the financial assistance to less-developed countries.

During the Paris conference, the UNFCCC’s Momentum for Change initiative recognized 16 “game-changing climate action initiatives,” such as NEMA member Chargepoint’s electric vehicle charging corridors and the solar market gardens project of the Solar Electric Light Fund.

At the WTO, while the EGA appears to remain on track for conclusion sometime in 2016, the talks appear to have lost much of the aspirational spirit that initially motivated the initiative to reduce costs of import products and technologies that can help countries address their urgent environmental challenges. Still, prospects for market access benefits for NEMA companies remain real. Although the product list on which the negotiators are working is not public, NEMA is aware that several product categories it supports (including lighting and industrial controls) remain on the table.

As it did in parallel negotiations to eliminate import tariffs on information and communication technology products (which concluded in December 2015), China is taking time to consider possible endgames and implications for the competitiveness of its domestic companies, as well as for environmental protection and remediation. China also chairs the “Group of 20” leading industrial economies in 2016 and may be ready to conclude the EGA from that leadership position.

NEMA will continue to work with interested members and international counterparts to advocate for the conclusion of an EGA as soon as possible in 2016.

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