EU, US eye green goods tax pact in climate fight

September 28, 2009

Vanes are lift onto a windmill at Beijing's first wind farm which starts installing wind turbine generators on the outskirts of Huailai, north China's Hebei province July 23, 2007. Thanks to the rapid development in 2001-2005 period, China's total installed capacity of windmill generators has reached 1.26 million kW, ranking 10th in the world and third in Asia. With 44 wind power grounds built so far, China has become one of the main wind-driven power market in the world after Europe, the United States and India,the official Xinhua News Agency said. REUTERS/Jason Lee (CHINA) By Darren Ennis
NEW YORK, Sept 28 (Reuters) – The European Union and the United States are holding talks on forging a pact with OECD countries and China to eliminate duties on environmentally friendly goods as part of incentives to Beijing in a potential global climate deal.

EU diplomats told Reuters that under a plan being discussed by Brussels and Washington, the 30 nations in the Organization for Economic Cooperation and Development and China would agree a global pact to phase out import tariffs on goods such as wind turbines, renewables and green technologies.

But any deal is unlikely to include environmentally friendly hybrid cars, the diplomats said.

“The talks are entering an advanced stage. Brussels and Washington hope this could be one of the incentives needed to get China on board in the lead up to the Copenhagen climate change talks,” one EU diplomat told Reuters.

A spokeswoman for the U.S. Trade Representative’s office said the United States and the EU had been pushing within the Doha round of world trade talks since November 2007 for a deal to cut tariffs on environmental goods “and continue to work closely in pushing for concrete progress.”

“We remain eager to move ahead with negotiations to eliminate tariff barriers on climate-friendly technologies and spur momentum on a larger WTO Doha package on environmental goods and services,” said USTR spokeswoman Carol Guthrie.

U.S. businesses such as United Technologies Corp and General Electric Co, that are frustrated with the slow pace of the Doha round, have urged the Obama administration to consider alternative paths to reach a deal to boost trade in environmental goods and services.

“It’s a chance to jump-start U.S. trade policy and aid global climate negotiations at the same time,” said Jake Colvin, vice president for global trade policy at the National Foreign Trade Council, a U.S. business group.

China is on course to become the world’s largest producer of wind turbines in the world this year and is a major manufacturer of solar products.

The Asian powerhouse — the world’s biggest polluter — is under pressure from Europe and the United States to cut its carbon dioxide (CO2) emissions as part of negotiations on a new global climate treaty to succeed the Kyoto Protocol, which lapses at the end of 2012.[ID:nLN536984]

In return Beijing wants billions of dollars in cash from the EU and the United States to help it harness new greener technologies for its export-driven economy.

“This deal would save Chinese exporters billions of euros and dollars and could form a large part of the overall package offered to Beijing to cut emissions,” another diplomat said.

India and Brazil are also being wooed by the EU and Washington before global climate talks in Copenhagen in December, but are considered unlikely to take part in the initiative.

“Brazil and India are not seen as part of the deal since reducing their import tariffs would not benefit them. They can opt in, but it is expected they will opt out,” the first diplomat said.

EU trade ministers gave the green light earlier this month to EU president Sweden and the European Commission — which oversees trade policy for the 27-nation bloc — to pursue the negotiations with Washington.

“Member states will get a complete update on Oct. 6 in Sweden and if approved, formal negotiations could start with the OECD and China before Copenhagen,” the second diplomat said.

Any negotiations would take place between ambassadors at the World Trade Organization in Geneva, but any deal would be formally agreed outside the global trade watchdog, the diplomats said.

“It would be similar to an agreement in the pharmaceutical sector and would not contravene WTO rules,” one envoy said.

Pharmaceutical-producing countries accounting for approximately 90 percent of global production, including the United States, EU and China, have agreed to “zero-for-zero” tariffs for pharmaceutical products and for chemicals used in the production of pharmaceuticals.

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