US favors early action on climate-friendly trade

Wed Dec 9, 2009 3:51pm EST

Related Topics

* US discussing idea with other countries, USTR says

* World Bank fears impact of proposed carbon tariffs

* Business group sees green trade talks launched soon

By Doug Palmer

WASHINGTON, Dec 9 (Reuters) - The United States supports taking "early action" to liberalize trade in products that reduce greenhouse gas emissions and believes that could spur progress in broader world trade talks on environmental goods and services, a U.S. trade official said on Wednesday.

"We would be interested in early action on climate-friendly technologies. We are discussing this possibility with other countries," Carol Guthrie, a spokeswoman for the U.S. Trade Representative's office, told Reuters.

Negotiators from around the world are in Copenhagen through Dec 18 for U.N. talks aimed at reducing carbon dioxide and other greenhouse gas emissions blamed for global warming.

Washington believes reducing tariffs and other trade barriers on technologies that help countries reduce carbon dioxide emissions could be an important component of international action to address climate change.

At the same time, the House of Representatives has aroused international concern by including language in its climate bill that would allow the United States to impose a "carbon tariff" on imports from countries the president believes are not doing enough to reduce greenhouse gas emissions.

That "would be a nuclear option in terms of trade consequence. For example, such an action by the U.S. and EU would be the equivalent of imposing a tariff of over 20 percent on China and India, resulting in lost exports of 20 percent," a recent World Bank study said.

STALLED DOHA ROUND

In the eight-year-old Doha round of world trade talks, the United States and the European Union have proposed eliminating barriers on a long list of environmental goods and services, including climate-friendly technologies such as wind turbines and "smart meters" for more efficient electricity grids.

But progress on that initiative has been held hostage to the overall Doha negotiation, which is stuck on a number of difficult agricultural and manufacturing trade issues.

The National Foreign Trade Council, a business group that represents major U.S exporters, has urged President Barack Obama to make negotiation of a green trade agreement a top priority, even if that means working outside of the World Trade Organization's normal process in the Doha round.

"The (Obama) administration recognizes the value of such an agreement, as do an increasing number of members of Congress. We at the NFTC ... are optimistic that negotiations on such an agreement will begin soon," Jeremy Preiss, vice president and chief international trade counsel for United Technologies Corp (UTX.N), said during a panel discussion on Wednesday on the potential trade implications of a new climate accord.

Guthrie did not address that point directly, but said U.S. Trade Representative Ron Kirk told WTO members in Geneva the United States was interested in early action to free up trade in climate-friendly technologies and believes such an initiative could "spur some momentum in ongoing Doha negotiations on environmental goods and services."

Many developing countries have been wary of participating in the broader environmental goods and services negotiations since cutting tariffs would expose their domestic producers to increased foreign competition.

But by starting with a smaller list of climate-friendly goods, "you could get a certain set of developing countries comfortable with the idea, and then expand both the list of countries and products as time goes on," said Jake Colvin, a vice president at the National Foreign Trade Council. (Reporting by Doug Palmer, editing by Anthony Boadle)

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