Trade Remedies on Clean Energy: A New Trend in Need of Multilateral Initiatives

18/06/2015 10:30 - 593 Views

Jonas Kasteng, Trade Policy Adviser, National Board of Trade

Abstract:

In recent years, trade remedies have increasingly been directed towards clean energy, such as solar panels, wind turbines and biofuels (biodiesel and bioethanol). This new trend has become apparent among most major producers of clean energy, such as the EU, the US, Australia, India and China. The trend has been particularly strong in the EU, which was also the first WTO member to use the trade remedies on clean energy on a major scale.

The use of trade remedies on clean energy is causing a conflict with the national climate goals of many countries, as well as a clash with the environmental objectives of international agreements. The measures risk having a negative effect on the global climate and the environment since clean energy will become more expensive and less competitive. As a consequence, the answers to this new trend should preferably be found on a multilateral level.

The paper explores different multilateral options for limiting the use of trade remedies on clean energy for further consideration. The main priority is to (1) improve the current WTO agreements on trade remedies. The concerns with the current trade remedy agreements are not limited to clean energy, even though the effects are particularly visible and negative for the environment. The current WTO provisions on trade remedies need to be improved to only target truly anti- competitive behavior- and not normal competition as mainly is the case today.

A step in this direction, environment- specific provisions could be considered in the agreements on trade remedies- for example in a public interest test or with regard to duty level, product scope, duration of the measures and/or a combination of these provisions. These provisions might be implemented in the current WTO agreements or as WTO- plus provisions, by the Member States in a unilateral, or plurilateral, manner as an example for others to follow.

As a consequence of the concerns with the current trade remedy provisions, which are targeting normal competition, it could also be relevant to (2) further explore the pros and cons with environment provisions on the use of trade remedies in other WTO agreements. In order not to undermine or circumvent the future tariff cuts of bound tariffs in environmental goods, (i) a provision on the non- use of trade remedies in a future WTO agreement on environmental goods could be explored. In order to avoid an escalation in the use of trade remedies in the field of clean energy, to the detriment of the environment, (ii) the extension or revision of the WTO provisions on non- actionable environmental subsidies with regard to the use of trade remedies could be explored. This initiative might make genuine environmental subsidies non actionable at a bilateral level to the benefit of the environment. This initiative might also be limited in time, i.e. a temporary “peace clause” on trade remedies could be introduce.

Download the paper here