China, U.S. and APEC Leaders Agree to Cap Tariffs on Green Goods

After meeting in Russia in early September, representatives of the Asia-Pacific Economic Cooperation (APEC) nations, including China and the U.S., reached an agreement on a list of environmental goods on which to cut tariffs to 5 percent or less by 2015. The list of 54 product lines encompasses a broad range of items, including components of industrial boilers and furnaces; gas, steam and wind turbines; solar water heaters and photovoltaic cells; and equipment for treating wastewater, recapturing waste heat, and controlling the release of air pollutants.

“This is a significant accomplishment that, when implemented across the APEC economies, will lower the cost of and improve access to a range of clean tech technologies,” said Jake Colvin, Vice President for Global Trade Issues at the National Foreign Trade Council (NFTC), in a written statement. “This commitment provides a strong basis to advance a broader agreement to reduce trade barriers to green technologies at the WTO as well as for APEC to explore other innovative sectors where similar progress could be achieved.”

The agreement brings potential benefits for the U.S. economy. “Currently, over $1 billion in U.S. environmental goods exports to the Asia-Pacific region face tariffs above 5 percent,” according to Deputy U.S. Trade Representative Ambassador Demetrios Marantis. “Tariff cuts on these environmental goods not only advance our green growth goals by making these environmental goods cheaper and more accessible, but also will have a meaningful impact on trade and job creation in the region.”

Other provisions of what is being called the Vladivostok Declaration also aim to strengthen energy security through promoting efficiency and clean energy sources, strengthen food security, establish reliable supply chains, promote cross-border education, and enhance innovation capacity.

Tariffs in the APEC region averaged around 5.8% in 2010, according to an assessment carried out by APEC with assistance from the World Bank. Non-tariff barriers to trade remain a challenge, however. At last year’s APEC summit in Honolulu, member nations agreed to eliminate local content requirements by the end of 2012. However, there was no quantification of progress toward that goal in this year’s declaration, rather, an instruction “to further study in 2013 the impact of local content requirements” and discuss alternative ways to promote job creation. Members also reaffirmed their pledge to refrain from raising new barriers, restrictions, or “WTO-inconsistent measures in all areas, including those that stimulate exports.”

For more, see ChinaFAQs Expert Michael Levi’s discussion of the APEC agreement and how it might be further developed in his blog, “Next Steps on Clean Energy Trade”, at the Council on Foreign Relations.

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