Center for Governance and Sustainability

at the University of Massachusetts Boston

Favor Sustainability

pg. 27: the creation of a sectoral free trade arrangement for sustainable energy products and services [bold in the original] that would eliminate tariffs and harmonize standards as well as begin to discipline domestic fossil fuel subsidies.


Readers' Guide Comment on “a sectoral free trade arrangement for sustainable energy products and services”

WEF’s recommendation is to extend the WTO legal framework to include a special arrangement to trade sustainable energy products and services. This would have wide benefits for the transition to a low-carbon global economy. What is less clear is why this proposal is seen by WEF as more likely to advance than the current Doha Trade Round  negotiations for special rules concerning environmental goods and services. 

The Doha negotiations on environmental goods and services have been plagued by definitional issues (i.e. what is an environmental good) and by the broader principles to use to crave out this sector from other manufacturing and service sectors (e.g. how should the rules on water purification valves be different from rules for other water values). Negotiations on ‘sustainable energy products and services’ would face similar obstacles. 

Readers' Guide Comment on “begin to discipline domestic fossil fuel subsidies”

The GRI recommendation to ‘begin to discipline’ oil and gas subsidies is a more traditional type of OECD proposal than a new idea in global trade governance. It follows closely on earlier G20 declarations. Interestingly, the G20 recommendation calls for the elimination of tariffs on energy products and services, but WEF only calls for the world to ‘begin to’ eliminate domestic fossil fuel subsidies. The lag time between the elimination of tariffs and the elimination of subsidies means that MNCs could continue to receive domestic fuel subsidies in one country and then sell products below cost in a country that has no import control policy tools.

Related Ideas: Four Tools; Managing economic globalization

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