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Addressing the rise of Trade Remedies against Environmental Goods

Clinic: Graduate Institute, Spring 2014

Executive Summary

Read the full report here

This research paper analyses the current problem of frequent resort to trade remedies for environmental goods and makes recommendations to resolve this problem. Specifically it tries to examine the issue, whether the imposition of trade remedies (that is levying of anti-dumping and countervailing duties) on environmental goods undermines the efforts at trade liberalisation, by tariff reduction for environmental goods.

This paper divided into 4 parts, part I establishes the context within which the issue of trade remedies arises. Part II examines the law under the WTO regime applicable to trade remedies. Part III in light of the findings of Part I and II tries to identify the problem and analysis the scope of the problem. Finally Part IV makes certain recommendations that could assist in overcoming the present crises.

Part I discusses the several contexts within the international sphere wherein the issue of international trade in environmental goods is relevant. Therefore it discusses the progress made by the Committee on Trade and Environment in Special Session at the WTO, the APEC members’ consensus for a list of a list of 54 broad product categories (comprising of whole 6-digit HS sub-heading) as well as the context of Energy Charter Treaty. The specific context of trade remedies and environmental goods is also identified. This is the sub-category of environmental goods, that is renewable energy products; products important for the generation of solar, wind and biofuels.

Part II of the paper analysis the provisions of the trade remedy law (that is safeguards, anti-dumping and subsidies) of the WTO relevant to the context of renewable energy. The provisions of safeguards are not relevant for this specific context, since no instance safeguard imposing measure was found. In the context of anti-dumping investigations the decisions of the domestic authorities firstly reveal a systemic bias in favour of domestic industry and more indicates other factors that may have a mitigating effect on a finding of injury due to dumping. With respect to countervailing duty investigation in the area of renewable energy, apart from the complex nature of its market which may render the benchmark in gauging the conferral of benefit imprecise, another problem that transpires is the difficulty to deviate the ultimate finding of specificity because, in reality, environmental policies are prone to being targeted to ensure effectiveness together with the fact that renewable energy industry is still developing and miniscule.

Part III of the paper analysis the findings of part I & II. It examines the dichotomy between tariff reductions (for liberalisation of international trade in environmental goods) and increase in use of trade remedies; and secondly, in the light of the first finding, identify the cause for this surge in trade remedies for certain environmental goods. As regards the first issue in the light of the finding that trade remedies have only been imposed on a smaller sub-group of environmental goods, that is, renewable energy products, the dichotomy only exists for renewable energy goods and not for all environmental goods. Secondly, as regards the second issue, modification and withdrawal of government support schemes has been identified as a major cause for the resort to trade remedies. In that, the domestic governments have been using trade remedies as a protectionist measure for their domestic industries. Further due to the 2008 economic crises governments were compelled to withdraw their support schemes, and in place, have allowed trade remedies, to take the place and support the withdrawn and modified support schemes.

Finally, in light of the above, part IV of the paper makes the following recommendations to overcome and deal with the problem of trade remedies on renewable energy goods:

  • Need for negotiations at a smaller forum of relevant WTO member countries (Member Countries),

  • Following a policy of accepting Price Undertaking,

  • Implementing a Public Interest Test,

  • Creating a fund compensating the domestic producers of renewable energy,

  • Binding the rates of duty imposed as a result of finding of injury,

  • Limiting the number of Trade remedies in time,

  • Limiting the total number of trade remedies for renewable energy goods,

  • Peace Clause.

Click this link to download the full memorandum in pdf format.

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