EU Trade Commissioner Peter Mandelson has called for a WTO zero tariff agreement on key green goods and rejected the idea of a Kyoto tax as the wrong political approach to securing global agreement on the need to act on climate change. In an audiocast to the 45000 subscribers to the EU's Trade Policy Website, Mandelson argued that trade policy needs to seek to widen and open global markets in the key technologies for addressing climate change. Mandelson called for action at the WTO level and said that all new EU bilateral trade agreements would tackle restrictions to green trade and investment.

Mandelson warned that Europe needed to adopt a long-term competitive rationale on climate change - moving decisively and unilaterally if necessary to new technologies. He argued that most of the European economy is built on goods and services that are not internationally traded and that Europe has the chance to lead in a direction the market is inevitably going to take. Referring to the Stern report, Mandelson argued: "Change is demanded by our long-term interests. But it may well be that being the first to change is in our immediate economic interests as well".

Mandelson argued that the Kyoto Protocol, and whatever global agreements will follow it, contain the "hidden imperative" of creating an open market in green goods and services. He argued: "Emissions trading can drive up the cost of emitting green house gasses and thus restrain them. Maximizing exchange and trade in green technology is what will ultimately drive emissions down altogether". Mandelson argued "Alongside an ambitious agreement to cut tariffs in industrial goods in the Doha Round, WTO members should agree to go even further in key areas like clean power generation - defined by their specific link to climate change. It should be possible to agree a 0% tariff deal for these key goods". Mandelson said the EU would pursue the same goal in its new generation of bilateral trade agreements. He said "I want these agreements to directly address trade and investment in green technologies".

Mandelson also expressed strong doubts about the idea of a Kyoto tax on goods imported from countries that have not ratified the Kyoto protocol. He said such a tax would be "highly problematic under current WTO rules and almost impossible to implement in practice…Not participating in the Kyoto process is not illegal. Nor is it a subsidy under WTO rules. How would we choose what goods to target? China has ratified Kyoto but has no Kyoto targets because of its developing country status. The US has not, but states like California have ambitious climate change policies". Mandelson argued that a Kyoto tax would also be "not good politics… collective responsibility will only be fostered by policies of dialogue, incentive and cooperation".


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