辨识与贸易及可持续发展相关的环境产品与服务:中国案例

					  Fiscal and Financial Policies for
Low-Carbon Economic Development
      Should be Double Green


                     HU Tao
            Policy Research Center of
   Ministry of Environmental Protection, China



 26 November 2010, SNAI, Shanghai
                Outline
•   Case of US Section 301 probe on
    China’s clean energy subsidies
•   Current challenge by WTO rules of fiscal
    and financial policies for low carbon
    economic development
•   Why Fiscal and financial policy should
    be double green?



                                         2
        US Section 301 probe
•   Storyline
    – Union of Steel Workers (USW) accusing
      China’s subsidy on clean energy, mainly
      wind and solar products
    – USTR is investigating according to US trade
      Act Section 301
    – If proved true, US discusses with China or
      brings it to Dispute Settlement Body (DSB)
      of WTO


                                              3
          US Section 301 probe
•   From UNFCCC perspective
    – All parties should make efforts to reduce
      GHGs to mitigate
      •   What US should do as Annex I country
          – 8% GHGs reduction required in KY Protocol
      •   What China should do as non-Annex I country
          – Voluntary based reductions
      •   What Annex I should do for non-Annex I:
          – Financial support 0.7% of GDP committed in Rio
          – Technology transfer committed in Rio


                                                             4
             US Section 301 probe
•       From UNFCCC perspective
    –     What China is doing for implementing its voluntary based
          action plan
         •   Target
             –   40-45% carbon intensity by 2020, 20% by 2010
             –   Cap for N2O by 2010
             –   15% renewable in energy mix by 2020; and 10% by 2010
         •   Instruments
             –   MBIs
                  » Financial supports
                  » Self-innovation
                  » Taxation or trading
             –   Moral education
             –   C&C
         •   Results (can be MRV)
             –   Reducing GHGs domestically 726 million ton CO2 per year with 261
                 GW capacity
             –   Helping others reducing GHGs internationally 11.1 million ton CO2
                 per year by exporting equipment for hydro 3GW, solar 2.59GW, wind
                 36.6MW.
             –   It’s very clear that the more renewable subsidized, the more GHGs
                 reduced                                                        5
          US Section 301 probe
•   From WTO perspective
    – Subsidy
      •   Defining subsidy
          –   Government or public body
          –   Financial sources
          –   Enterprises
          –   Specificity
      •   Types of subsidy
          – Prohibited (red box)
          – Actionable subsidy (yellow box)
          – Non-actionable subsidy (green box)
              »   Article 8 expired already in 2000
                                                      6
          US Section 301 probe
•   From WTO perspective
    – Exceptions
      •   GATT XX
          – For environmental protection
          – For resources conservation
      •   Case by case
          – Tuna-dolphin
          – Shrimp and turtle
      •   Transaction costs?
      •   Agriculture as an exceptional sector

                                                 7
          US Section 301 probe
•   From WTO perspective
    – What China has done
      •   Subsidies
          –   Compensations
          –   Financial supports
          –   Privilege credit and loans
          –   VAT waived
          –   Quotas, regulations etc for renewable requirements
              creating high shadow price of demanded equipment




                                                               8
          US Section 301 probe
•   From WTO perspective
    – What US has done
      •   Subsidies for renewable too as key part of
          stimulus plan during the financial crisis
      •   Subsidies for agriculture that increases fertilizer
          applying amount and results in more emissions
          of N2O, CH4 and ammonia-nitrogen
          – US$ 19 billion annually
          – 513.8 million ton carbon annually, taking 7% of total




                                                                9
          US Section 301 probe
•   From WTO perspective
    – Other cases
      •   Japan as complainant accusing Canada for it’s
          renewable in Ontario
      •   US Senate’s proposal of BTA to punish China
          and India high carbon goods
      •   US, EC’s complain in DSB on China’s raw
          materials exporting, rare earth element mineral
          ores exporting
      •   EC’s complain on China’s exported coke
      •   US’s proposal in APEC on non-tariff measures
          (but barriers) for renewable
                                                      10
          US Section 301 probe
•   From other bodies’ perspective
    – OECD’s Green subsidies for
      •   Agriculture
      •   Regional development
      •   Environment protection
    – World Bank’s climate-friendly products
      •   List of products for WTO EGS negotiation




                                                     11
          US Section 301 probe
•   Conclusions from the case
    – Between WTO and MEAs
      •   Global environmental interests required by
          UNFCCC are NOT coherent with free trade
          articles of WTO.
      •   Which rules should be followed when two sets of
          international rules conflict each other?
    – Within WTO
      •   Between the principle of free trade and the
          principle of sustainable development are
          unbalanced
      •   There are no operational details of SD principle
      •   Environmental issue maybe an exception which  12
          is case by case by GATT XX
 Current challenge by WTO rules of financial
polices for low carbon economic development

•   The question is not why new coherent
    rules needed but HOW
•   The cases above mentioned are
    challenges for WTO rule itself




                                           13
 Current challenge by WTO rules of financial
polices for low carbon economic development

•   WTO has realized the potential conflicts
    – Committee for Trade and Environment (CTE)
      being established before Doha ministerial
      meeting 2001
    – Topics dealing with environmental issues
      started after Doha
      •   DDA 31.1 dealing with the relationships between
          WTO and MEAs
      •   DDA 31.2 MEAs observership
      •   DDA31.3 EGS negotiation
      •   DDA 32.1 Market access of environmental
          requirement                                   14
      •   DDA32.3 Eco-label discussion
 Current challenge by WTO rules of financial
polices for low carbon economic development

•   Directions
    – To normalize (at least global) environmental
      exception in GATT XX, following agriculture
      sector exception
    – To meet our common environmental demand
      as another goal of WTO besides free trade, to
      let SD principle operational
    – To rejuvenate Article 8 of SCM to have green
      box policies

                                               15
Why fiscal policy should be double green

•   Fiscal and financial policies should be
    green for low carbon economic
    development
•   Why low carbon is more important than
    low sulfur, low nitrogen, low VOC from
    the global perspective?




                                         16
     Spectrum of the environment
                                                        Scale of
                                                        environment


Indoor      Outdoor     Local       National    Regional    Global
environment environment environment environment environment environment




             The conventional Environment
   Micro                                                      Macro
                                                                 17
  Spectrum of the environment
     from micro to macro level
 Indoor environment
 Outdoor/local/national/regional environment
 Global environment
  – Climate change
  – Ozone depletion
  – Biodiversity loss
  – POPs
  – Hazardous wastes Trans-boundary transfer
    regulated by Basal convention
  – And other MEAs regulated global
    environmental problems                   18
Why fiscal policy should be double green

•   Fiscal and financial policies should be
    green generally for promoting green
    economy
    – To support MEAs implementation for
      improving global environment
    – To reduce air pollution, water, solid wastes
      for conventional environmental
      improvement
    – To support indoor environmental
      improvement for human being’s health
                                               19
Why fiscal policy should be double green

•   Fiscal and financial policies should also
    be green for green box policies
    – definitely not use red box policies which are
      prohibited clearly by WTO
    – Not use amber box policies which are not
      allowed as actionable by WTO
    – Better to use green box policies, which are
      much safer than other two sets of policies,
      although Article 8 is to be saved, such as
      •   R&D
      •   Smart location
      •   Global than local environmental goods and
          services                                    20
Thank you very much!

   hu.tao@vip.163.com



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