Trade and Environment The EU approach

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					                 Trade and Environment
External Trade

                                The EU approach

                                             Paolo Caridi
                 First Secretary, Delegation of the European Commission to Japan
                 1. The EU approach to Climate Change

                 2. The EU in World trade

                 3. The contribution of the EU trade policy
                    to environment
External Trade

                   •   WTO

                   •   Bilateral relations

                 4. An example : biofuels
                 The EU approach to climate change

                 • A sense of urgency

                 • Ambitious objectives: Council
                   Conclusions of May 2007
                     - Foster renewable energy -> 20% by 2020
                     - Foster energy efficiency -> reduce CO² by
External Trade

                     20% by 2020
                     - Globalize carbon trade

                 • Need international cooperation to
                   limit global warming to 2°C
                     - Action in the EU not enough

                 • Trade can be part of the solution
                     - Factor in environment in our trade negotiations
                     - Address the competitiveness impact
                 The EU in world trade
                                  19% of world trade, 17.1%
                                  world trade in goods (2006),
                                  26% world trade in services

                                                                        Second largest
                 First exporter             A MAJOR                        importer
External Trade

                                      TRADING POWER

                                    Foreign direct investment: EU-25
                                    a major source of the world’s FDI
                                    (€171.8 billion) and host of the
                                    world’s FDI (€ 94.1 billion) in 2005
                 The EU in world trade

                            SHARE IN WORLD TRADE IN GOODS (2006)

                                Others                                           United States
                                50,6%                                                16,0%

                     A                                       China        6,6%
External Trade

                            Source: Eurostat                  9,6%
                  TRADING      SHARE IN WORLD TRADE IN SERVICES (2005)
                   POWER                                                  EU25

                                                                           United States
                                                 China                         18,4%
                              Source: Eurostat
                                                  3,8%    6,9%
                 The EU Trade policy - basic features
                                      Policy concept
                     A competitive European economy in an open world
                        trade system organised by multilateral rules

                  Ensure that the European
External Trade

                  economy is open to the                     Support a strong multilateral
                  world and competitive in                   trading system
                  foreign markets                            Most effective means of
                  Secure real market access in               managing trade and enforcing
                  foreign countries                          rules

                                      Promote European values
                                      on democracy, rule of law,
                                      environment, social
                                      rights... enforce sustainable
                 The contribution of the EU trade policy
                            to environment

                                     Policy objectives

                 1.   Liberalize environmental goods - services

                 2.   Seek global market for CO² emission trading
External Trade

                 3.   Develop renewable energy (increase sustainable trade
                      in biofuels)

                 4.   Foster trade cooperation to improve energy efficiency

                 5.   Help   reversing  deforestation   (FLEGT     Voluntary
                      Partnership   Agreement    negotiations    :   seeking
                      commitments on illegal logging and incentive policy)

                      Measures must remain WTO compatible.
                 The contribution of the EU trade policy
                            to environment

                    Existing EU trade instruments in support of

                 • The GSP : additional trade preferences to countries
External Trade

                   committed to implementing environmental and
                   labour standards.

                 • The Sustainability Impact Assessments (SIAs) look
                   at the impact of each trade negotiation in the
                   economic, social and environmental field…

                 • …so as to link with specific funding and assistance.
                     The EU multilateral environment
                       agenda / WTO Doha Round
                 Implementing the Doha Declaration on trade and
                   environment (paragraph 31) :

                    open trade for environmental goods and
                     services: no quota/no tariff trade for goods and
External Trade

                     services that contribute to combating climate

                    equal relationship between WTO rules and
                     Multilateral Environment Agreements (MEAs)
                     need legal certainty that trade multilateral rules
                     acknowledge environmental commitments

                    observership status for MEAs in the WTO
                  The EU bilateral environment agenda

                 • "Global Europe" communication of November
                   2006 : a set of new FTA negotiations
External Trade

                 • Environment will be part of the negotiations,
                   with   a  view    to  ensuring    substantial
                   commitments – from both sides

                 • Possible      market    access/development
                   assistance incentives
                           An example : renewable

                 • Objective : 10% of biofuels in road transport by
External Trade

                 • Room for increased market access in EU

                 • Foster imports through ethanol tariff reduction
                   and tariff free quotas in FTAs

                 • Biofuels should be produced in a sustainable
                   way to bring real benefits
                       The EU focus on sustainably
                            produced biofuels

                 • Commission working on an incentive based
External Trade

                   − to be applied without discrimination to
                     domestic production and imports
                   − potentially  taking   into   account      :
                     greenhouse gas emissions and biodiversity
                 • FTA negotiations to encourage sustainable
                   production and import