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1/ Trade, the environment and the "level playing field". A thread.
What @guyverhofstadt is saying is: "The EU won't commit to not having tariffs on your products if you can then undercut our producers by allowing yours to produce in a cheaper, environmentally negligent way."
What @guyverhofstadt is saying is: "The EU won't commit to not having tariffs on your products if you can then undercut our producers by allowing yours to produce in a cheaper, environmentally negligent way."
2/ Countries have three types of tools to discourage imports of foreign products produced in an environmentally negligent or unsustainable way:
(a) Regulations
(b) Consumer Choice / Voluntary Standards
(c) Tariffs
(a) Regulations
(b) Consumer Choice / Voluntary Standards
(c) Tariffs
3/ Regulations give governments over how things are made on their own territory, but WTO rules are a lot more restrictive about the BASIS on which you can exclude a foreign product.
To oversimplify: the final product itself has to be problematic, not just the process.
To oversimplify: the final product itself has to be problematic, not just the process.
4/ You can ban the sale of toys with lead paint on them.
You can't ban the sale of toys made in a factory that dumps its waste into a local river, if that river is overseas.
That may sound crazy but it's to stop rich countries conditioning all imports on Norwegian standards.
You can't ban the sale of toys made in a factory that dumps its waste into a local river, if that river is overseas.
That may sound crazy but it's to stop rich countries conditioning all imports on Norwegian standards.
5/ Almost all environmental regulation adds costs to production. There are commercial benefits to reckless burning of coal, dumping of waste and Panda-meat supply chains.
That means environmental regulation at home, if not matched abroad, makes your firms less competitive.
That means environmental regulation at home, if not matched abroad, makes your firms less competitive.
6/ But surely consumers can just choose to buy local, environmentally sound products?
They can and they do, but only to a point.
Moreover, while highly branded consumer goods (especially in luxury retailers) can champion sustainability, they're just one part of the market.
They can and they do, but only to a point.
Moreover, while highly branded consumer goods (especially in luxury retailers) can champion sustainability, they're just one part of the market.
7/ A huge volume of products are interim goods sold business to business, about which most consumers know nothing.
The cheese in a frozen pizza at the supermarket, an engine part in a Land Rover or the blade on a wind turbine may as well be produced in Narnia for all we know.
The cheese in a frozen pizza at the supermarket, an engine part in a Land Rover or the blade on a wind turbine may as well be produced in Narnia for all we know.
8/ That leaves tariffs.
Taxes on imports are generally pretty blunt tools when it comes to adjusting for differing levels of environmental protection, but it is a role they can play.
Taxes on imports are generally pretty blunt tools when it comes to adjusting for differing levels of environmental protection, but it is a role they can play.
9/ They can also redress other differences like animal welfare standards for example, which the WTO SPS and TBT agreements hamstring you in addressing as they pertain to other countries (unless the welfare standards mean the final product poses a scientifically proven risk).
10/ That brings us to FTAs and the Level Playing Field.
A free trade agreement, especially an ambitious one, binds both sides to eliminating the vast majority of their tariffs and keeping them that way.
It removes tariffs as a tool, leaving only regulation and consumer choice.
A free trade agreement, especially an ambitious one, binds both sides to eliminating the vast majority of their tariffs and keeping them that way.
It removes tariffs as a tool, leaving only regulation and consumer choice.
11/ The EU with its comparatively high environmental regulations and their associated costs, is reluctant to forego that tool unless it receives guarantees its trading partners won't exploit that disarmament by gutting environmental standards to make their firms more competitive.
12/ There's elements of protectionism to this stance, but there's common sense as well.
The goal of environmental policies is supposed to be to improve the environment, not to bankrupt all your own businesses while outsourcing cheap, environmentally damaging production abroad.
The goal of environmental policies is supposed to be to improve the environment, not to bankrupt all your own businesses while outsourcing cheap, environmentally damaging production abroad.
13/
<Standard Disclaimer About How It's All Actually Even More Complicated and There Are Layers of Nuance To All of the Above>
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<Standard Disclaimer About How It's All Actually Even More Complicated and There Are Layers of Nuance To All of the Above>
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