Trade Minister Dan Tehan will lobby his international counterparts over the coming days to eliminate tariffs on green goods and services, as Australia fights back against the European Union’s push to impose carbon levies on countries with weak emissions laws.
Energy and trade experts backed the Morrison government’s move to slash tariffs on wind turbines, solar panels and other green industries but said it did not need to be done at the expense of the EU’s carbon tariffs.
Australia wants an ambitious global plan to eliminate tariffs on wind turbines, solar panels and other green industries.Credit:Erin Jonasson
The Sydney Morning Herald and The Age revealed on Friday that Mr Tehan would counter Europe’s push for carbon levies at the border by launching an alternative plan to remove tariffs on green products, declaring the world needed “trade liberalisation, not protectionism”.
In 2012, members of the Asia-Pacific Economic Cooperation (APEC) forum agreed to cut tariffs on 54 environmentally friendly products to five per cent. Australia will now argue through the World Trade Organisation and the Cairns Group of 20 agricultural exporting countries that tariffs on these products should be slashed to nothing. Canberra will also push for environmental services – such as climate change mitigation, wastewater management and refuse disposal – to be added to the list.
Former Labor trade minister Craig Emerson, who helped negotiate the move to slash tariffs on environmental goods at APEC a decade ago, said Mr Tehan’s proposal to widen the list was “excellent”.
“It could be pursued through APEC where it started or through the WTO,” Dr Emerson said.
Dr Emerson, now director of RMIT’s Australian APEC Study Centre, said unless the EU’s carbon tariffs were designed so as not to target individual countries they may not be compliant with WTO rules.
“The EU would not be able to target individual countries with their carbon border adjustment mechanism and remain compliant with WTO rules, but could target the production of goods from various countries that have a high carbon content,” he said.
The EU, frustrated by global inaction on emissions reduction, has committed to a carbon border tax by 2023 to be applied on imported goods – such as aluminium, steel and chemicals – that are produced in countries with weaker climate laws.
Tony Wood, director of the Grattan Institute’s energy program, said the proposal to slash tariffs was a “good idea, but it’s not an alternative” to carbon levies.
“The fundamental principle on the idea that it is an alternative is that carbon border adjustment mechanisms or carbon tariffs are protectionism. They’re not, they are a levelling of the playing field,” Mr Wood said.
“Because what they’re doing is recognising that if the UK or EU is paying for climate change and we’re not, then that’s unfair.”
Mr Tehan said the EU had heavily subsidised domestic industries and Australia did not want additional protectionist measures put in place as it negotiates new free trade agreements.
“We don’t want particular parts of the globe dealing with it in unique ways which are protectionist,” he said on Friday. “We want everyone working together in a way which is very positive, and we think trade liberalisation in environmental goods and services is the way to go.”
Labor’s trade spokeswoman Madeleine King said the EU’s carbon tariffs were only a threat because of the government’s “division and inaction on climate policy”.
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