Trade and Environment The EU approach

1. Trade and EnvironmentThe EU approach Paolo Caridi First Secretary, Delegation of the European Commission to Japan

2. The EU approach to Climate Change • The EU in World trade • The contribution of the EU trade policy to environment • WTO • Bilateral relations • An example : biofuels

3. 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 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

4. The EU in world trade 19% of world trade, 17.1% world trade in goods (2006), 26% world trade in services Second largest importer A MAJOR TRADING POWER First exporter • 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

5. The EU in world trade A MAJOR TRADING POWER

6. Policy concept A competitive European economy in an open world trade system organised by multilateral rules The EU Trade policy - basic features • Ensure that the European economy is open to the world and competitive in foreign markets • Secure real market access in foreign countries • Support a strong multilateral trading system • Most effective means of managing trade and enforcing rules • Promote European values • on democracy, rule of law, environment, social rights... enforce sustainable development

7. The contribution of the EU trade policy to environmentPolicy objectives • Liberalize environmental goods - services • Seek global market for CO² emission trading • Develop renewable energy (increase sustainable trade in biofuels) • Foster trade cooperation to improve energy efficiency • Help reversing deforestation (FLEGT Voluntary Partnership Agreement negotiations : seeking commitments on illegal logging and incentive policy) Measures must remain WTO compatible.

8. The contribution of the EU trade policy to environment Existing EU trade instruments in support of environment • The GSP : additional trade preferences to countries 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.

9. 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 services that contribute to combating climate change • 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

10. The EU bilateral environment agenda • "Global Europe" communication of November 2006 : a set of new FTA negotiations • Environment will be part of the negotiations, with a view to ensuring substantial commitments – from both sides • Possible market access/development assistance incentives

11. An example : renewable energies/biofuels • Objective : 10% of biofuels in road transport by 2020 • 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

12. The EU focus on sustainably produced biofuels • Commission working on an incentive based scheme • 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