Can APEC Deal Help COP17 Climate Change Talks?

The Asia-Pacific Economic Cooperation (APEC) countries may become a good example of how to deal politically with deadlocking issues. At their summit in Honolulu last week, they agreed to reduce import tariffs to boost trade in products that cut fossil fuel use and reduce pollution. 

With dismal expectations for the COP17 climate change talks, which will open in Durban, South Africa later this month, this agreement looks like a lesson on how to bridge differences and reach consensus. It could also somehow inspire the parties to the climate convention about to gather in South Africa. Durban’s COP17 risks provoking the collapse of the UN climate change negotiations architecture if it ends on a standstill.

The APEC meeting started with sharp differences between the U.S. and China. Opening statements from both countries’ leaders, Barack Obama and Hu Jintao, explicitly mentioned their disagreements. Obama even showed a trace of irritation with Chinese trade practices. “We’re going to continue to be firm that China operate by the same rules as everyone else,” he said at the close of the 21-nation APEC summit, after saying that “enough is enough”.  It looked like a deadlock would be unavoidable.

In his opening statement, Hu Jintao insisted on more clout for China as an emerging global power. He also made clear Beijing prefers to work through existing global trade architecture rather than allow itself to be subject to U.S.-led efforts to open Asia-Pacific markets at any cost. Chinese officials also warned that the U.S. decision to launch a probe that could lead to anti-dumping duties on Chinese-made solar cells and modules could impair energy cooperation within APEC.

But, at the end of the meeting, both countries managed to agree to cut import tariffs on environmental goods (mainly clean energy products) to 5 percent by 2015. APEC members also pledged to eliminate domestic content requirements that distort environmental goods and services trade by the end of 2012.

Additionally the APEC leaders agreed to:

* rationalize and phase out inefficient fossil-fuel subsidies that encourage wasteful consumption, and set up a voluntary reporting mechanism on progress, to be reviewed annually;

* promote energy efficiency by taking specific steps related to transport, buildings, power grids, jobs, knowledge sharing, and education in support of energy-smart low-carbon communities; incorporate low-emissions development strategies into our economic growth plans and leverage APEC to push forward this agenda;

* a goal of reducing the region’s energy intensity by 45 percent by 2035;

* work to implement appropriate measures to prohibit trade in illegally harvested forest products and undertake additional activities in APEC to combat illegal logging and associated trade.

Chinese President Hu Jintao signed onto the plan, even though earlier this week Chinese officials criticized the tariffs cuts as too ambitious.

The environmental goods that will have their import tariffs cut are still to be designated. U.S. officials “have identified solar panels, wind and hydraulic turbines, air pollution filters and sewage treatment pumps as goods they would like included,” according to Reuters.

Tariffs and subsidies cuts are more easily enforceable because they become immediately effective upon enactment. Energy intensity goals are more elusive. Chinese officials hurried to explain that they were aspirational goals and that the APEC commitments are “voluntary and non-binding.”

“We can and must address both the region’s economic and environmental challenges by speeding the transition toward a global low-carbon economy in a way that enhances energy security and creates new sources of economic growth and employment,” said the Asia-Pacific Economic Cooperation leaders in their Honolulu Declaration.

“We are committed to advancing our shared green growth objectives. We can and must address both the region’s economic and environmental challenges by speeding the transition toward a global low-carbon economy in a way that enhances energy security and creates new sources of economic growth and employment.”

The APEC deal can be a major step forward in the adoption of clean energy by major developed and emerging economies. It may also become a lesson on how to constructively address contentious issues. If the deal becomes effective in 2012, it could be used as a reference to future climate negotiations.

Negotiations on tough issues have a better chance of success when the number of parties to the deal is relatively small. To make a difference in the status quo, the parties have to be representative. APEC is a powerful economic conglomerate, and its contribution to GHG emissions is considerable. The APEC countries account for more than half of global GDP, 44 percent of global trade, and 63 percent of global greenhouse gas emissions. Although the European Union, Brazil, and India, also relevant economic actors and major GHG emitters are not represented, the group can make a difference. One useful contribution from APEC could be to propose the extension of these commitments to G20 countries.