Moving forward
Some WTO member-states appear to have opted not to participate in the EGA negotiations due to fears that they would unnecessarily open their markets to competing manufactures of relevant products. In the short term, this may benefit such countries because initially, the EGA will apply in accordance to the ‘most favoured nation’ principle once a ‘critical mass’ of WTO member-states have agreed to participate.
In the context of the WTO Information Technology Agreement, the ‘critical mass’ is considered to have been met when participants of a plurilateral agreement account for approximately 90% of trade in the relevant products. At this point, the tariff reductions in the participating member-states go into effect for all member-states. Accordingly, non-signatory member-states will benefit from the tariff reductions once the EGA hits the ‘critical mass’.
However, in the long term, it is likely that, through other bilateral discussions or consultations, other WTO member-states will be encouraged or pressured into joining the EGA in return for other trade concessions.
If that is the eventual outcome for a non-signatory WTO member-state, such a country would then have missed the opportunity to participate in the negotiation of the EGA, and to ensure that products relevant to its export industry are included.
In Malaysia’s case, a critically-important green export product is sustainable palm oil. It is unclear whether palm oil is currently included in the list of EGA products, given certain concerns about the potential for unsustainable palm oil to also benefit from the agreement. Although one solution would be to tie certain products to sustainability certification requirements, there is no indication that this has been proposed yet within the EGA context.
Tying the use of a particular certification scheme, such as the Malaysian Sustainable Palm Oil standard, would have increased the recognition and strength of such a standard, and allowed sustainable palm oil to benefit from reduced tariff rates and from the priceless label of ‘green product’.
FratiniVergano
European Lawyers
