INF/TE/SSD/W/10  
 
23 March  2021 
(21-2395) Page: 1/4 
  Original: English  
 
 
TRADE AND ENVIRONMENTAL SUSTAINABILITY STRUCTURED DISCUSSIONS (TESSD)  
COMMUNICATION BY JAPAN  
The following communication, dated 22 March  2021, is being circulated at the request of the 
delegation of Japan . 
 
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Proposal on Contributions to Achieving Global Carbon Neutrality at the WTO  
1  BACKGROUND  
1.1.  The Paris Agreement calls for achieving a balance between anthropogenic emission a nd 
removals by sinks of greenhouse gases in the second half of this century, and by 2020, more than 
120 countries have pledged to achieve carbon neutrality by 2050.  
1.2.  Working towards the goal of Paris Agreement which is to achieve global carbon neutrality, t he 
WTO, which is a responsible body for the multilateral trading system, is expected to address climate 
change as one of its main agenda items and deliver building blocks to promote reduction of global 
carbon emissions.  
1.3.  While the negotiation  on the Enviro nmental Goods Agreement (hereafter "EGA") had been 
stalled, in bilateral and regional trade agreements, in addition to the provisions which requires 
compliance with existing international environmental agreements, there are a number of provisions 
which lik ely have an impact on domestic environmental measures.  
1.4.  Some countries and regions took carbon border adjustment mechanism against other countries 
and industries with insufficient measures for carbon reduction into consideration.  
1.5.  In light of such international trends, we should identify ways in which the WTO can maximize 
its contribution to global carbon neutrality, considering the current international attention that 
carbon neutrality is receiving, and proceed with discussions towards MC12.  
2  OBJECT IVE 
2.1.  To achieve global carbon neutrality, it is necessary, not only to utilize existing products and 
technologies, but also to newly develop and globally spread innovative products and technologies 
that contribute to emission reduction. For that purpose, it  is essential to remove trade obstacles 
such as through elimination of tariffs as discussed in the process of the EGA negotiations.  
2.2.  Tariff elimination is not enough to promote the spread of these products and technologies. We 
should also work on rule -makin g related to regulatory issues to facilitate transactions from 
production to consumption, and prevent arbitrary trade obstacles from being introduced in the 
future. The WTO has the ability to introduce new rules, from a trade facilitation perspective, that  
push governments ' emission reduction efforts.  INF/TE/SSD/W/10  
 
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  2.3.  In this sense, to achieve global carbon neutrality, we should start discussing concrete ways 
towards (1) elimination of tariffs on goods that contribute to emission reduction ; and (2) rule -making 
to promote di ssemination of such products and technologies simultaneously.  
2.4.  In order for the WTO to achieve meaningful results on environmental issues in a timely manner, 
this proposal focuses on issues related to carbon neutrality which have been drawing political 
attention. However, depending on the interests of the Members, there are possibilities to extend the 
scope of the discussion articulated in paragraph 2.3 above  to other environmental objectives.  
3  ELIMINATION OF TARIFFS  
3.1.  Goods subject to tariff elimination should be products using technologies which directly 
contribute to the reduction of greenhouse gas emissions (hereafter "environmental goods") towards 
realization of global carbon neutrality. When identifying the "environmental goods", we shoul d 
consider including goods which were not covered in the lists in the EGA negotiations, taking into 
account the recent development and spread of new technologies.  
3.2.  Sectors that "environmental goods" are considered to belong to are, for instance, (1) wind 
power; (2) fuel ammonia ; (3) hydrogen ; (4) mobility ; (5) battery ; (6) carbon recycling ; (7) housing 
and building ; (8) solar energy ; and (9) resource circulation. Specific goods subject to this initiative, 
including ones that belong to other sectors, will be identified through discussions among the 
Members from the perspectives of whether they use technologies that directly contribute to 
greenhouse gas emission reduction or that are required during the period of innovative technology 
transition. Given that car bon neutrality can only be achieved through development, introduction and 
dissemination of new technologies over the next decades to come, different from conventional 
liberalization negotiations focusing on goods already in the market, we should bear in mi nd the 
necessity of including goods that are expected to become widely used in the market from a 
mid-to-long term viewpoint.  
4  RULE -MAKING ON REGULATORY ISSUES  
4.1.  In order to realize the prompt spread of the "environmental goods" globally, we need to proceed 
discussions on rule -making on regulatory issues so as to promote research and development, 
strengthen supply chains, facilitate diffusion, and enhance transparency of domestic measures, in 
conjunction with tariff liberalization. The contents listed in parag raphs 4.2 to 4.5  below are examples 
of solutions to possible issues. We welcome various input from Members based on their experiences 
such as in bilateral and regional agreements.  
4.2.  Examples of possible actions for promoting research and development.  
a. Newly d eveloped "environmental goods" need to be promptly launched and spread in the 
market. The launch and spread of "environmental goods" can be promoted by shortening 
patent examination processes and providing patent protection expeditiously.  
i. Shortening the wa iting period of patent examination of technologies related to 
"environmental goods", upon request.  
4.3.  Examples of possible actions for strengthening supply chains.  
a. Access to the "environmental goods" need to be secured when each country is bolstering 
its effo rt to reduce greenhouse gas emissions. Thus, it is necessary to avoid trade 
restrictive measures and facilitate trade.  
i. Exempting from the imposition of export duties on "environmental goods" . 
ii. Strengthening rules on export restrictions regarding "environmen tal goods" . 
b. Access to parts and raw materials that are critical for the production of "environmental 
goods" need to be secured for a stable production of "environmental goods". Thus, it is 
necessary to avoid trade restrictive measures and facilitate trade.  INF/TE/SSD/W/10  
 
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  i. Exempting from the imposition of export duties on parts and raw materials necessary 
for the production of "environmental goods" . 
ii. Strengthening rules on export restrictions regarding parts and raw materials necessary 
for the production of "environmental go ods". 
4.4.  Examples of possible actions to facilitate spread.  
a. Each country needs to take initiative in procuring the "environmental goods" and aim to 
expand demand of these goods by increasing global public demand.  
i. Following rules such as non -discrimination tre atment and providing a sufficient 
time-period for the tender process stipulated in the Agreement on Government 
Procurement, when procuring "environmental goods" which exceed a certain 
threshold.  
ii. Requiring considerations by central governments of whether to  include the amount of 
greenhouse gas emission reduction that occurred during the use of certain 
"environmental goods" within the criteria  (e.g. energy saving performance) when 
formulating the technical specifications for procurement of such "environmental  
goods" . 
b. In order for dissemination of the" environmental goods", it is necessary to ensure to the 
extent possible that the newly introduced technical regulations and conformity 
assessments of each country do not disturb trade.  
i. Promoting harmonization of technical regulations and conformity assessment 
procedures, with international standards . 
• Explaining the reasons and providing available technical evidence, upon request, 
if relevant international standards are not used as a basis for its technical 
regulations or conformity assessment procedures . 
ii. Enhancing transparency when adopting technical regulations and conformity 
assessment procedure . 
• Notifying proposals for new technical regulations and conformity assessment 
procedures that are in ac cordance with the technical content of relevant 
international standards and that may have a significant effect on trade to the WTO 
and inviting written comments . 
• Allowing in principle at least 60 days from the date of notification to provide written 
commen ts to the proposal of technical regulations or conformity assessment 
procedure . 
iii. Providing relevant information on which it has relied in the preparation of its technical 
regulation, upon request.  
4.5.  Examples of possible actions to enhance accountability and t ransparency of domestic 
measures.  
a. In order to achieve global carbon neutrality, it is necessary to not retreat measures for 
reducing greenhouse gas emissions.  
i. Do not encourage trade and investment by weakening or reducing the levels of 
greenhouse gas emiss ion reduction measures  
b. Discussions on carbon border adjustment measures need to be stimulated at the WTO to 
avoid future trade conflicts.  INF/TE/SSD/W/10  
 
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  i. Discussing how carbon border adjustment measures should be formulated based on 
the GATT principles  
5  RULE -MAKING ON ENVI RONMENTAL SERVICES  
5.1.  Attention should be paid to the fact that there have not been thorough discussions on 
environmental services, compared to goods that had been dealt with at the EGA negotiations and 
APEC. Taking into account previous discussions at the Co uncil for Trade in Services and ongoing 
work within other fora such as APEC, support should be given to the discussions on identification of 
environmental services.  
5.2.  In relation to the JSI on domestic regulations, there are ongoing discussions on rules such  as 
on providing indicative timeframes for processing applications, informing the applicant of the reasons 
for rejection, and providing opportunities to comment on new laws and regulations. Prompt 
agreement on this JSI should be supported.  
6  CAPACITY BUILDIN G 
6.1.  In order for developing countries and LDCs to disseminate products and technologies which 
contribute to greenhouse gas emission reductions in their countries and steadily promote emission 
reductions, it is crucial to take actions such as formulating appr opriate technical regulations based 
on international standards. Capacity building to support such efforts needs to be considered.  
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