MC11 Ministerial Declaration on Fossil Fuel Subsidy Reform

Photo: WTO
Photo: WTO

At the WTO’s 11th Ministerial Conference in Buenos Aires, 12 WTO members signed a Ministerial Declaration encouraging reform and phasing out of fossil fuel subsidies. Reducing subsidies to fossil fuels would have a significant environmental impact, and would contribute to limiting the estimated temperature increases. The WTO has an important role to play in this regard, including through enhanced transparency and reporting. The members that signed the statement include Chile, Costa Rica, Iceland, Liechtenstein, Mexico, Moldova, New Zealand, Norway, Samoa, Switzerland, Chinese Taipei and Uruguay. The Ministerial Declaration reads as follows:

1. Recognizing that fossil fuel subsidies encourage wasteful consumption, disadvantage renewable energy, and depress investment in energy efficiency, and that effectively addressing fossil fuel subsidies will deliver trade, economic, social and environmental benefits;

2. Recalling our Leaders' commitment to fossil fuel subsidy reform under the Sustainable Development Goal 12 (c) of the 2030 Agenda, and recognising that a growing number of WTO Members have made further pledges under the auspices of the G20, G7, APEC and V20, and in the context of the Paris Agreement on Climate Change and the Addis Ababa Action Agenda on Financing for Development;

3. Recognizing that subsidies for fossil fuels were estimated at USD 425 billion in 2015, and that fossil fuel subsidies amounted to 20 per cent of the value of internationally traded fuels;

4. Recognizing that a phase-out of fossil-fuel subsidies would generate an estimated 12 percent of the total abatement needed by 2020 from energy sector emissions and action towards holding the increase in global average temperature below 2°C above pre-industrial levels, and would contribute to the pursuit of efforts to limit the temperature increase to 1.5 °C above pre-industrial levels;

5. Acknowledging that reforming fossil fuel subsidies can release funds for other development priorities;

6. Acknowledging that accelerating the reform of fossil fuel subsidies is therefore a priority;

7. Considering that trade has been explicitly identified as a powerful enabling force that is indispensable in progress toward sustainable development;

8. Recognizing that sustainable development is a fundamental principle of the Marrakesh Agreement establishing the World Trade Organization;

9. Acknowledging that the trade and investment distortions caused by fossil fuel subsidies reinforce the need for global action including at the World Trade Organization; 

10. Confirming, therefore, that the World Trade Organization can play a central role in achieving effective disciplines on inefficient fossil fuel subsidies;

We have accordingly reached the following shared understandings:

  • We seek the rationalisation and phase out of inefficient fossil fuel subsidies that encourage wasteful consumption, and encourage the international community to join us in those efforts; 
  • We recognise that reform needs to take fully into account the specific needs and conditions of developing countries and minimize the possible adverse impacts on their development in a manner that protects the poor and the affected communities;
  • We seek to advance discussion in the World Trade Organization aimed at achieving ambitious and effective disciplines on inefficient fossil fuel subsidies that encourage wasteful consumption, including through enhanced World Trade Organization transparency and reporting that will enable the evaluation of the trade and resource effects of fossil fuel subsidies programmes.

Buenos Aires, December 2017

For more information about the Ministerial Statement, visit https://us3.campaign-archive.com/?e=&u=78abf941b6786fca0ed7e367d&id=aa936d8db5