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  • WTO NEGOTIATIONS ON ENVIRONMENTAL GOODS: ENSURING A MEANINGFUL OUTCOME FOR DEVELOPING COUNTRIES

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    WTO Negotiations on Environmental Goods: Ensuring a Meaningful Outcome for Developing Countries

     

     
     
    International Trade Forum - Issue 1/2010

    Negotiations on liberalizing trade in Environ-mental Goods and Services (EGS) began with the launch of the Doha Round. Paragraph 31(iii) of the Doha mandate, agreed by all WTO members in 2001, calls for a reduction or elimination of tariffs and non-tariff barriers on EGS.

    Progress within WTO's Committee on Trade and Environment (CTE-SS) has been slow. The challenges arise from two sets of issues: what to liberalize (i.e., what goods could be defined as "environmental"); and how to liberalize (the actual modalities for liberalization).

    Failure to successfully conclude negotiations on agricultural and industrial goods has been prejudicial. Given the "single undertaking" nature of the Doha Round, many regard progress in these areas as essential to catalyse movement in EGS negotiations.

    What and how to liberalize?

    Just what constitutes an environmental good remains unresolved. Relevant customs categories also contain products that have non-environmental uses. Often the same products can be used for environmental and non-environmental purposes.

    Such "dual-use" issues led developing countries, such as Argentina and India, to propose restricting liberalization of these goods according to their "environmental end-use" in specific projects ("project/integrated" approaches) such as the Clean Development Mechanism. Proponents of liberalization (the so-called friends of environmental goods") favoured a " list approach", seeking tariff reductions on a list of 153 goods, mostly products used for air-pollution control, solid-waste management and wastewater treatment and renewable energy. Out of this '153' list, the US and EU informally proposed accelerated liberalization for a subset list of 43 climate-friendly goods.

    A third approach - the "request offer approach" - was proposed by Brazil, whereby countries would request specific liberalization commitments from each other and extend tariff cuts equally to all WTO members. No resolution of the approach to be adopted has been achieved.

    Recent developments

    During the CTE-SS session in March 2010, Japan proposed various energy-efficient products such as appliances and electric cars. Saudi Arabia proposed some natural gas-related derivatives. The Philippines is the only developing country outside the "friends" group to identify products of trade interest including three categories: renewable energy; waste management, recycling and remediation; and others.

    The Filipino submission was supported by some other South-East Asian countries, in particular on products such as solar panels and wind turbines.

    WTO developing country members have raised other issues such as non-tariff barriers and access to environmental technologies. They also seek "special and differential treatment" to protect their manufacturing sectors.

    Most "traditional" environmental goods are manufactured or high-tech equipment exported mostly by Organisation for Economic Co-operation and Development countries and middle-income developing economies in East and South-East Asia, especially China. What comparable items can smaller, lesser developed economies export? As an efficient producer of ethanol, Brazil faces major tariff barriers in developed countries. It proposes that bio-ethanol, an agricultural product, be considered an environmental good.

    Some WTO members have opposed including agricultural products, although the Doha mandate does not confine environmental goods to manufactures. Early in the negotiations, many African countries suggested including organic products. However organic products cannot be physically differentiated from non-organic products for tariff purposes. If members agree, the Doha Round might be able to advance standards and certification of such products.

    Smaller developing countries may specialize in goods lower down the value-chain, such as parts and components. Although tariffs are generally low, non-tariff barriers in developed countries need to be addressed. Tariffs may still restrict South-South trade. The bigger markets of China and India could also hold out promise for smaller developing country exports.

    ICTSD research has found that supportive government policies and public and private financing are key market drivers, particularly in renewable energy. For many smaller developing countries, bilateral and multilateral technical and financial assistance could assist them adopt climate-friendly technologies and move them up the value chain.

    This article is based on monitoring, research and analysis undertaken by ICTSD and on informal consultations with WTO delegations. Any views expressed are either the opinions of the author or those emerging from ICTSD-commissioned research. They should not be attributed to ICTSD as an organization.