ENVIRONMENTAL GOODS AND THE WTO

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ENVIRONMENTAL GOODS AND THE WTO
THE ASIA WTO RESEARCH NETWORK SEMINAR
Rokiah Alavi Taipei, 23-24 April 2006
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INTRODUCTION

• The Doha Ministerial Declaration called for the
  reduction/elimination of tariff and non-tariff
  barriers to environmental goods and services
  (EGS) para 31 (iii).
• Liberalization could increase the availability of
  green products support environmental
  objectives.
• Agreed that the negotiations for
• Environmental goods will take place in the
  Negotiating Group on Market Access (NAMA).
• Environmental services will take place in Council
  for Trade in Services Special Session (CTSSS).

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DEFINITION

• Negotiation modalities use OECD and APEC lists
  as a starting point.
• No single accepted definition.
• EGS - considered to be any equipment, material or
  technology used to address a particular
  environmental problem or as a product that is
  itself environmentally preferable to another
  similar products because of its relatively
  benign impact on the environment (Hamwey et al.,
  2003).

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OECD/APEC and UNCTAD Lists

• Industrial goods used to provide environmental
  services to address pollution and waste affecting
  water, soil and air OECD/APEC Definition
• This includes
• Generally have multiple end-uses, only one of
  which is to provide environmental services.
• 2. Usually do not have inherently environmental
  characteristics it is their use to provide
  environmental services that qualifies them as
  environmental goods.
• Hamwey (2005)

• Environmentally Preferable Products (EPPs),
  including both industrial and consumer goods -
  UNCTAD Definition
• This includes
• Have environmentally preferable characteristics
  relative to substitute goods, i.e., reduced
  negative environmental impacts in production,
  end-use or disposal.
• 2. Are generally used for purposes other than
  environmental ones in commercial and household
  applications.

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OECD List Includes

• Includes goods covering 132 6-digit HS Codes and
  covers the following
• Pollution Management
• Air pollution control
• Water pollution control
• Solid waste management equipment
• Remediation/clean up of soil and water
• Noise/vibration abatement
• Environmental monitoring/analysis equipment
• Renewable Energy Plants
• Sustainable Forestry
• Sustainable Agriculture and fisheries
• Eco-Tourism
• Portable Water
• Recycling Systems/materials
• Chemicals used in pollution control systems
• Energy efficient or comparatively environment
  friendly consumer products
• Cleaner technologies
• (Source OECD, 1999)

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APEC List Includes

• Covers 104 HS Codes
• Similar to OECD lists have 54 goods in common
  at HS 6-digit level.
• Differences
• Excludes minerals and chemicals
• Includes a more extensive set of goods needed for
  environmental monitoring and assessment

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EPPs

• For most developing countries EPPs are of their
  export interests.
• No specific list has been submitted to NAMA.
• Country proposals include
• Non-timber forest products such as honey,
  gum-arabic etc.
• Products based on traditional knowledge
• Products made of natural fibres such as jute,
  sisal and coir
• Wood and wood based products
• Eco-labeled or certified products made with
  environment friendly processes
• Organic products
• Biofuels such as ethanol and biodiesel

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Trade and External Barriers

• Environmental sector is big and expanding
  expenditure is more than US600b. in 2005
  (Vaughan, 2003) mainly in solid waste
  management, water equipment and air pollution
  abatement.
• Trade developed countries in general have trade
  surplus, while developing countries face deficit
  (OECD/APEC lists product).
• Tariff protection - developed countries have
  lower tariffs than developing countries and LDCs
  (Hamwey, 2005 Bora and Teh, 2004).
• There was large gap between bound and applied
  rates (Fliess and Lejarraga, 2005 Bora and Teh,
  2004).

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Average Bound Tariffs
Source Bora and Teh, 2004
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Average applied tariff
Source Bora and Teh, 2004
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Environmentally Preferable Products (EPPs)
UNCTADs List

• Export interests of developing countries,
  particularly Asia.
• Exports about 30 of global EPPs exports (Kim,
  2005).
• Tariff protection for EPPs in developed countries
  is low high in developing countries.
• Tariffs higher for textiles and apparels made of
  natural fibres such as cotton, wool and silk.
• Various forms of NTBs.

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SOURCE Hamwey, 2003
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SOURCE Hamwey, 2003
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SOURCE Hamwey, 2003
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Case Studies

• Wind Turbine
• Natural Fibre Products

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WIND TURBINES AND PUMPS

• Wind turbine are made in many shapes and sizes
  small ones produce a few hundred watts of power
  and the large ones 5 million watts.
• Large turbines dominant exporters Denmark,
  Germany, USA and Spain. Production includes all
  parts manufacturing activities distributed not
  only in OECD countries, but also across several
  developing countries.
• Small turbines produced mainly by developing
  countries.
• Statistics only indicative difficulty to
  distinguish the product from other items
  classified under the same HS code.

Source Steenblik, 2005
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Regional Distribution New Installed Wind Power
Capacity in 2004 ()
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Top 10 Wind Large Capacity Turbine Manufacturers
by Country
Source Lewis and Wiser (2005), Table 4, p.26
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Major Large Capacity Turbine Producers in
Developing Countries

• Suzlon Energy India
• The 7th largest wind turbine manufacturer in the
  world in 2004
• Had 4.5 percent of global market share in 2004
• Goldwind China
• No export yet
• Producing for domestic market

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Wind Turbine Sales in China by Manufacturer, 2003
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• Wind turbines tariff is high in developing
  countries 15 or more. OECD countries very low
  tariff.

LEADING EXPORTERS AND HIGEST TARIFF APPLIED TO
WIND POWERED ELECTRIC GENERATING SETS
SOURCE Taken from Steenblik (2005), Annex Table 4
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Non-Tariff Barriers

• Local Content Policy
• Certification
• Export Credit Assistance
• Preferential Import Duty for Parts and Duty
  Exemption
• Technology Transfer and RD capacity

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NATURAL FIBRES

• JUTE AND JUTE PRODUCTS
• Raw jute fibre do not face much barriers.
  Exports to developed country under GSP, no tariff
  escalation (except Australia)
• Japan woven fabrics no GSP
• Developing countries importers - tariff
  escalation.
• China raw (8), woven fabrics and jute sacks
  (13), jute carpets (22.3)
• Iran raw and yarn (5-25), woven fabrics (60),
  carpets (250), jute sacks (500)

SOURCE Consultation on Natural Fibre (2005),
obtained from www.fao.org
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Applied Tariff on Imports of Jute and Jute
Products ()
SOURCE Consultation on Natural Fibre (2005),
obtained from www.fao.org
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NATURAL FIBRES

• SISAL AND SISAL PRODUCTS
• Principal market USA and EU.
• Developed countries - zero duty / GSP
• China tariff escalation domestic processing
  industry protection.

SOURCE Consultation on Natural Fibre (2005),
obtained from www.fao.org
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Applied Tariff on Imports of Sisal and Sisal
Products ()
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NATURAL FIBRES

• 3. COIR AND COIR PRODUCTS
• Major exporters India and Sri Lanka
• Principal market EU.
• Developed countries - zero duty / GSP
• China tariff escalation domestic processing
  industry protection.

SOURCE Consultation on Natural Fibre (2005),
obtained from www.fao.org
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Applied Tariff on Imports of Coir and Coir
Products ()
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NATURAL FIBRES

• 4. ABACA AND ABACA PRODUCTS
• Major exporters Philippines and Ecuador
• Principal market USA, EU and Japan.
• Developed countries - zero duty / GSP
• China tariff escalation domestic processing
  industry protection.

SOURCE Consultation on Natural Fibre (2005),
obtained from www.fao.org
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Applied Tariff on Imports of Abaca and Abaca
Products ()
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Concluding Remarks

• Need to identify existing and potential export
  interests of EGs
• Promote production of EGs
• Periodical review of EGs list development of
  new products, technology and awareness
• Identify export barriers of each product
  existing and potential
• Market access supply side and demand side
• Serious effort need to be taken to improve
  consumers and producers awareness on EGs.