Bridges Weekly Trade News Digest • Volume 9 • Number 21 • 15th June 2005
India’s ‘Project Approach’ Causes Stir At Environmental Goods Talks
At an informal consultation on environmental goods on 10 June, WTO Members discussed a new submission by India proposing the use of what is now referred to as the "project approach", which would link the accelerated (albeit temporary) liberalisation of environmental goods to their use in environmental projects. Canada and New Zealand also submitted new proposals, which involved proposed lists of environmental goods.
New "project approach"
The Indian proposal (TN/TE/W/51) on a project approach aims to provide an alternative to the "list" and "criteria" approaches. Most of the recent submissions to the Committee on Trade and Environment Special Session (CTE-SS) have focused on the "list approach." It has, however, raised concerns among many developing countries. The "criteria approach" involves developing criteria or a definition of environmental goods.
In its submission, India outlines some of the "problems" associated with the list approach, including, among others, the "dual use" of many items that would likely be contained in the list, the impact of unrestricted concessional duty import of environmental goods on indigenous innovation, competitiveness of local industries, and the missing link between environment goods and services (EGS). Also, the submission notes that simply permitting the flow of goods would not necessarily help achieve environmental objectives.
The project approach aims to address these concerns as well as ensure that both the environmental and development goals of the Doha negotiations and Agenda 21 are met. To this end, environmental goods and services included in environmental projects would qualify for specified concessions for the duration of the project. Such projects would be approved by a Designated National Authority based on certain criteria to be developed by the CTE-SS and could include, for instance, air pollution control, renewable energy facilities, or environmentally preferable products (EPPs). This approach, India believes, provides sufficient policy space for national governments to achieve environmental objectives. It also mitigates concerns over dual use by making the concessions finite (based on the duration of the project), while providing a coherent approach to the liberalisation of both environmental goods and services.
Several Members, in particular developed countries, questioned whether the proposed approach would have as widespread effects as envisaged under the Paragraph 31(iii) mandate on EGS, given that it would be applied on a case-by-case basis. Some noted that the benefits might in fact be limited to multinational corporations since an environmental project implies a certain scale that might be beyond the capacities of smaller enterprises, which would therefore not be able to take full advantage of this option. Many developing countries welcomed the new, alternative approach as a basis for further discussion, but also raised questions about practicalities.
While many developed countries have pushed for a list to be finalised by the next WTO Ministerial meeting in Hong Kong in December, most developing countries have resisted this attempt, fearing that a list approach would not provide any benefits for them (see BRIDGES Weekly, 2 March 2005). If the Indian proposal attracts sufficient support as a viable alternative, efforts in the lead-up to Hong Kong are likely to focus on striking a balance between the list and project approaches.
NZ, Canada proposals
The New Zealand proposal (TN/TE/W/49) aims to apply its previously proposed use of "reference points" — such as the OECD or APEC lists of environmental goods, or relevant bilateral or regional Free Trade Agreements (see BRIDGES Weekly, 2 March 2005, referenced above) — in the identification of possible environmental goods. To this end, the proposal presents a list of goods sorted into categories along with the reference points used for each product. In addition to previously cited categories, New Zealand added EPPs, cleaner and more resource-efficient technologies and products, and waste and scrap utilisation as new categories. The proposal was generally well-received, although many countries asked for more time to consider the list and in particular the implications of the new categories.
The Canadian proposal (TN/TE/W/50) simply presents a list of proposed environmental goods, grouped under previously suggested categories that were mainly drawn from the OECD and APEC lists. Canada would like to see an initial list reflecting the trade and environmental interests of both developed and developing countries developed by the Hong Kong meeting. Members said they would need more time to look at the list in detail.
The next meeting of the CTE-SS will be held from 5-6 July.
ICTSD reporting.