Bridges Weekly Trade News Digest • Volume 9 • Number 35 • 19th October 2005
CTE Remains Divided On How To Define Environmental Goods
WTO Members remain divided on how to define ‘environmental goods’ so as to liberalise trade in them under Paragraph 31 (iii) of the Doha Declaration. Discussions in the Committee on Trade and Environment Special (negotiating) Session (CTE-SS) on 14 October once again looked at the two main approaches for defining such goods: the multilateral identification of a list of environmental goods; and a project-based approach, which would temporarily liberalise trade in environmental goods for use in particular environmental projects of fixed duration (see BRIDGES Weekly, 15 June 2005).
Some delegates suggested that Members were unlikely to reach consensus on the issue in time for the Hong Kong Ministerial Conference in December.
Renewable energy receives wide support; strong opposition to PPMs
Chair Ambassador Toufiq Ali of Bangladesh had previously invited delegates to focus on five broad areas: wastewater management; solid and hazardous waste management; air pollution control; renewable energy products; and environmentally preferable products (EPPs, distinguished by their low environmental impacts). Negotiators found this suggestion very helpful in structuring their discussions.
Delegates report that the single thing that stood out during a 12 October gathering on environmental goods was the strong consensus among all delegations, including least-developed countries (LDCs), about the environmental and economic benefits of renewable energy technologies. Almost as stark was Members’ rejection, with notable exceptions including the EU, of distinctions based on production and processing methods (PPMs) in the definition of environmental goods. With regards to EPPs, Members generally agree that the definition has to be tightened.
Argentine bridging proposal finds little support
At the formal meeting on 14 October, Argentina presented a new proposal (TN/TE/W/62) that sought to bridge the gap between India’s Environmental Project Approach and the list-based methodology favoured by several developed countries. Argentina’s so-called "integral approach" seeks to incorporate the merits of both approaches. The proposal would have national authorities decide on whether to temporarily eliminate tariffs for environmental products used in particular environmental projects. However, as in the list approach, Members would multilaterally pre-identify categories of both environmental projects and environmental goods that could be used in them.
The US, the EU and Canada argued that the Argentine proposal was simply a variant of India’s project proposal. Subsequent discussions thus focused on broader issues related to project-based approaches rather than the specifics of Argentina’s proposal. The US and Hong Kong were particularly forceful in their opposition, contending that it was overly bureaucratic and difficult to implement. They also argued that it would grant no market access to small- and medium-sized enterprises, since the large scale necessary for many environmental projects would mean that only big multinational companies would export the equipment needed for them. While the EU was less negative, it nevertheless defended the merits of a list approach over a project-based one in terms of achieving environmental objectives. It also pointed out that project-based liberalisation would constitute a form of case-by-case tariff cuts that is outside the scope of the Doha Mandate. Brazil attempted to point out positive aspects of both approaches.
India refines project approach
India responded to concerns about how to implement its favoured project approach in a new proposal that elaborates on procedural and technical aspects of it (TN/TE/W/60). The submission describes the role of the Designated National Authorities that Member countries would set up in order to appraise environmental project proposals. These authorities would examine project proposals, including the quantity and type of goods required, to determine whether they are appropriate for achieving the project’s stated objectives. The document also suggests that Members devise a fast-track approval process for small- and medium-sized enterprises, and create a database of approved projects.
Some Members complained that there was still not enough information about how it would be implemented. India expressed disappointment with their reaction, and suggested that countries that still found the approach unworkable were misunderstanding it. The list approach, India reiterated, would not appropriately address the real environmental mandate of the negotiations.
Cuba, South Africa and Côte d’Ivoire said that the project approach was more compelling than the one based on lists, given that most goods that figure in existing lists are of export interest mainly to developed countries.
Preliminary lists by Hong Kong unlikely
Debates on the lists that several countries have drawn up continued to focus on the issue of dual or multiple use, i.e., that listed goods might not be used for environmental purposes.
In light of Members’ differences on which approach to take, several trade diplomats consider consensus by December unlikely. While developed countries hope to come up with a preliminary list before then, many developing countries consider it premature to talk about specific lists before the Ministerial Conference. According to one developing country delegate, developing countries have yet to clearly define their interests and come up with corresponding criteria. They therefore regard talk about expectations for Hong Kong as premature.
During the meeting, New Zealand presented a modified version of its list of environmental products (TN/TE/W/49/Rev.1). Switzerland circulated a communication outlining the relationship between WTO rules and MEAs (TN/TE/W/61) in response to requests from New Zealand and other Members to clarify the meaning of the principles of no-hierarchy, mutual supportiveness and deference in international law. Referring to general principles of international law, Switzerland argued that rules in both MEAs and the WTO must be interpreted in ways that maintain their compatibility with both sets of rules in order ensure the integrity of each.
Although no more formal CTE-SS sessions have been scheduled before Hong Kong, informal meetings are likely to take place during the first week of November.
ICTSD reporting.