Options for Liberalising Trade in Environmental Goods in the Doha Round
by Robert Howse and Petrus b. van Bork
Trade and Environment Series • Issue Paper 2
Environmental goods and services (EGS) as a subset of goods and services were singled out for attention in the negotiating mandate adopted at the Fourth Ministerial Conference of the World Trade Organization (WTO) in November 2001. Increasing access to and use of EGS can contribute to reducing air and water-pollution, improving energy and resource-efficiency, and facilitating solid-waste disposal to name a few of the benefits. Trade in these sectors can also be a powerful tool for economic development by generating economic growth and employment and enabling the transfer of valuable skills, technology and know-how embedded in such goods and services. In short, trade in EGS can facilitate the achievement of sustainable development goals laid out in global mandates such as the Johannesburg Plan of Implementation, the UN Millennium Development Goals and various multilateral environmental agreements.
On the other hand, the negative impacts of liberalisation on vulnerable industries in developing countries, in particular fledgling small and medium-sized enterprises, and sections of populations without the purchasing power to access privately-delivered EGS, such as sanitation, has often been cited. Environmental goods such as pollution prevention and end-of-pipe equipment and technologies are essentially produced and exported by developed countries. As a result, many developing country policy makers argue that these negotiations would primarily benefit the economies of developed countries which are looking for new markets and might generate important tariff revenue losses for some developing countries. Furthermore, in order to generate durable benefits they argue that there is a need to ensure that the trade in EGS goes hand in hand with the transfer of technologies, but negotiations to date have failed to take into account the relationship between the environmental goods mandate and incentives for technology transfer. This has led to calls among some stakeholders that liberalisation should be gradual or carefully qualified and in certain cases that countries should be able to stop or roll back liberalisation that may have these negative impacts.
This uncertainty regarding the sustainable development impacts of EGS liberalisation is partly responsible for the fact that developing countries have been slow in articulating their positions in the WTO Committee on Trade and Environment (CTE). To add to the confusion, the definition of goods and services deemed ‘environmental’ remains a highly controversial issue, which still awaits resolution at the WTO. What makes a good environmentally friendly? Is it the way it was made, the characteristics of the final product or what the product can do or all of these? How to deal with cases of dual use, namely products that can be used both for environmental and non-environmental purposes? Members have been trying a variety of approaches such as proposing specific lists of goods or even seeking to identify goods and services that are inputs into specific environmental projects. A number of goods proposed are based on lists developed by the Organization of Economic Co-operation and Development (OECD) and the Asia Pacific Economic Co-operation Mechanism (APEC) which heavily focused on capital, technology and knowledge-intensive goods exported primarily by developed countries. Others go beyond this categorisation to include environmentally preferable goods that many developing countries have a comparative advantage in producing.
As a contribution to the debate this paper examines and builds on the different approaches that have emerged in the negotiations as well as existing and expected trends in international trade in environmental goods. The authors propose ways to overcome disagreements in the negotiations and agree on liberalisation of environmental goods that can provide win-win outcomes for the environment and development for all WTO Members. Robert Howse is Professor of Law at the University of Michigan and has published extensively on key legal issues in international trade law, public health and the environment. Petrus van Bork is a consultant specialising in information technology, standards and innovation policy matters. The study is part of a series of issue papers that address a range of cross-cutting, country specific and regional issues of relevance to the current EGS negotiations, commissioned in the context of ICTSD’s Environmental Goods and Services Project. The project aims to enhance developing countries’ capacity to understand trade and sustainable development issue linkages with respect to EGS and reflect regional perspectives and priorities in regional and multilateral trade negotiations.
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