The Negotiations on Environmental Services in the CTS - SS

1. The Negotiations on Environmental Services in the CTS - SS Workshop on Environmental Goods and Services for Developing Country Members WTO - 18 February 2010

2. Negotiations on environmental services • Two main aspects in the Special Session of the Council for Trade in Services: • Definition and classification of environmental services • Market access negotiations • Undertaking new “specific commitments” on environmental services envserv/feb10

3. Definition and classificationof services under the GATS • There are two reference instruments: • Services Sectoral Classification List (W/120) • UN Central Product Classification List (CPC) • Members use the 1991 version (co-called CPC prov.) • There is no compulsory classification system • Members can use the classification system of their choice. • In practice, most Members use a combination of the W/120 and the CPC prov. • Important: classification instruments do not determine the scope of the GATS! envserv/feb10

4. Environmental services in W/120 6. ENVIRONMENTAL SERVICES CPC prov. A. Sewage services 9401 B. Refuse disposal services 9402 C. Sanitation and similar services 9403 D. Other - - envserv/feb10

5. Remaining CPC items • Cleaning services of exhaust gases • CPC 9404 • Noise abatement services • CPC 9405 • Nature and landscape protection services • CPC 9406 • Other environmental services n.e.c. • CPC 9409 envserv/feb10

6. Other environment-related services • Moreover, other activities, found in various sections of the W/120, are relevant for the provision of environmental services and for the protection of the environment more generally, for instance: • research and development services on natural science (CPC 851); engineering design services for the construction of sewage, industrial and solid waste treatment plants (CPC 86724); integrated engineering and project management services for water supply and sanitation works turnkey projects (CPC86732); testing and analysis services of chemical and biological properties of materials such as air, water, waste, soils (CPC 86761); construction services of water and sewer mains (CPC 5135). envserv/feb10

7. Focus of negotiations during Uruguay Round Predominant role for public sector Public good characteristics Ex: cleaning of streets Prone to natural monopolies Special distribution or collection networks High capital investments But Trends towards delegation of certain tasks to private operators Private sector also represents an important market. “Infrastructure” ES envserv/feb10

8. “Non-Infrastructure” ES • Increasing importance to confront environmental challenges • Climate change • Rapid technological changes, more sophisticated technologies • Niches for SMEs • More prone to “B2B” relations • But public authorities also buy these services. envserv/feb10

9. Classification of ES: is it outdated? • Debate among Members and several proposals • EC proposal: • Identifies 7 “core” subsectors classified according to environmental media (air, water, solid and hazardous waste, noise, soil, biodiversity, etc.) • Breakdown is different than in W/120, but references to CPC prov. remain • Main novelty: proposal to include a reference to water distribution service. envserv/feb10

10. EC Classification proposal envserv/feb10

11. Classification debate: where are we? • No consensus so far to modify the classification of environmental services in the W/120. • Multilateral discussions are de facto suspended. • But, new classifications are used in the market access negotiations by those Members interested in doing so. envserv/feb10

12. GATS and national schedules A Member’s obligations are defined by and GATS provisions its schedule of specific commitments envserv/feb10

13. Environmental services and modes of supply envserv/feb10

14. How GATS schedules are structured envserv/feb10

15. Distribution of specific commitments across sectors (Number of WTO Members) envserv/feb10

16. Specific commitments on environmental services NB: based on EC-12 Schedule envserv/feb10

17. Services market access negotiations • 2001 Negotiating Guidelines: • No a priori exclusion of any sector or mode of supply • Starting point for the negotiations: current schedules • Main negotiating method: request and offer approach • Appropriate flexibility for individual developing country Members for opening fewer sectors, liberalizing fewer types of transactions • Annex C of Hong Kong Ministerial Declaration: • LDCs not expected to undertake new commitments • Negotiating objectives (Modes/MFN exemptions/scheduling principles) • Plurilateral request-offer negotiations envserv/feb10

18. The collective request on environmental services (1) • Recalls that environmental goods and services were singled out in paragraph 31 (iii) of the Doha Declaration and notes that liberalized environmental services market benefits both exporters and importers of these services as well as environment and development • Refers to the right to regulate: • “It is understood that liberalization in these sectors will not impair the ability of governments to impose performance and quality controls on environmental services and to otherwise ensure that service suppliers are fully qualified and carry out their tasks in an environmentally sound manner. In addition, as under current obligations, each WTO Member can establish, maintain, and enforce its own levels of protection, inter alia, for consumers, health, safety, and the environment.” envserv/feb10

19. The collective request on environmental services (2) • Sub-sectors included: CPC 9401 to 9409 • Water distribution is not included • Members can use the classification system of their choice • W/120, EC proposal, etc. • Stresses importance of undertaking commitments in “related” sectors • Ex: construction, engineering envserv/feb10

20. The collective request (3) – Scope of commitments sought • Modes 1 & 2 : request seeks full commitments. • Mode 3: calls for “ambitious” commitments. Removal of barriers to commercial presence (e.g. foreign equity limitations, joint operation requirements, restrictions or requirements on types of legal entity for foreigners, such as joint venture). When exclusive rights exist, foreign suppliers should be able to participate in the supply of the service. • Mode 4: Members are “encouraged” to schedule mode 4 commitments. envserv/feb10

21. Offers on environmental services • 16 offers by developed and developing countries, involving all sub-sectors • Several restrictions concern public networks. • Some Members propose to redefine their commitments pursuant to a new classification. envserv/feb10

22. Services Signalling Conference – Report of the Chairman of the TNC (July 2008) • Many indications of improvements were given across the range of environmental services, including: sewage services; sanitation services; refuse and solid waste disposal services; waste water management services; soil remediation and clean-up; environmental laboratory services; and other services related to air pollution control and noise abatement. In addition to expanding sectoral coverage, several participants were willing to expand the modal scope of their commitments, and to reduce or eliminate restrictions such as joint venture requirements and foreign equity limitations. • Several participants expressed aspirations for new commitments on all modes of supply across the range of environmental services. A specific request was made for commitments on advisory services under mode 1. envserv/feb10