Trade & Environment Negotiations

1. Trade & Environment Negotiations Sanjay Kumar 16th December 2005

2. Objectives of Negotiations • Economic benefit – promote dynamic efficiency in production and greater access to consumption of goods at lower prices • Development benefit – addressing basic human needs in terms of Millennium Development Goals • Environmental benefit – promote sustainable modes of production and consumption.

3. Para 31(iii) Mandate • To negotiate on reduction or, as appropriate, elimination of tariffs and non-tariff barriers to environmental goods and services • With a view to enhancing the mutual supportiveness of trade and environment. • Mandate is essentially environmental-benefit oriented, and market access is a means to that objective; not the objective itself.

4. EG Negotiations Approaches • List Approach – earlier discussion on the definitional aspects and now, on preparing the list. • Definitions: Some definitions given; no agreement on a common definition. • Bottoms-up approach preferred - carving out WTO list out of OECD / APEC lists. • 9 submissions so far - all from developed countries • Project Approach – by India

5. Problems with the “list approach” • Dual and multiple use – 480 goods; e.g. electricity meters, heat exchangers, microwave ovens, etc. • No synergy between goods and services – many environmental activities entail delivery of services. • Too diffused to meet environmental objectives • Appears basically to address only market access objectives. Most of the developing countries are net importers. • Export from South to South only; imports are from North. This will affect SMEs, which are 60% of the industrial base. • Always need to negotiate – changes the balance of rights & obligations • Lack of technology transfer mechanism.

6. Problems of developing countries • Though developed countries have average tariff of less than 5%, and developing countries around 25%, exports from developed countries are around 80% of the environmental goods. • Any indiscriminate tariff reduction would increase the trade deficit of developing countries.

7. Export / Import Ratio for OECD and APEC list Source: UNCTAD Study

8. Top EG Exporting Developing Countries

9. EG Trade Patterns of DCs • Trade significance based on OECD/ APEC lists of EG is low. • Export dynamics to developed countries is high. • If EPPs are included, it brings some marginal improvement in EG trade pattern.

10. Environmental Project Approach • Objective of the approach • To bring trade liberalization to meet environmental and developmental goals • To bring synergy between environmental goods and services. • To address diversity in environmental standards. • To bring common but differentiated responsibilities. • To give policy space to national governments. • Capacity building, technology transfer.

11. Environmental Project • Any activity with a view to achieving environmental objectives • Tariff concessions for goods used in the project for the project period • Both public or private projects to be included • Many countries already have something like this – e.g. India, Indonesia, China & Thailand.

12. Environmental Objectives • Examples: • Water management – drinking water or surface water • Waste management – solid or soil • Energy saving management • Renewable resources – energy or water • Industrial applications – energy saving management or devices, process optimization • Land, air and water pollution clean up • noise abatement • Can include any other environmental objective.

13. Advantages of ‘Project Approach’ • Integrates goods and services. • Focused & direct – goals of environmental objectives • Accommodates changing needs of global environmental requirements • Positive measures • Technology transfer – with the services. • Does not affect market access schedules of the goods – does not lead to “zero-for-zero” sectoral NAMA negotiations • Enhances mutual supportiveness of trade & environment . • National flexibility and policy space available. • Approach – need-based and objective oriented.

14. Thank You