WTO: HOW TO EVALUATE IF A GOOD IS ENVIRONMENTALLY-FRIENDLY?

At an informal 10-12 May technical meeting of the WTO Committee on Trade and Environment Special Session (CTE-SS), Members were split on how to evaluate whether certain wastewater and solid and hazardous waste management products could be described as 'environmental' for the purposes of expedited trade liberalisation. While several developing countries maintained that only products with a single environment use should be considered, developed countries countered that this would exclude all but a handful of items from coverage.

In November 2005, the WTO Secretariat put together a compilation (TN/TE/W/63) of all of the 480-odd products that Members have proposed for liberalisation under Paragraph 31(iii) of the Doha Declaration, which mandated Members to negotiate "the reduction or, as appropriate, elimination of tariff and non-tariff barriers to environmental goods and services". Although countries remain divided on the broad approach to take to removing barriers to trade in environmental goods, they agreed in February to undertake a technical examination of the products in the Secretariat's compilation to evaluate whether certain items should be eliminated. In April, they focused on the products included in the categories of renewable energy and air pollution (see Bridges Trade BioRes, 14 April 2006). As per prior agreement, the recent meeting looked at wastewater management and solid and hazardous waste management goods.

Wastewater, solid and hazardous waste management goods examined

Canada, the EU, New Zealand, Japan, Norway, Taiwan, Switzerland and the US, which have been referring to themselves as the 'Friends of environmental goods' since December 2005, circulated an informal non-paper on the two categories (including a list of all such products drawn from the Secretariat's compilation) to Members on 8 May. The document, though it recognised the importance of examining products for possible non-environmental dual or multiple uses, stressed the importance of considering broad environmental and developmental benefits such as those identified in the Millennium Development Goals when determining whether a product should be retained in the list. For example, it pointed to deaths caused by insufficient access to safe water and sanitation to justify liberalising trade in the waste management products identified in the Secretariat compilation.

During the meeting, Brazil, China, India, Ecuador and several other developing countries -- many of which are opposed to the 'list approach' that would identify specific products for liberalisation, and prefer India's environmental project approach (see Bridges Trade BioRes, 23 June 2005) -- said that they would rather go through the list of products with single environmental use as a filter. For example, they argued that covering-sheets for landfills should not be included in the list, on the grounds that they could also be used for another non-environmental purpose, such as for the roofs of makeshift shelters.

The Friends group countered that single end-use was an excessively narrow criterion to use for filtering and evaluating potential environmental goods, and would result in the elimination of too many of them. Instead, they suggested that products should be retained if it can be shown that they are predominantly used for environmental purposes. Developing countries said that in the future, any lists of potential environmental goods submitted by Members should include explicit descriptions of all possible uses of the products.

Environmental implications of liberalisation questioned

Several developing countries raised concerns that liberalising trade in some of the listed products would not have positive environmental effects, and might even have negative ones. In particular, some Members pointed out that it was unclear what precisely was covered by current references to recycled products in the Secretariat's compilation. For instance, would a reference to "recycled paper" involve the used paper that is employed as an input; the machinery for shredding used paper; the shredded material itself; the machines for turning it into recycled paper; and/or the recycled paper thus manufactured? Most Members expressed support for including the technology used to recycle products for liberalisation, rather than the inputs or end products themselves, out of concern that the latter do not have environmental purposes.

A new submission from Egypt suggested that reducing tariffs on trade in certain wastes and scraps in the Secretariat's compilation would work against the objectives of the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal. The Convention obliges its 168 Parties to minimise the transboundary movement of hazardous and other wastes included in its Annexes I and VIII. According to the Egyptian document, the Convention would cover the wastes and scraps included in the environmental goods list because many of them include material listed in Annex I of the Convention and have poisonous, corrosive, infectious and toxic characteristics. As such, Egypt proposed excluding hazardous wastes from the coverage of the CTE-SS, and called for the Basel Convention to retain its jurisdiction over trade in such products. The proposal received broad support at the meeting, particularly from developing countries.

How to identify particular products?

China, India, Brazil, Ecuador and several other developing countries said that they did not support the current way some products in Members' lists have been identified because it is not transparent. At question is the practice in the Friends group's list of naming a product category at the relatively general 6-digit HS level, and then specifying in a separate column that only a sub-category -- called an 'ex-out' -- would actually be eligible for expedited liberalisation. However, these 'ex-outs' are only identified in general terms. For example, 'liquid pumps' would be the category at the 6-digit level, and the ex-out identified would be 'pumps for sewage systems'. The developing countries argue that such unspecific references could lead to a multitude of different interpretations of product coverage. Instead, they would like to have more specific definitions at an 8-, 10- or 12-digit HS level.

However, the World Customs Organization pointed out that 'ex-outs' were already used extensively by customs officials, for example to distinguish between civil and military aircrafts. The Friends group reiterated their support for the ex-out approach.

Steps ahead

The third and last CTE-SS informal technical discussion will be held on 12-14 June. In a recent note to Members, Chair Ambassador Toufiq Ali (Bangladesh) said that the categories to be covered include environmental monitoring, analysis and assessment equipment; remediation and clean up of soil and water; cleaner technology and products; environmentally preferable products based on end use or disposal characteristics; and high environmental performance or low environmental impacts. Sources suggest that the discussions are likely to be highly controversial, given that many developing countries are concerned that products in the 'cleaner technology and products' category could be treated differently on the basis of process and production methods (PPMs).

'Friends' call for environmental goods liberalisation in NAMA talks

In related news, the US, Canada, the EU, New Zealand, Norway, Singapore and Switzerland submitted a proposal to both the CTE-SS and the Negotiating Group on Non-Agricultural Market Access (NAMA) calling for developed countries and developing countries "declaring themselves in a position to do so" to eliminate tariffs on environmental goods by 2008 (TN/MA/W/70 and TN/TE/W/65). Other developing countries would do so by a to-be-determined later date.

The paper acknowledged that the products to be covered by the environmental goods-specific liberalisation initiative still needed to be finalised, but suggested that they would be based on the environmental goods identified in the CTE-SS. It also suggested that developing countries could be allowed to exclude a limited number of products from tariff elimination. Sources report that at informal NAMA meetings on 10 and 16 May, a number of developing countries including Argentina and Cuba described the proposal's consideration of modalities for liberalising trade in environmental goods as premature, since Members have not even agreed on the best way to approach the negotiations, let alone on a final list of goods.

ICTSD reporting.