Since the Harmonized System is updated on a more or less regular basis - sets of amendments came into force on 1 January 1992, 1996, 2002 and 2007, respectively - users may refer to different editions. Any reference in this paper to HS headings, subheadings and Section, Chapter or Subheading Notes, is based on the fourth edition (2007) of the Harmonized System.

In order to properly understand the possible contribution that the environmental goods and services (EGS) negotiations in the WTO could make to sustainable transport strategies, this paper addresses a number of questions: What trade issues are involved in the deployment of climate-related transport technologies? What EGs can be identified in the transport sector? Do tariffs and NTBs affect international trade in these products? Will trade liberalisation alone support the deployment of climate-friendly technologies and products to developing countries? What are the key issues to be considered by governments in assessing the pros and cons of liberalising trade in specific EGs? Also discussed in this paper are issues related to tariff classifications. The analysis in this paper focuses on specific trade-related issues involved in the deployment of climate-related technologies in the transport sector rather than on the much broader theme of sustainable transport strategies.

This paper highlights three sets of issues: biofuels, the deployment of alternative fuel vehicles, and the role of subsidies and other incentives and their potential trade implications.

This paper highlights the challenges involved in accurately identifying and classifying for tradestatistics purposes many of the energy-efficient goods used in the buildings sector. It also underscores the importance of policy interventions, regulations and incentives as a major driver of technology deployment, and in some cases, as a major determinant of international trade flows in these goods. Consequently, enhanced trade and market creation for these goods require, in addition to low tariffs at the border, the existence of these regulations and incentives. Incentives are particularly important as the high cost for a number of renewable energy and energy-efficiency technologies associated with the buildings sector constrain market diffusion. The paper shows the main exporting and importing countries for equipment associated with key categories of building technologies as well as the prevailing tariff-levels for these. The paper concludes that in order to promote a significant uptake of renewable energy and energy-efficiency technologies in residential and commercial buildings, trade-liberalisation will need to be complemented by an integrated national policy for energy-efficiency and renewable energy generation in the buildings sector supported by international cooperation in technological knowledge-sharing, financing and capacity-building. Policy coordination and collaboration, for instance in the case of standards, can also enable international trade to contribute meaningfully to global market transformation.

The current phase of negotiations under the UN Framework Convention on Climate Change (UNFCCC) is set to lay the groundwork for the necessary policy reforms, and will require concerted and cooperative efforts by individual countries, the business sector and civil society. Innovation – with regard to both the technologies of the future and the regulatory frameworks used to usher them in at the scale needed – will be key to the successful implementation of the Convention. In this context, both the global trade regime through the World Trade Organization (WTO) and regional trading arrangements may need to be moulded and reformed to support action on climate change.

Addressing climate change and energy security requires massive and rapid deployment of more efficient, cleaner technologies that promote clean growth and economic gain. Carefully crafted trade policies could contribute to a rapid diffusion and transfer of clean technologies around the world and provide new incentives for innovation and investment in climate-friendly technologies.

In this regard, ICTSD’S Global Platform on Climate Change, Trade, and Sustainable Energy (the Global Platform) launched a mapping exercise of commercially available technologies and goods as well as those undergoing R&D (with a strong prospect of commercialization in a five- to 10-year time horizon) in three sectors: renewable energy supply, buildings, and transport. Once peer reviewed by Intergovernmental Panel on Climate Change lead experts, these mapping studies set the stage for customs classification and a subsequent detailed analysis of their market drivers, trade flows, and trade barriers. The mapping study for the renewable energy supply, residential and commercial buildings and transportation sectors were prepared by experts from the Energy Research Centre of the Netherlands (“ECN”), the Energy and Resources Institute (TERI), India and the Energy Research Institute (ERI), China respectively. These sectors have been identified by the Intergovernmental Panel on Climate Change (“IPCC”) as one of the critical sectors for mitigation of greenhouse gas (GHG) emissions.

This paper synthesizes findings from these three mapping studies commissioned by the International Centre for Trade and Sustainable Development (“ICTSD”) and also includes an overview of key policies and measures important for the uptake of some of the technologies identified in these mapping studies. It also includes some findings on international trade in many of the products associated with these technologies and the trading opportunities, particularly for developing countries.

The views expressed in this paper are those of the author and do not necessarily reflect the views of ICTSD or the funding institutions. The full version of the mapping studies as well as detailed analyses on international trade are available or will be made available shortly on www. ictsd.org.

Rene Vossenaar is from the Netherlands and presently lives in Brasilia, Brazil. He worked for the Economic Commission for Latin America and the Caribbean (ECLAC) and was also the Head of the Trade, Environment and Development Branch at the United Nations Conference on Trade and Development (UNCTAD). Since his retirement in March 2005, he has carried out work for UNCTAD and other institutions as an independent consultant as well as a resource person.

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While Paragraph 31 (iii) of the Doha mandate calls for a reduction, or as appropriate, elimination of tariffs and non-tariff barriers (NTBs) on EGS, the lack of a universally-accepted definition on EGS has meant that trade delegates have struggled over the scope of goods and services that could be taken up for liberalization. Furthermore, while the aim of the EGS mandate is to liberalize, it provides no indication of the pace, depth or sequencing of liberalization vis-à-vis ‘other’ goods and services. A major fault line in the negotiations on environmental goods is the dispute over whether only goods intended solely for environmental protection purposes should be included, or if other goods that may have both environmental and non-environmental uses should also be incorporated. A number of developing countries are concerned about the inclusion of goods which they perceive to be only vaguely linked to environmental protection. They are also concerned about the import-led impacts of including a broad range of industrial goods on their domestic industries, employment and tariff revenues. In a broader context, a lack of movement on issues of interest to developing countries, particularly agriculture, also inhibits proactive developing country engagement in EGS negotiations.

Particular attention has been focused on the challenges of climate change and the widespread diffusion of climate-friendly technologies which are viewed as critically important in addressing these challenges. To the extent that the WTO negotiations on EGS can help identify and liberalize specific climate-friendly goods and services, they can enhance their wider diffusion. In the WTO context a number of challenges exist, as they do with many other environmental goods in identifying specific climate-friendly goods. This is partly related to the way climate-friendly goods are classified for the purposes of international trade negotiations and also to the fact that the same goods may have other uses in addition to climate-mitigation. Political economy considerations surrounding international trade negotiations indicate that it is will not be easy to liberalize any good or service even if it is important to climate change, and if doing so will also impact a broad range of industries in producing countries. Furthermore, trade-liberalization done in isolation may not necessarily generate greater trade flows in climate-friendly goods and services if the right policies and incentives that drive markets in these goods and services are missing. Hence, it would also be useful to identify the key market drivers of these goods and services that are related to domestic regulatory policies and measures.

In order to enable a better understanding of the patterns of trade flows and market drivers for technologies and associated goods, it is important as a first step to map key technologies and the associated goods that are important for climate mitigation. This needs to be done in a number of sectors. Thus, this paper by Dr. Veena Jha builds on a mapping exercise of technologies and associated goods in the renewable energy sector carried out by experts from the Energy Research Centre of the Netherlands (ECN) and their subsequent classification under the Harmonised System (HS) customs codes at the 6-digit level undertaken by Mr Izaak Wind, an expert and former Deputy-Director at the World Customs Organisation (WCO). Similar mapping studies and customs classification exercises have already been carried out for climate-friendly technologies and associated goods in the building and transport sectors in order to feed into subsequent trade analyses for these sectors.

This paper points out the challenges in identifying goods used solely for renewable energy generation purposes for computing trade statistics. It also highlights goods for which identification is relatively easier and those sectors which appear to be more trade-intensive than others.  In addition, it shows the key exporting and importing countries of renewable energy equipment in a range of sectors including solar, wind, hydro-electricity, geothermal, ocean and biomass. Finally, the paper assesses to what extent tariffs drive trade flows in these technologies, compared to a number of other policy drivers including regulations and incentives. Overall, the paper addresses the issue of the need for a level playing field, particularly for developing country producers. The playing field can be leveled through subsidies provided to renewable energy in the developed world being made available to developing countries while addressing the trade-distorting ones through WTO rules and disciplines. While subsidies need to be phased out over the long term it is important to recognize the importance of some of these subsidies at least in the short to medium term for market creation. All of these issues are important in the context of both the role of the WTO in generating conditions for free and fair trade in climate-friendly goods as well as for the United Nations Framework Convention on Climate Change (UNFCCC) negotiations in creating an enabling environment for markets and domestic demand for these goods, particularly in developing countries.

Dr. Veena Jha is a Visiting Professorial Fellow at the Institute of Advanced studies, University of Warwick, UK, and a research fellow at the International Development Research Centre, Canada. In addition, she is the Executive Director of Maguru Consultants Limited, London, UK. She has worked with the United Nations in various capacities for over twenty years. She was the Coordinator of an important UNCTAD/ DFID/Government of India initiative on ‘Strategies and Preparedness for trade and Globalisation in India’. She has published twelve books on trade and development issues, articles in journals, and was a member of some consensus-building initiatives on trade and environment issues in the last decade. She has been a member of several national and international Advisory Boards, notably the United Nations Secretary General’s Task Force on Millennium Development goals. She has served as an expert on technical committees of the Government of India, industry associations, and non-governmental organisations on trade and development issues.

The paper is part of a series of issue papers commissioned in the context of ICTSD’s Environmental Goods and Services Project, which address a range of cross-cutting, country specific and regional issues of relevance to the current EGS negotiations. 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. We hope you will find this paper to be stimulating and informative reading and useful for your work.

ICTSD has invited Dr. Andrew D. Mitchell (Associate Professor at  Melbourne Law School and Visiting Associate Professor of Law at the Georgetown University Law Centre, Washington D.C.) to present research findings by himself and Ms. Jesscia Rae (Researcher, Melbourne Law School) on the status of commitments in environmental services made by a number of WTO Members at the end of the Uruguay Round as well during the Doha Round (at the time of writing).

Dr. Mitchell will then compare these bound commitments (both market access and national treatment) and improved WTO offers (at the time of writing) with the extent of bound liberalisation that these Members may have undertaken in environmental services under various bilateral or regional trade agreements (RTAs). Dr. Mitchell will also analyse to what extent these commitments, offers and exceptions reflect the regulatory principles on environmental services laid out in an earlier ICTSD paper by Mr. Massimo Geloso Grosso (accessible at http://ictsd.net/i/publications/11432/).

The objective of Dr. Mitchell’s and Ms. Rae’s research is to enable an assessment by WTO trade policy makers and negotiators of the extent of bound and proposed liberalisation of their trading partners both in the context of GATS negotiations as well as in Regional Trade Agreements (RTAs).This will assist them in conducting a reality check on the extent of market access and degree of national treatment they enjoy in the markets of their trading partners as well as the extent of liberalisation (including policy space they retain) in their own markets.

We intend that this informal roundtable provide a valuable opportunity for key trade delegates to engage in an open discussion with Dr. Mitchell on important priority issues and areas of concern in WTO environmental services negotiations and, based on these research findings, their implications for future trade negotiations-both regional as well as multilateral.

Ms. Fahmida Khatun, researcher with the Centre for Policy Dialogue in Bangladesh, will present the key findings of a paper commissioned by the UNDP on ‘Trade Negotiations on Environmental Goods and Services in the LDCs Context’. This paper is the first attempt to review the challenges and possible options for the negotiations on EGS at the WTO, from the specific perspective of the LDCs.

The meeting is open to the LDCs delegations only to allow for a brainstorming among the LDCs on the findings of the report as well as more broadly, the status of the WTO EGS negotiations. Resource persons from a number of international organizations and experts working in this field have been invited to share their expertise with the group.

Please find a copy of Dr. Fahmida Khatun’s presentation by following the link below:

Dr. Khatun Power Point Presentation