DOHA ENVIRONMENT NEGOTIATIONS MOVE SLOWLY, HINGING ON PROGRESS ELSEWHERE

With their eyes on the ongoing push for a breakthrough in the Doha Round talks, WTO delegates met to discuss the trade and environment negotiations from 11-12 June.

Progress has been slow in talks on expedited trade liberalisation for environmental goods and services, as well as the relationship between multilateral environmental agreements (MEAs) and the WTO. However, this is expected to change if Members manage to break the current deadlock on trade in agricultural and industrial goods, setting the stage for a conclusion of the round by early next year.

Environmental goods unresolved

Broadly speaking, developed countries would like Members to agree to a 'list' of specific environmental goods to be subjected to accelerated tariff liberalisation. Many developing countries are sceptical of this approach, fearing that such a list would mainly feature goods of export interest to developed countries. One alternative 'project' approach, suggested by India, would temporarily liberalise trade in environmental goods and services used for approved environmental projects. Supporters claim that this would help ensure that the imported products are used for environmental purposes.

During the recent meeting, India and Argentina made a joint submission [JOB (07/77)] outlining a multi-step approach to environmental goods and services liberalisation that incorporated aspects of both the 'list' and 'project' approaches.

Under this proposal, Members would first identify and agree on a list of environmental activities. These could include air pollution control, water and wastewater management, soil and soil conservation, solid waste management, environmental monitoring and analysis, energy saving management, and renewable energy. All of these sectors have featured prominently in the talks thus far.

Next, governments would develop a list of public and private entities that carry out the agreed activities in their territories, and, following negotiations, formally notify the list to the WTO. Those companies would then become eligible for preferential tariff treatment on all goods and services used for the environmental activity in question, following the introduction of audit systems to ensure that they are not being put to other purposes. Periodic negotiations would serve to update countries' lists of companies eligible for the lower duties.

In terms of special and differential treatment, India and Argentina proposed that developed countries could offer duty-free access for such goods, while developing countries could offer a less substantial margin of preference. Least-developed countries would be free to decide individually on concessions or preferences.

Argentina had originally proposed a compromise that would have temporarily lowered tariffs on environmental goods listed as necessary for environmental projects.

The new paper called for the WTO Secretariat to boost monitoring and reporting on Members' technology transfer activities, arguing that in order to achieve a truly environmentally friendly outcome, developing countries must gain unrestricted access to alternate and clean environmental technologies.

With regard to another obstacle to commerce, the proposal suggested that domestic regulatory requirements could serve as non-tariff barriers (NTBs) even to environmental technologies, and recommended that Members consider relaxing them to the extent necessary for the agreed environmental activities to be carried out effectively.

Argentina and India noted that, unlike a simple list of environmental goods, their approach covered both goods and services, ensured that they were used for environmental purposes alone, and addressed key areas of concern to developing countries such as transfer of technology and non-tariff barriers.

Proposal meets mixed response

One trade source told Bridges that the joint paper was an attempt by India and Argentina to address reservations that other Members had expressed about the transparency, predictability, and operational aspects of the project approach.

Nevertheless, the proposal met with a mixed response. Egypt and Ecuador, for instance, welcomed it, while 'list' proponents - notably the 'friends of environmental goods' -- were generally critical. Many developing countries that are otherwise supportive of the 'project approach' also raised questions of a more technical nature.

Supporters of the 'list' method asked about the criteria that would be used to identify the entities that receive favourable tariff treatment. Would they be domestic companies alone, or would multinationals be eligible too? Would it be consistent with the 'national treatment' principle if some entities could import goods duty free while others could not? What legal issues might arise? One issue raised by China and others was the number of entities that would be involved. Would the number and types of entities eligible for liberalised imports of environmental goods and services be negotiated at the multilateral level, or would it be for the national authorities to take a decision and then notify the WTO? The 'friends' said that the proposal would involve too much 'bureaucracy'.

One trade source noted that there could potentially be thousands of entities within a single country. China said that its expanding economy was creating many such entities every year. Would an ever-changing list be enforceable in the context of the WTO rules-based system? The capacity of developing countries to implement the approach was also questioned.

Brazil, the world's largest exporter of ethanol, once again demanded that biofuels be included in any classification of environmental goods. However, sources reported that discussion of the issue did not 'take off' during the meeting, although they expected Brazil to raise the issue again.

If there is indeed a breakthrough in the overall negotiations before the WTO's August holiday - with framework deals on tariff and subsidy cuts for agriculture and non-agricultural market access - Members will have only a few months in which to finalise agreements on several other issues in the talks, including the environment mandate. In this scenario, sources suggest that some developing countries might be willing to consider a substantially shortened list, even if otherwise sceptical of the approach.

Discussions on information exchange between MEA secretariats and WTO committees, along with the criteria for granting MEAs observer status, focused on a draft text circulated by the chair. The text proposed measures such as more frequent information exchange sessions with MEAs, possibly using the internet. The text also suggested possible criteria to judge an MEA's relevance for observership status.

One trade delegate noted that there was general agreement on the issue of information exchange, and that most Members appreciated the document produced by the chair. The observership issue, in contrast, remained contentious, with most Members disagreeing with the EU's suggestion to automatically grant the status to MEAs that met certain criteria.

One developing country delegate told Bridges that the mandate on observership simply called on Members to develop criteria that each WTO committee could use when considering applications from MEAs for such status. Any automatic grant of Membership, even ad hoc, was beyond the scope of Paragraph 31 (ii) of the Doha Declaration, which sets out the mandate on the issue.

The chair has reportedly called for further informal consultations on observership in order to iron out differences standing in the way of an agreement on the issue, widely perceived to be a 'likely deliverable' within the trade and environment mandate.

The next Committee on Trade and Environment Special Session is reportedly due for 17-18 July.

ICTSD reporting.