An Overview of Key Markets, Tariffs and Non-tariff Measures on Asian Exports of Select Environmental Goods
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Environmental goods and services (EGS) as a subset of goods and services was singled out for attention in the negotiating mandate adopted at the Fourth Ministerial Conference of the World Trade Organization (WTO) in November 2001. Increasing access to and use of EGS can yield a number of benefits including reducing air and water-pollution, improving energy and resource-efficiency, and facilitating solid-waste disposal to name a few of the benefits. Gradual trade liberalisation and carefully managed market opening in these sectors can also be a powerful tool for economic development by generating economic growth and employment and enabling the transfer of valuable skills, technology and know-how embedded in such goods and services. In short, well-managed trade liberalisation in EGS can facilitate the achievement of sustainable development goals laid out in global mandates such as the Johannesburg Plan of Implementation, the UN Millennium Development Goals and various multilateral environmental agreements.
Developing countries are clearly interested in including, as part of ongoing WTO negotiations, products of export interest that could provide environmental benefits, export earnings and livelihoods to local populations. At the same time, many developing countries lack a comparative advantage in the so-called ‘traditional’ environmental goods and services that are reflected in lists developed by the OECD and APEC and are often capital and technology intensive. This has also led experts to point to environmentally preferable products (EPPs) as an export category worth consideration by developing countries. The global market size and export share of developing countries in these products is, however, still relatively small. Hence, there is scope for further export growth for many EPPs from their present levels.
Asian developing countries account for the greatest share of both traditional environmental goods exports and EPPs among developing countries. Thus, identifying key markets and trade barriers are critical for these countries if they wish to leverage opportunities for exporting these products. Barriers to trade in environmental goods comprise tariffs as well as non-tariff measures (NTMs). While tariffs remain significant on certain EPPs such as biofuels, tariffs on ‘traditional’ environmental goods are relatively low, particularly in developed country markets. Tackling tariffs will be easier as they are transparent and quantifiable. However, tackling non-tariff measures which become non-tariff barriers (NTBs) will be a much greater challenge as these may not be easy to identify or pin down and may also evolve and diversify rapidly. It is worth bearing in mind that in many cases, non-tariff measures are used to pursue legitimate policy goals.
Identifying and dealing with NTBs has been a significant challenge in multilateral trade policy making even before the Uruguay Round and continues to be so during the Doha Round. The knowledge-gap that exists on NTBs in the sector of environmental goods has persisted due to a notable lack of focussed and meaningful research.
This paper is a pioneering initiative towards redressing that gap by identifying the tariffs and particularly, non-tariff measures prevalent in key markets and select environmental goods of export interest to Asian countries. It examines the status and trend of select ‘environmental goods’, such as pollution abatement and treatment equipment, wind turbines, biofuels and wood and wood-based products produced by Asian countries and analyses the tariff and non-tariff barriers faced by Asian exporters in key markets. The paper finds that NTBs such as certification and local-content requirements, subsidies and tied-aid along with technical, sanitary and phytosanitary and environmental measures are the main obstacles to Asian environmental goods exports to developed countries; market access in developing countries is mainly restricted by high and escalating tariff rates with local content requirements being the main NTB.
It is hoped that a preliminary identification and focus on trade barriers in specific sectors of environmental goods will permit a greater depth of analysis and provide useful lessons for similar work in other sectors as well.
Dr. Rokiah Alavi is an Associate Professor at the Department of Economics, International Islamic University Malaysia, and her research interests are in the area of international trade and development economics.
The paper is part of a series of issue papers commissioned in the context of ICTSD’s Environmental Goods and Services Project, to 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.