1st September 2006
Trade in Environmental Services: Assessing the Implications for Developing Countries in the GATS
Environmental goods and services (EGS) as a subset of goods and services were 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 contribute to reducing air and water-pollution, improving energy and resourceefficiency, and facilitating solid-waste disposal to name a few of the benefits. Trade 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, trade 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.
On the other hand, the negative impacts of liberalisation on vulnerable industries in developing countries, in particular fledgling small and medium-sized enterprises, and sections of populations without the purchasing power to access privately-delivered EGS, such as sanitation, has often been cited.
Environmental services are essentially exported by developed countries. As a result, many developing country policy makers argue that these negotiations would primarily benefit the economies of developed countries which are looking for new growing markets and might impact equitable access to services that in developing countries, primarily lie in the public domain such as water and waste-water treatment and sanitation. A number of developing countries as well as civil society groups have voiced their opposition to include ‘water for human use’ within the scope of environmental services. The uncertainty regarding the sustainable development impacts of EGS liberalisation has led to calls among some stakeholders that liberalisation should be gradual or carefully qualified and in certain cases that countries should be able to stop or roll back liberalisation that may have these negative impacts.
Developing countries are also unclear about where their export interests lie in environmental services although temporary movement of environmental consultants, at least for the more-advanced developing countries, could be an area of opportunity.
As a contribution to the discussion this paper examines the various options available within GATS to those WTO Members that wish to undertake commitments in environmental services. It points to the need for a clear assessment of the sustainable development impacts of liberalisation as well as effective mitigation measures, which may include a regulatory institutional framework which can safeguard the public interest.
Colin Kirkpatrick is Hallsworth Professor of Development Economics at the Institute for Development Policy and Management, University of Manchester and has published extensively, among others, on development economics and policy and environment and sustainable development including impact assessment. He has also had extensive consultancy experience with international and national organisations such as the Department of International Development (DFID), World Bank, Asian Development Bank, OECD, European Commission.
The study is part of a series of issue papers that address a range of cross-cutting, country specific and regional issues of relevance to the current EGS negotiations, commissioned in the context of ICTSD’s Environmental Goods and Services Project. 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.