Bridges Trade BioRes • Volume 5 • Number 19 • 28th October 2005

CTE LOOKS AT APPROACHES TO ENVIRONMENTAL GOODS LIBERALISATION

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CTE LOOKS AT APPROACHES TO ENVIRONMENTAL GOODS LIBERALISATION

WTO Members remain divided on how to define ‘environmental goods’ earmarked for liberalisation under Paragraph 31 (iii) of the Doha Declaration. Discussions in the CTE Special (negotiating) Session (CTE-SS) on 14 October once again looked at two proposed approaches for defining such goods, namely the multilateral identification of a list of environmental goods and India’s project approach, which would temporarily liberalise trade in environmental goods for use in environmental projects (see BRIDGES Trade BioRes, 24 June 2005). Some delegates suggested that Members were unlikely to reach consensus on which approach to use in time for the Hong Kong Ministerial Conference in December.

Renewable energy receives wide support; strong opposition to PPMs

Delegates noted that a workshop on 12 October on environmental goods, held as part of the WTO Symposium on Trade and Sustainable Development, had helped them identify the kinds of products that could be designated under the negotiations. They reported that the single thing that stood out in the workshop was the strong consensus among all Members, including least-developed countries (LDCs), about the benefits of renewable energy technologies in terms of both their environmental impact and their economic potential. Almost as stark was most Members’ rejection, with the exception of the EU, to the incorporation of characteristics on production and processing methods (PPMs) into the definition of environmental goods. The EU agreed to suspend discussion of the issue for the time being, but indicated its intention to bring it up again in the future. With regards to environmentally preferable products (EPPs), Members generally agreed that the definition needed to be tightened.

Argentine bridging proposal criticised

At the CTE-SS on 14 October, Argentina presented a new proposal (TN/TE/W/62, available at http://docsonline.wto.org/) that sought to bridge the gaps between India’s ‘environmental project’ (EP) approach and the ‘list’ approach favoured by several developed countries. Argentina’s so-called ‘integral’ approach seeks to incorporate the merits of both approaches. Drawing heavily from the EP approach, the proposal would have national authorities decide on whether to eliminate tariffs for environmental products used in designated environmental projects. However, as in the list approach, Members would multilaterally pre-identify categories of environmental projects and of environmental goods that could be used in the projects. Unlike the Indian paper, the Argentine did not mention environmental services liberalisation. As well, the proposal did not clarify other questions, including whether goods recognised by the CTE would have to be approved by the national authorities. According to the proposal, national authorities would then approve enhanced liberalisation of products used in environmental projects on the basis of these categories.

The US, the EU and Canada argued that the Argentine proposal was simply a variant of India’s EP approach. As a result, subsequent discussions focused on the broader issues surrounding the EP approach rather than going into the specifics of Argentina’s proposal. The US and Hong Kong repeated that they were opposed to the approach, contending that it was overly bureaucratic and difficult to implement. They also argued that it would not increase market access for small- and medium-sized enterprises since the large scale necessary for many environmental projects would mean that only big multinational companies would export the equipment needed for them. While the EU was less negative, it nevertheless defended the list approach over the EP approach in terms of achieving environmental objectives. One Member also pointed out that the project approach constituted a form of virtually voluntary case-by-case tariff cuts that was outside the scope of the Doha Mandate. Brazil pointed out that there are positive aspects and commonalities between the two approaches.

India refines EP approach

India responded to concerns about how to implement its approach in a new proposal that elaborates on procedural and technical aspects (TN/TE/W/60). The submission describes the role of the Designated National Authorities (DNAs) that Member countries would set up in order to appraise environmental project proposals. DNAs would examine project proposals, including the quantity and type of goods required, to determine whether they are appropriate for achieving the project’s stated objectives. The document also suggests that Members devise a fast-track approval process for small- and medium-sized enterprises, and create a database of approved projects.

Members opposed to the EP approach maintained that there was still not enough information about how it would be implemented. India expressed disappointment with their reaction, and suggested that countries that still found the approach unworkable were misunderstanding it. The list approach, India reiterated, would not appropriately address the real environmental mandate of the negotiations. Instead, Cuba, South Africa and Côte d’Ivoire said the EP approach was the more compelling option. They argued that most goods figuring in existing lists are of export interest mainly to developed countries, despite arguments to the contrary from the US and New Zealand (see BRIDGES Trade BioRes, 16 September 2005).

MEA-WTO relationship discussions at a standstill

No progress was made in the negotiations under the Doha Declaration paragraph 31(i) on the relationship between existing WTO rules and specific trade obligations (STOs) set out in multilateral environmental agreements (MEAs). In response to requests from New Zealand and other Members, Switzerland circulated a communication to elaborate further on the principles of no-hierarchy, mutual supportiveness and deference in international law which it had previously proposed as three principles that should underlie the MEA-WTO relationship (TN/TE/W/61, see BRIDGES Trade BioRes, 8 July 2005). Referring to general principles of international law, Switzerland argued that rules in both MEAs and the WTO must be interpreted in ways that maintain their compatibility and integrity. No discussion took place on the submission.

Preliminary list by Hong Kong increasingly out of reach

In light of Members’ differences on which approach to take, many delegates consider consensus on a draft list by December highly unlikely. Debate on the issue of dual or multiple use, i.e. that listed goods might not be used for environmental purposes, continues to hinder progress on the lists that have been proposed. While developed countries would have liked to come up with a preliminary list before then, many developing countries consider it premature to talk about specific lists before the Ministerial Conference, given that most developing countries have yet to clearly define their interests and come up with the positions accordingly.

While no more formal CTE special sessions have been scheduled before the Hong Kong Ministerial Conference, informal meetings will take place during the first week of November.

ICTSD reporting.