ENVIRONMENTAL GOODS ENVIRONMENTAL GOODS AND THE WTOAND THE WTO

THE ASIA WTO RESEARCH NETWORK SEMINARTHE ASIA WTO RESEARCH NETWORK SEMINAR

Rokiah AlaviTaipei, 23-24 April 2006

INTRODUCTIONINTRODUCTION

The Doha Ministerial Declaration called for the reduction/elimination of tariff and non-tariff barriers to environmental goods and services (EGS) – para 31 (iii).

Liberalization could increase the availability of green products – support environmental objectives.

Agreed that the negotiations for:1. Environmental goods will take place in the

Negotiating Group on Market Access (NAMA).2. Environmental services will take place in Council

for Trade in Services Special Session (CTSSS).

DEFINITIONDEFINITION

Negotiation modalities – use OECD and APEC lists as a starting point.

No single accepted definition.

EGS - considered to be any equipment, material or technology used to address a particular environmental problem or as a product that is itself “environmentally preferable” to another similar products because of its relatively benign impact on the environment (Hamwey et al., 2003).

OECD/APEC and UNCTAD Lists

Industrial goods used to provide environmental services to address pollution and waste affecting water, soil and air – OECD/APEC Definition

This includes:

1.Generally have multiple end-uses, only one of which is to provide environmental services.

2. Usually do not have inherently environmental characteristics; it is their use to provide environmental services that qualifies them as environmental goods.

Hamwey (2005)

Environmentally Preferable Products (EPPs), including both industrial and consumer goods - UNCTAD Definition

This includes:

1.Have environmentally preferable characteristics relative to substitute goods, i.e., reduced negative environmental impacts in production, end-use or disposal.

2. Are generally used for purposes other than environmental ones in commercial and household applications.

OECD List Includes:OECD List Includes:

Includes goods covering 132 6-digit HS Codes and covers the following:

1. Pollution Management:i. Air pollution controlii. Water pollution controliii. Solid waste management equipmentiv. Remediation/clean up of soil and waterv. Noise/vibration abatementvi. Environmental monitoring/analysis equipment

2. Renewable Energy Plants3. Sustainable Forestry4. Sustainable Agriculture and fisheries5. Eco-Tourism6. Portable Water7. Recycling Systems/materials8. Chemicals used in pollution control systems9. Energy efficient or comparatively environment friendly

consumer products10. Cleaner technologies

(Source: OECD, 1999)

APEC List Includes:APEC List Includes:

1. Covers 104 HS Codes2. Similar to OECD lists – have 54 goods

in common at HS 6-digit level.3. Differences:

i. Excludes minerals and chemicalsii. Includes a more extensive set of goods needed

for environmental monitoring and assessment

EPPsEPPs

1. For most developing countries – EPPs are of their export interests.

2. No specific list has been submitted to NAMA.

3. Country proposals include:i. Non-timber forest products such as honey, gum-arabic etc.ii. Products based on traditional knowledgeiii. Products made of natural fibres such as jute, sisal and coiriv. Wood and wood based productsv. Eco-labeled or certified products made with environment

friendly processesvi. Organic products vii. Biofuels such as ethanol and biodiesel

Trade and External Barriers Environmental sector is big and expanding;

expenditure is more than US$600b. in 2005 (Vaughan, 2003) – mainly in solid waste management, water equipment and air pollution abatement.

Trade – developed countries in general have trade surplus, while developing countries face deficit (OECD/APEC lists product).

Tariff protection - developed countries have lower tariffs than developing countries and LDCs (Hamwey, 2005; Bora and Teh, 2004).

There was large gap between bound and applied rates (Fliess and Lejarraga, 2005; Bora and Teh, 2004).

Average Bound TariffsAverage Bound Tariffs

0

20

40

60

80

100

APEC OECD Non-Ag

Developed Developing LDC

Source: Bora and Teh, 2004

Average applied tariff

0

2

4

6

8

10

12

14

APEC OECD Non-Ag

Developed Developing LDC

Source: Bora and Teh, 2004

Environmentally Preferable Products (EPPs) – UNCTAD’s List Export interests of developing countries,

particularly Asia. Exports about 30% of global EPPs exports

(Kim, 2005). Tariff protection for EPPs in developed

countries is low; high in developing countries.

Tariffs higher for textiles and apparels made of natural fibres such as cotton, wool and silk.

Various forms of NTBs.

SOURCE: Hamwey, 2003

UNCTAD EG GROUP

CLASSIFICATION OF GOODS AS EGs

CT Clean technologies used for power generation. This list includes energy efficient natural gas based power generation and renewable energy technologies and their components.

CT-FUEL Including fuels for CT, and power generation technology application. Includes natural gas, propane and butane, as well as ethanol and a range of agricultural feedstocks – bagasse and oilseed – used respectively to produce ethanol and biodiesel fuels.

EPP-Core Includes consumer and industrial non-durable and semi-durable EPP goods. Include wide variety of goods including natural fibres for industrial uses, and in the form of textiles , natural rubber, natural vegetable derivatives, colourings and dyes.

EPP-RCY Comprises of recoverable materials that are reintegrated into the production cycle. Includes scrap and waste paper, wood, plastics, rubber and various scarp metals.

EPP-Wood Wood and wood based products including building supplies and furniture.

EPP-WSA Includes apparel manufactured from natural wool and silk fibres -lower/negative environmental impacts during end-use and/or disposal phases of their life-cycle.

EPP-CM Raw cotton materials and cotton textiles

EPP-CA Apparel manufactured from natural cotton fibres – lower/negative environmental impacts during end-use and/or disposal phases of their life-cycle.

SOURCE: Hamwey, 2003

1

0

1.6

0.20.7

8.3

4.9

9.3

0

2

4

6

8

10

Ad-Valorem Rates (%)

CT CT-Fuel

EPP-Core

EPP-RCY

EPP-Wood

EPP-WSA

EPP-CM

EPP-CA

Trade Weighted Average Tariff Rate (Developed Countries, 2003)

SOURCE: Hamwey, 2003

9.5

4.6

18.6

7.25.8

19.8

16.6

23.1

0

5

10

15

20

25

Ad-Valorem Rates (%)

CT -CTFuel

-EPPCore

-EPPRCY

-EPPWood

-EPPWSA

-EPPCM

-EPPCA

Trade Wighted Average Tariff Rates (Developing Countries, 2003)

Case Studies Wind Turbine

Natural Fibre Products

WIND TURBINES AND PUMPSWIND TURBINES AND PUMPS

Wind turbine are made in many shapes and sizes – small ones produce a few hundred watts of power and the large ones 5 million watts.

Large turbines – dominant exporters: Denmark, Germany, USA and Spain. Production includes all parts – manufacturing activities distributed not only in OECD countries, but also across several developing countries.

Small turbines – produced mainly by developing countries.

Statistics only indicative – difficulty to distinguish the product from other items classified under the same HS code.

Source: Steenblik, 2005Source: Steenblik, 2005

Europe 72%

Asia 16%

N.America 6%

Pacific 4%Africa 1%

Others 1%

Regional Distribution: New Installed Wind Power Capacity in 2004 (%)

Top 10 Wind Large Capacity Turbine Manufacturers by Country

CompanyTotal Installed Capacity (MW)

2003 Installed Capacity (MW)

Global Market Share, 2003 (%)

Share of Total Global Turbines (%)

Denmark

Vestas 8400 1812 21.8 20.0

Bonus 3367 552 6.6 8.0

NEG Micon 6398 855 10.3 15.2

USA

GE Wind 4428 1503 18.0 10.6

Germany

Enercon 5758 1218 14.6 13.7

RE Power 893 291 3.5 2.1

Nordex 2219 242 2.9 5.3

Spain

Gamesa 3935 956 11.5 9.4

Made 1273 243 2.9 3.0

Japan

Mitsubishi 806 218 2.6 1.9

Others 4489 441 5.3 10.7

TOTAL 41966 8331 100.0 100.0

Source: Lewis and Wiser (2005), Table 4, p.26

Major Large Capacity Turbine Producers in Developing Countries

Suzlon Energy – India; The 7th largest wind turbine manufacturer in

the world in 2004 Had 4.5 percent of global market share in 2004

Goldwind – China No export yet Producing for domestic market

NEG Micon29%

Vestas25%

Goldwind 24%

Gamesa13%

Nordex5%

Others4%

Wind Turbine Sales in China by Manufacturer, 2003

Wind turbines: tariff is high in developing countries –15% or more. OECD countries – very low tariff.

LEADING EXPORTERS AND HIGEST TARIFF APPLIED TO WIND POWERED ELECTRIC GENERATING SETS

Leading Exporters Export Value (US$000) Importers with the highest level of duty

Applied Tariff (%)(Data Year)

World 1 128 505 Bahamas 35 (2001)

Denmark 964 965 Bermuda 33.5 (2004)

Brazil 2000 India 25 (2004)

India 771 Mexico 3-23 (2004)

Singapore 678 Brunei 20 (2003)

Namibia 95 Maldives 20 (2003)

Tunisia 69 Thailand 20 (2003)

South Africa 33 Cambodia 15 (2003)

S. Korea 23 Nepal 15 (2004)

Malaysia 23 Nigeria 15 (2002)

China 16 Romania 15 (2001)

Tanzania 15 (2003)

Yemen 15 (2000)

SOURCE: Taken from Steenblik (2005), Annex Table 4

Non-Tariff Barriers

1. Local Content Policy2. Certification 3. Export Credit Assistance4. Preferential Import Duty for Parts and

Duty Exemption5. Technology Transfer and R&D capacity

NATURAL FIBRESNATURAL FIBRES1. JUTE AND JUTE PRODUCTS

Raw jute fibre – do not face much barriers. Exports to developed country under GSP, no tariff escalation (except Australia)

Japan – woven fabrics – no GSP Developing countries importers - tariff

escalation. China: raw (8%), woven fabrics and jute sacks

(13%), jute carpets (22.3%) Iran – raw and yarn (5-25%), woven fabrics

(60%), carpets (250%), jute sacks (500%)

SOURCE: Consultation on Natural Fibre (2005), obtained from www.fao.org

Applied Tariff on Imports of Jute and Jute Products (%)

USA EU Australia Japan Iran Pakistan China

Jute Fibres Raw

0.0 0.0 0.0 0.0 5.0 5.0 8.0

Single Yarn 0.0 0.0 5.0 0.0 25.0 10.0 9.0

Multiple Cabled Yarn

0.0 0.0 5.0 0.0 25.0 10.0 9.0

Woven Fabrics of Jute, unbleached

0.0 GSP- 0.0Applied – 4.0

0.0 GSP- 0.0Applied – 12.8

60.0 25.0 13.0

TwinsCordage of jute

GSP- 0.0 Applied - 1.6

GSP- 0.0Applied – 5.1

10.0 0.0 75.0 25.0 15.0

Carpets of Jute

GSP- 0.0 Applied – 5.0

GSP- 0.0 Applied – 5.0

0.0 n.a. 250.0 25.0 22.3

Sack of Jute 0.0 GSP- 0.0 Applied – 4.0

0.0 0.0 500.0 25.0 13.0

SOURCE: Consultation on Natural Fibre (2005), obtained from www.fao.org

NATURAL FIBRESNATURAL FIBRES

2. SISAL AND SISAL PRODUCTS

Principal market – USA and EU. Developed countries - zero duty

/ GSP China – tariff escalation –

domestic processing industry protection.

SOURCE: Consultation on Natural Fibre (2005), obtained from www.fao.org

Applied Tariff on Imports of Sisal Applied Tariff on Imports of Sisal and Sisal Products (%)and Sisal Products (%)

USA EU Australia

Japan China

Sisal Fibre Raw

0.0 0.0 0.0 0.0 6.0

Binder or baler twins of sisal

0.0 GSP 0.0Applied

15.7

10.0 0.0 15.0

Other twins or cordage of sisal

GSP 0.0

Applied 5.0

GSP 0.0Applied

15.7

0.0 0.0 15.0

NATURAL FIBRESNATURAL FIBRES

3. COIR AND COIR PRODUCTS

Major exporters – India and Sri Lanka

Principal market – EU. Developed countries - zero duty /

GSP China – tariff escalation – domestic

processing industry protection.

SOURCE: Consultation on Natural Fibre (2005), obtained from www.fao.org

Applied Tariff on Imports of Coir and Coir Products (%)

USA EU Australia

Japan China

Coir Fibre, Raw

0.0 0.0 0.0 0.0 6.0

Coir yarn 0.0 0.0 0.0 0.0 6.0

Floor Coverings of Coconut Fibres/Coir

0.0 GSP 0.0Applied

4.0

0.0 GSP 0.0Applied

5.2

26.0

NATURAL FIBRES

4. ABACA AND ABACA PRODUCTS Major exporters – Philippines and

Ecuador Principal market – USA, EU and

Japan. Developed countries - zero duty /

GSP China – tariff escalation – domestic

processing industry protection.

SOURCE: Consultation on Natural Fibre (2005), obtained from www.fao.org

Applied Tariff on Imports of Abaca and Abaca Products (%)

USA EU Australia Japan China

Abaca Fibre, Raw

0.0 0.0 0.0 0.0 3.0

Abaca Fibre, Others

0.0 0.0 0.0 0.0 3.0

Twins or Cordage of Abaca

GSP 0.0Applied 4.8

GSP 0.0Applied 10.0

10.0 GSP 0.0Applied 3.0

15.0

Concluding Remarks

Need to identify existing and potential export interests of EGs

Promote production of EGs Periodical review of EGs list – development of

new products, technology and awareness Identify export barriers of each product –

existing and potential Market access – supply side and demand side Serious effort need to be taken to improve

consumers and producers awareness on EGs.