Negotiations on Environmental Goods with WTO and Sustainable Development
| Author | Era Upadhyay,S. N. Singh,U. Sankar |
| DOI | 10.1177/0015732515120301 |
| Published date | 01 October 2012 |
| Date | 01 October 2012 |
| Subject Matter | Article |
Negotiations on Environmental Goods
with WTO and Sustainable Development
An Economic Evaluation
S. N. Singh, Era Upadhyay and U. Sankar
Doha Round of negotiations on environmental goods and services
are continuing without resulting in any gainful output. The basic
challenge of negotiations on environment is emerged on
definitional approach of environmental goods because neither
internationally agreed definition of Environmental Goods (EGs)
nor any agreed criteria for their classification is specified.
However, suggested definitions have varied between limited
primarily to “pollution prevention activities” to “extending
beyond simple end-use criteria”. The paper attempted to examine
various definitions of environmental goods developed from time
to time besides estimating time series analysis of export and
import data. The paper is also focused on environmental goods
in which India has comparative advantage and elaborates the
potential for negotiations on environmental goods in India.
Keywords: Doha Development Agenda (DDA), Environmental
Goods (EGs), Organization of Economic Cooperation and
Development (OECD), Asia-Pacific Economic Cooperation
(APEC).
Introduction
MARRAKESH Agreement had enshrined the policy of sustainable
development and protection and preservation of the
environment. The negotiations at Marrakesh contributed significantly
to the establishment of the WTO, whose objective is to reduce trade
barriers and eliminate discriminatory treatment in international trade
relations across the world. While there is no specific agreement dealing
with the environment under the WTO rules, Members can adopt trade-
related measures aimed at protecting the environment provided a
number of conditions to avoid the misuse of such measures for
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FOREIGN TRADE REVIEW
protectionist ends are fulfilled (Rio Summit 1992). The current Doha
Round of negotiations gives Members a chance to achieve an even
more efficient allocation of resources on a global scale through the
continued reduction of obstacles to trade. The Round is also an
opportunity to pursue win-win-win results for trade, development
and the environment. For example, the Doha Round is the first time
environmental issues have featured explicitly in the context of a
multilateral trade negotiation and the overarching objective is to
enhance the mutual supportiveness of trade and environment.
Members are working to liberalize trade in goods and services that
can benefit the environment. They are also discussing ways to maintain
a harmonious co-existence between the WTO rules and the specific
trade obligations in various agreements that have been negotiated
multilaterally to protect the environment. Other parts of the Doha
negotiations are also relevant to the environment, for example aspects
of the agriculture negotiations and also disciplines on fisheries
subsidies. The Doha Development Agenda also has a section specifying
the priority items in the CTE’s regular work (www.wto.org).
In the fourth Ministerial meeting of Doha in 2001, the WTO for
the first time explicitly committed to take trade and sustainable
development as an integral part of its trade negotiation agenda.
Paragraph 6 of the Doha Ministerial Declaration reaffirming the
commitment to the objective of sustainable development, mentions
that upholding and safeguarding an open and non-discriminatory
multilateral trading system, and acting for the protection of the
environment and the promotion of sustainable development can and
must be mutually supportive. In paragraph 16 the trade ministers
have decided to negotiate opening the market for environmental goods
and services and as per paragraph 31(iii), there is commitment to the
reduction/elimination of tariff and non-tariff barriers to Environmental
Goods and Services (EGS) (WTO, 2002). Under the WTO rules, it is
not permitted to discriminate against products based on PPMs.
Therefore, products like organic foods and certified timber products
are ruled out of this category (CUTS, 2004b).
The Doha Ministerial Declaration (2001) aims at maintaining the
process of reforms and liberalization of trade policies, thus ensuring
that the system plays its full part in promoting recovery, growth and
development. It seeks to place the needs and interests at the heart of
the Work Programme and tries to make positive efforts designed to
NEGOTIATIONS ON ENVIRONMENTAL GOODS WITH WTO
5
ensure the developing countries secure a share in the growth of world
trade commensurate with the needs of their economic development.
Two factors have slowed down agreement on the product coverage.
The first is lack of universally accepted definition/classification of EGs.
This has resulted in examination of alternative classifications of EGs
and the corresponding lists of EGs. Even the pruned list of 153 EGs
and the list of 43 climate-friendly EGs contain goods which have non-
environmental uses. The second is the difficulty in carrying out national
impact assessments of the proposed trade liberalization because of
the absence of direct links between the international trade statistics
based on HS 6-digit codes and industrial production statistics based
on ISIC at 3-digit/4-digit levels. The difficulty is compounded by the
fact that even the 6-digit level HS trade statistics is inadequate for
identifying single use EGs.
Over a decade of relentless efforts and difficult negotiations,
discussion on defining environmental goods seems to have entered a
vicious circle, if it goes out of control – could very well undermine the
“Doha Development Round” (Shahin, 2007). An international arena
has become challenging issues particular for the nations who does
not have export interest in the list of environmental goods proposed
by the developed countries. In the absence of proper definition of
environmental goods the negotiations are going to be prolonged
further. There are no internationally agreed definitions of
Environmental Goods (EGs), nor are there any agreed criteria for their
classification. Suggested definitions have varied between limited
primarily to “pollution prevention activities” to “extending beyond
simply end-use criteria”. These classifications of EGs proposed in the
past are the OECD classifications which define the environmental
sector as the set of “firms producing goods and services capable of
measuring, preventing, limiting or correcting environmental damage
such as pollution of water, air, soil as well as waste and noise-related
problems. This includes cleaner technologies, products and services
that reduce environmental risks and minimize pollution and resource
use”.
Based on this definition, the OECD categorized environmental
management functions, and defined a corresponding list of 164 goods
providing these functions (OECD, 2003). This list was adopted by
OECD Member States as a basis to collect, compare and consolidate
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FOREIGN TRADE REVIEW
consistent economic data on the sector. The APEC list which was
compiled in the late 1990s is based on the proposals from the
individual APEC members as a bottom up approach to Early
Voluntary Sectoral Liberalization (EVSL) initiative which included
environmental sector, but there was no consensus on the definition
and categorization of environmental industry to advance voluntary
liberalization of environmental goods. The APEC list is based on
identifying products that are needed for a set of environmental
functions similar to those used by the OECD and has 54 goods in
common with the OECD list. The UNCTAD list classified
environmental goods mainly in terms as Environmentally Preferable
Products (EPPs) including both industrial and consumer goods.
These goods have environmentally preferable characteristics relative
to substitute goods, i.e., reduced negative environmental impacts
in production, end-use or disposal and are generally used for
purposes other than environmental ones in commercial and
household applications (Kumar, 2002). According to their
environmental justification or benefits, comprising of (a) products
that are more environmental friendly than similar products (at some
stage of their life cycle), (b) products which are produced in an
environmentally-friendly way (production/processessing stage),
and (c) products that contribute to the preservation of the
environment and the basic criteria for identification of EPPs include:
use of natural resources and energy; amount of waste generated
along the life cycle; impact on human and animal health; and
preservation of the environment.
The problem encountered with OECD and APEC lists being the
large number of items with more emphasis on products from
developed countries whereas some items have no direct environmental
use and many items have dual/multiple uses, i.e. environmental and
non-environmental. The two lists overlap a little at the Harmonized
System (HS) six-digit level and in all less than 30 per cent of the goods
in the combined list are common to both lists, and about half of the
goods on either list can be found on the other (Ronald Steen Blink,
2005). The OECD definition is very broad and can encompass goods
of almost any sort.
The list include Cleaner Technologies, despite whose importance,
there is currently no agreed methodology which allows their
contribution to be measured in a satisfactory way and it seems these
NEGOTIATIONS ON ENVIRONMENTAL GOODS WITH WTO
7
lists were developed for purposes other than negotiation with WTO.
However, the lists may be indicative and helpful but are not definitive.
Counting only entries with corresponding HS codes, the OECD list
appears to be about...
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