Transcript WTO NEGOTIATIONS ON TRADE & ENVIRONMENT

Market Access on Environmental
Goods and Services: Implications
for India
Seminar on “Trade and Climate Change in Emerging Economies:
The Competitiveness, Technology, and Intellectual Property Rights Dimension”
30-31 March 2010, New Delhi
Rajan Sudesh Ratna
Professor
Centre for WTO Studies
[email protected]
[email protected]
Doha Mandate
Paragraph 31 (iii) of the Doha Ministerial
Declaration calls for negotiations on "the
reduction or, as appropriate, elimination of
tariff and non-tariff barriers to environmental
goods and services", with a view to
enhancing the mutual supportiveness of
trade and environment.
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Proposals
• During the negotiations, members have
tabled the following approaches:
– Environmental Project Approach (tabled by
India);
– List Based Approach (by USA, EC, Japan, Canada,
Qatar, Switzerland, Korea, Norway, New Zealand,
Chinese Taipei etc.)
– Integrated approach (initially by Argentina)
– Request – Offer approach (Brazil).
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The Lists
• Earlier the Secretariat in its paper provided a list
of 480 items as environmental goods.
Convergence list of 153 tariff lines (Canada, EC,
US, Japan, Korea, New Zealand, Norway, Taiwan,
Switzerland, Penghu, Kinmen & Matsu).
• The WTO Secretariat has circulated a list of 43
items identified as “climate friendly goods” by
the World Bank for discussions.
• Though USA & EC are at the moment supporting
the World Bank list of 43 “climate friendly
goods” but it is not very clear that the list will
stop here.
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July 2008 Report
• In his report submitted to the Trade Negotiations
Committee (TNC) in July 2008, Chairman of the Committee
on Trade and Environment in Special Session (CTESS) has
listed out the approaches that are on the table – list
approach, integrated approach, request & offer approach
and possible combination of approaches.
• Report further stated that by 10 September 2008 the
members submit to the Secretariat:
– environmental goods of interest to them identified across as
many categories as possible; and/or
– environmental goods identified in any requests/offers they
would have made to other Members.
– Submit proposals on issues such as technical assistance,
capacity building, S&DT and ToT.
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Request Offer Approach
• Members to exchange request/ offer lists of
environment goods on a bilateral/ plurilateral
plane for reduction/ elimination of tariffs.
• Results of negotiations to be multilateralised
and made available to all Members on MFN
basis.
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Possible advantage
• Approach non-prescriptive, voluntary and
optional and provides flexibility.
– Project/ Integrated approach has limited support
– Less damaging compared to list/ basket approach
• Lists to be agreed depending on own needs/ priorities.
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•
•
•
•
Present Status
Focus of discussion - elimination of duties
No talks on removal of non-tariff barriers
No talks on Services
USA & EC are at the moment supporting the
World Bank list of 43 “climate friendly goods”
but it is not very clear that the list will stop
here.
• Chairman of CTESS has submitted progress report to
TNC (TN/TE/19 dated 22 March 2010) discusses
para 31 of Doha Mandate.
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Analysis of 43 items
 There are 32 items in this list on which sectoral proposal under
NAMA has been made. Chemical – 1 item, Electronics &
Electrical Equipment - 13 items, Electrical & Industrial
machinery (in both Sectors) – 4 items, and Industrial Machinery
– 14 items.
 There are 37 items which are bound. On these lines the
average UR Binding duty is 33.43%.
 The current applied rate is approx 8%.
 The above levels will become 11.92% as new binding due to
Swiss Coefficient of 20 & 12.65% if we use 22 as Coefficient.
 India's export in 2007-08 was US $ 1.68 Bn as against import of
US $ 2.41 Bn. During 2008-09 the export was US $ 2.66 Bn
against the imports of US $ 3.38 Bn.
 The major exporters to India are EC, China, US, Japan, Malaysia,
South Korea in that order. They take more than half the share
of our total imports.
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Analysis of 153 items
• There are 132 items in this list on which sectoral
proposal under NAMA has already been made.
• There are 143 items which are bound. On these
lines the average UR Binding duty is 30.43%.
• The current applied rate is approx 6.91%.
• The above levels will become 11.20% as new
binding due to Swiss Coefficient of 20 & 11.87% if
we use 22 as Coefficient.
• India's export in 2007-08 was US $ 5.31 Bn as
against import of US $ 11.18 Bn. During 2008-09 the
export was US $ 6.78 Bn against the imports of US $
13.05 Bn. (Base year 1999 – 2001 : US $1.74 Bn.)
Analysis of 480 items: Facts
• These represent a total of 705 items at 6 digit HS.
• There are following entries as well:
– 6
items
from
Agriculture
(HS
121190,
130214,151590,152110,152190 & 251200).
– 2 entries at Chapter level i.e. 2 digit HS ( 14 – vegetable plaiting
materials & 48 – all types of recycled papers).
– 65 entries at 4 digit HS level.
• There are 551 items which are bound. On
these lines the average Base Rate of binding
for Doha reduction is 39.83%.
• 135 items are unbound in UR.
• No information available on 19 items.
480 list : Tariff and trade
• The average applied rate is 11.91%.
• The above levels will become 12.84% as new
binding due to Swiss Coefficient of 20 &
13.66% if we use 22 as Coefficient.
• India's export in 2007-08 was US $ 16.72 Bn
as against import of US $ 28.29 Bn. During
2008-09 the export was US $ 19.83 Bn against
the imports of US $ 32.56 Bn. (Base year 1999
– 2001 : US $4.76 Bn.)
480 list : Sectoral proposal
• There are 316 items in this list on which sectoral
proposal under NAMA has already been made.
• The base rate of duty is 33.75%.
• If Swiss Coefficient of 20 is applied, the Doha
Round duties will become 11.89%. For SC 22 it
will be 12.62%.
• Imports during 1999-2001 (Av.) was US $ 2.84
Bn. Imports in 2005 – 2006 was US $ 9.15 Bn &
in 2006-2007 was US $ 11.53 Bn.
• Average applied rate of duty on these 316 items
is 11.13%.
Issues
• List based approach could bring outdated technology.
• Most environment-related technologies of the
developed world are under IP protection i.e. ToT
either does not take place or comes with export
restrictions/ conditionalities.
• Many products are dual/multiple use products. E.g.
Microwave oven, energy efficient refrigerators,
electricity meters, heat exchangers, conveyers and
centrifugal drums.
• NAMA backdoor - SMEs could be hurt.
• Are members really serious for protecting
environment or is this also one of the ways to seek
market access?
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Simple Average Applied Tariff
13.88
14.00
12.00
10.68
10.00
9.13
7.94
8.00
6.00
5.75
4.00
4.80
2.00
0.00
1.91
2.47
3.63
2.52
2.60
0.94
1.81
0.00
0.09
0.00
0.00
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Issues (2)
• No fixed definition of “Environmental goods and Services”
• Avoid inverted duty structure:
– Certification of only end product as being environmentally benign would provide tariff
benefits to these products but in long run open up case for tariff reduction for all its
sub-components/components and raw materials thereof as otherwise inverted tariff
structures may arise.
– This would weaken the position to negotiate for sub-components and materials which
are of polluting nature but go in for manufacture of environment friendly end
products.
• Identifying ex-outs
• Identifying dual use risk
• Possibility to monitor end use:
– Is it possible to certify that an environmental product will only be used for
environmental purposes (i.e., actual user)? E.g. many of the renewable energy
products , such as mechanical devices like AC generators, steam generators and
controlling instruments are dual/multiple purpose devices which can even be used
where conventional fuels are adopted for power energy/applications.
– Are Customs in developing countries equipped?
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Issues (3)
• Technology Transfer & Investment:
– Most environment goods are of export interest to
developed countries. If developed countries get
duty-free market access to the developing
country, why will the investments come to the
developing countries and how will TOT take place?
If there is no mechanism for TOT, in the long run
the developing countries may become dependent
on the developed countries for their imports and
the major players may create a monopolistic
situation that is neither warranted nor desirable.
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THANK YOU
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