Transcript Slide 1

Trade Negotiations on Environmental
Goods and Services in the LDCs Context
by
Fahmida Khatun, PhD
Additional Director
Centre for Policy Dialogue (CPD)
24 September 2009
1
Introduction

In view of the increased intensity of global
environmental problems, and as a result of the
integration of the global economy environmental issue
has emerged as an important area of concern for policy
makers.

Since the beginning of the 1990s when trade
liberalisation took place at a faster pace, environmental
aspects became a prominent phenomenon in the
context of its interface with trade policies.
2
Introduction

The relationship between trade openness and the
environmental quality has been discussed at
length both theoretically and empirically by
several authors during the last twenty years.

An ideal situation would require compatible trade
and environment policies as a result of which
trade, environment and sustainable development
can join paths in one direction.
3
Doha Ministerial Declaration on environment

Paragraph 31(iii) of the Doha Ministerial Declaration (DMD)
mandated negotiations on “ the reduction or as appropriate
elimination of tariff and non-tariff barriers to environmental goods and
services” as part of single undertaking.

Environmental goods and services have been specifically singled
out in DMD though it was always on trade-liberalisation agenda of
the WTO.

Trade-environment issues as laid out in the work
programme of the Doha Declaration are of critical
importance to LDCs particularly in terms of market access
opportunities for its exports to the global market.
4
Challenges of LDCs

LDCs face multiple problems in the areas of environment which
range from air and water pollution to soil degradation and
desertification to depreciation of forest and fish resources to loss
of biodiversity and ecosystem to urbanization and congestion.

Some of the LDCs are also vulnerable to the risk of climate change
which is feared to lead to sea level rise with severe impact on the
lives and livelihoods of a large number of people in the country.

For LDCs the challenges are (1) how to get market access
without degrading the environment, and (2) how to protect the
environment without affecting economic growth adversely and
make progress in the trade liberalisation process.
5
Challenges of LDCs

LDCs can tackle many crucial environmental problems
through increased access to EGS at a lower tariff rate
and Non Tariff Barrierss.
 This
can contribute to their economic growth as well
as to the improvement of social indicators, such as
health.

Access to EGS at a lower cost gives an opportunity to
access to technology and know how. This can also
induce energy and resource-efficiency in the economy.
6
Rationale for the study

There is a dearth of adequate capacity in terms of general
awareness as well as in terms of understanding on the issues
of EGS negotiations among LDCs.

These lacunae may undermine their policy efficacy in the
related area in terms of identifying their export and import
interests of EGS.

It will be useful for LDCs to engage themselves in exploring
the benefits and costs associated with liberalization of the
EGS in order for them to be able to engage themselves fully
in the negotiations.
7
Objectives of the study

Based on secondary data the paper estimated
the pattern of EG trade in LDCs, their share
in global EG trade, and major EG exports and
imports by LDCs.

Meaningful statistics on trade of ES are not
available for LDCs on the basis of which any
analysis can be made.
8
Definition and coverage of environmental goods

No clear agreement among WTO Members on definitions and
coverage of environmental goods.

OECD and APEC lists used as starting point for discussions
on EGs in the WTO after the Doha Declaration.

Member countries continued to submit their own proposals.

In 2007 the ‘WTO 153 list’ has been proposed by the Friends of
EGs (mainly developed countries). This list is currently under
discussion.
9
EGs according to WTO 153 list
1. Air Pollution Control
2. Management of Solid and Hazardous Waste and Recycling System
3. Clean up or Remedial of Soil and Water
4. Renewable Energy Plant
5. Heat and Energy Management
6. Waste Water Management and Portable Water Treatment
7. Environmentally Preferable Products,
8. Cleaner or More Resource Efficient Technologies and Products
9. Natural Risk Management
10. Natural Resources Protection
11. Noise and Vibration Abatement
12. Environmental Monitoring, Analysis and Assessment Equipment
10
Definition of environmental services

Similar to EG there is no clear cut universally
accepted definition of environmental services.

The General Agreement on Trade in Services
(GATS)’s Services Sectoral Classification List, W/120,
sorts environmental services as: (a) sewage services;
(b) refuse disposal services; (c) sanitation and similar
services; and (d) other (cleaning services of exhaust
gases, noise abatement services, nature and
landscape protection services, and other
environmental services).
11
Trade of EGs by regions, WTO 153 lists
The market of EG trade is dominated by the
developed countries with a share of 69%
 Developed countries make up 76.4% of EGs
exports; developing countries 23.5%; and LDCs
only 0.1%.
 Developed countries make up 61.2% of EGs
imports; developed countries 37.9%; and LDCs
0.8%.

12
Trade of EGs by Regions
Growth of Environmental Goods Export, 2001-2007
Export Vlue (in mln USD)
900000
750000
600000
450000
300000
150000
0
2001
2002
2003
2004
2005
2006
2007
Year
World
Developed Countries
Developing Countries
LDCs
Source: ITC Trade Map.
13
Trade of EGs by Regions
Growth of Environmental Goods Import, 2001-2007
Import Value (in mln USD)
900000
750000
600000
450000
300000
150000
0
2001
2002
2003
2004
2005
2006
2007
Year
World
Developed Countries
Developing Countries
LDCs
Source: ITC Trade Map.
14
Trade of EGs by Regions
Share of Environmental Goods Trade, 2007
Export
Developi LDCs
ng
Countries
Import
LDCs
Develope
d
Countries
Developin
g
Countries
Develope
d
Countries
Source: ITC Trade Map.
15
Trade of EGs by Regions
Trade in Environmental Goods, 2007
Trade Value (in mln USD)
700000
Export 2007
600000
500000
Import 2007
400000
Import 2007
300000
Export 2007
200000
100000
Export 2007
Import 2007
0
Developed Countries
Developing Countries
LDCs
Country Category
Source: ITC Trade Map.
16
EG export according to WTO 153 product lists, 2007 (in mln USD)
Sl No.
Product Group
World
Developed
Countries
Developing
Countries
All LDCs
1
Air Pollution Control
71937
55756
19636
7
2
Management of Solid and Hazardous
Waste and Recycling Systems
130730
112925
15360
42
3
Clean Up for Remediation of Soil and
Water
5905
4367
3174
40
4
Renewable Energy Plant
202314
126973
52941
65
5
Heat and Energy Management
13400
10664
2432
2
6
Waste Water Management and Portable
Water Treatment
198216
158682
53638
79
7
Environmentally Preferable Products,
Based on End Use or Disposal
Characteristics
548
389
1969
328
8
Cleaner or More Resource Efficient
Technologies and Products
8252
3900
5151
2
9
Natural Risk Management
7320
6580
2107
24
10
Natural Resources Protection
861
713
1938
14
11
Noise and Vibration Abatement
56677
43497
13960
11
12
Environmental Monitoring, Analysis and
Assessment Equipment
87047
74078
11745
18
783207
598525 (76.4%)
184051 (23.5%)
631 (0.1%)
Total
17
EG import according to WTO 153 product list, 2007 (in mln USD)
Sl No.
Product Group
World
Developed
Countries
Developing
Countries
All LDCs
1
Air Pollution Control
71028.05
39974.24
30317.69
416.77
2
Management of Solid and Hazardous
Waste and Recycling Systems
120349.17
66512.24
46436.98
1083.13
3
Clean Up for Remediation of Soil and
Water
5469.29
3713.44
5182.74
42.91
4
Renewable Energy Plant
190689.40
121025.83
61955.97
1629.31
5
Heat and Energy Management
12493.87
1158.89
4536.07
121.89
6
Waste Water Management and
Portable Water Treatment
193121.96
137971.75
68810.21
1810.00
7
Environmentally Preferable Products,
Based on End Use or Disposal
Characteristics
436.53
151.07
3770.69
21.08
8
Cleaner or More Resource Efficient
Technologies and Products
9741.66
504.86
5554.27
123.96
9
Natural Risk Management
6172.38
3910.22
5431.66
214.10
10
Natural Resources Protection
654.34
395.87
3746.69
62.40
11
Noise and Vibration Abatement
57615.68
32929.32
20737.94
313.63
12
Environmental Monitoring, Analysis
and Assessment Equipment
86023.91
53378.40
29508.55
341.49
753796.24
461626.1 (61.2%)
285989.5 (37.9%)
6180.7 (0.8%)
18
Total
Trade of EGs by LDCs, 2007
On the basis of WTO 153 list of EGs the share of EG export in total EG
exports was 0.08% in 2007 and the share of EG import in total EG import
was 0.82% in 2007.
Value in mln USD

900000
800000
700000
600000
500000
400000
300000
200000
100000
0
631.1
208.1
75.3
5
2
8
7
33.9
8
2
2
3
Export value in
2001
.7
6180
15.6
6
7
4
7
.3
1612
81.3
1
2
3
3
EXport value in
2007
Rest of the World's EG Trade
Import value in
2001
Import value in
2007
Total LDCs' EG Trade
19
500
400
300
200
100
202.1
141.4
63.4
1.9
0.9
0
Export value in 2001
4463.5
5000
428.0
EXport value in 2007
Asia Africa Latin America
Value in mln USD
Value in mln USD
Trade of EGs by LDCs, 2007
4000
3000
1660.6
2000
1000
1096.9
492.2
31.8
13.7
0
Import Value in 2001
Import value in 2007
Asia Africa Latin America
20
Export Value of EG in Top 10 EG Exporting LDCs
Export Value in 2007
(in mln USD)
Export share in total EG
Exported by all LDCs
(%)
Bangladesh
351.1
55.6
Tanzania
31.1
4.9
Nepal
29.9
4.7
Uganda
27.9
4.4
Liberia
27.0
4.3
Yemen
25.1
4.0
Angola
20.9
3.3
Madagascar
18.0
2.9
Senegal
14.7
2.3
Myanmar
14.1
2.2
Total of top 10 LDCs
559.9
88.7
Rest of the LDCs
71.25
11.3
Total LDCs
631.10
100.0
Country
21
Import Value of EG in Top 10 EG Importing LDCs
Import Value in 2007
(in mln USD)
Import share in total EG
Imported by all LDCs
(%)
Angola
1248.6
20.2
Sudan
677.6
11.0
Bangladesh
488.0
7.9
Yemen
376.2
6.1
Zambia
335.9
5.4
Ethiopia
311.2
5.0
Myanmar
295.4
4.8
Tanzania
261.6
4.2
Senegal
181.8
2.9
Democratic Republic of the Congo
163.0
2.6
Total of Top 10 LDCs
4339.3
70.2
Rest of the LDCs
1841.3
29.8
Total LDCs
6180.7
100
Country
22
Top 10 LDC EGs Exporters

Among LDCs the share of Asian LDCs in total LDCs’ EG
export was 67.8% and of African LDCs was 32% in 2007.

However, in case of imports Asian LDCs’ import share of EG
in all LDCs’ EG import was 26.9% while of African LDCs it
was 77.2% in 2007.

Top 10 LDC exporters of EGs are Bangladesh, Tanzania,
Nepal, Uganda, Liberia,Yemen, Angola, Madagascar, Senegal
and Myanmar.

These 10 LDCs export 88.7% of all LDC EG exports.
23
Top 10 LDC EGs Importers

Top 10 LDC importers of EGs are Angola, Sudan, Bangladesh,
Yemen, Zambia, Ethiopia, Myanmar, Tanzania, Senegal and
Democratic Republic of the Congo.

These 10 LDCs import 70.2 % of all LDC EG imports.
24
Top 10 LDC EGs export products
At 6 digit level HS code top 10 EG export products comprise
69.5% of all LDC EG exports










Jute and other textile bast fibres, raw or retted,
Sacks & bags,for packg of goods,of jute or of other textile bast fibres
Buoys, beacons, coffer-dams, pontoons and other floating structures
Twine, cordage, ropes and cables, of jute or other textile bast fibres
Tubes, pipe & hollow profiles,i/s,welded,of non circ cross sect,
Tubes, pipe & hollow profiles, iron or welded,of circ cross sect,
Parts and accessories for use with the apparatus of heading No 90.15
Prisms, mirrors & other optical elements of any material unmounted,
Machines & mechanical appliances nes having individual functions
Turbines, output , 40 MW
25
Top 10 LDC EGs import products
At 6 digit level HS code top 10 EG import products comprise 33% of all LDC EG
imports










Towers and lattice masts, iron or steel
Machines & mechanical appliances nes having individual functions
Parts for diesel and semi-diesel engines
Taps, cocks, valves and similar appliances,
Articles, iron or steel,
Parts of electric motors, generators, generating sets & rotary converters
Crushing/grinding machines for earth/ stone/ores o oth minerals subs etc
Static converters,
Boards, panels, including numerical control panels, for a voltage <=1000 V
Tubes, pipe & hollow profiles, iron or steel, welded
26
Tariffs on EGs

It has been estimated that complete elimination of tariffs and non-tariff
barriers would lead to an average increase of trade in clean coal
technology, wind/solar power generation and efficient lighting
technology by 13.5 percent (World Bank 2008).

Tariffs on EGs are already low in developed countries. The effective
applied tariff on LDCs’ top 10 export and import EG products range
between 0-2%

LDCs still stands to benefit from liberalization of EGs since much of
LDC exports of EGs are destined to a number of developing countries
where they face high export duty for EGs.

Tariff rates for EGs on the WTO ‘153’ list at six digit level HS codes for
top 10 products exported from LDCs face up to 31 percent tariffs in
the developing country markets.
27
Average applied tariffs
LDC
Developing
Developed
Othe r Re cycling Syste ms
He at/Ene rgy M anage me nt
Potable Wate r Tre atme nt
Re ne wable Ene rgy Plant
Re me diation/Cle anup
Solid/Hazardous Waste
M onitoring/analysis
Air Pollution Control
Waste Wate r M anage me nt
Noise /v ibration abate me nt
0
2
4
6
8
10
12
14
28
Preference Erosion

LDCs benefit from preferential duty free treatment on
nearly 84 percent of dutiable MFN tariff lines on
average (WTO 2009).

It is likely that many of the EGs will fall under various
preferential programmes offered to LDCs by
developed countries.

Therefore, if these products are listed as EGs, tariff
will be reduced at a faster pace for these items which
will erode LDCs’ preferences in those markets and
reduce their competitiveness.
29
Non-Tariff Barriers

Standards, certifications, and environmental regulation
limit trade to a great extent.

Products from LDCs face difficulties in entering foreign
markets due to a lack of appropriate standards for their
products, which may be quite stringent to protect
domestic suppliers.

The lack of uniformity of environmental requirements
and technical regulations in different national markets
are known to affect the type of environmental goods
that are used to meet environmental requirements, and
thus act as an NTB.
30
Liberalisation of environmental services

The main way to trade in ES through commercial presence
(Mode 3) and temporary movement of natural persons
(Mode 4).

Export of ESs by LDCs is not very significant though some
LDCs may extract economic benefits by exporting
environment related professional services in the form of
studies, assessments and consultancies.

However, increased export of ES also requires less stringent
regulations of importing developed countries as regards
movement of service providers.
31
LDC strategy for EGS negotiations

The negotiating strategy of LDCs should stem from their
own requirements for import and potential for export of
EGS.

Additionally, domestic social, political and economic
factors need to be kept in mind in arriving at a decision
on liberalising EGS market in LDCs.

Opportunities and challenges for liberalisation of EGS
should be examined through in-depth benefit-cost
analysis on a case by case basis.
32
LDC strategy for EGS negotiations

LDCs have, to certain extent, undertaken autonomous
liberalisation, thus significant further liberalisation of EGS
may not be necessary.

LDCs may work out an approach for the negotiations of
EG to make it suitable for their domestic conditions.
Considerations of narrow list of EGs, preference erosion,
DFQF should be made.

The common goal is poverty alleviation through
employment generation and income distribution.
33
LDC strategy for EGs negotiations
 Identification, harmonisation
and elimination
of NTBs for products identified as EG are
needed in order to facilitate trade in such
goods by LDCs.
 LDCs
should be exempted from the
obligation of patent protection of EGs for a
longer period.
34
LDC strategy for EGS negotiations

Commitments by LDCs on Mode 3 and Mode 4 related to
various infrastructural sectors of LDCs should stipulate the
degree of market access of foreign firms, regulation, and
standards on the basis of which companies should be allowed
to access such sensitive areas in the economy of LDCs.

This is important in order to ensure accessibility and
affordability of essential products and services such as
drinking water and sanitation
35
LDC strategy for EGs negotiations

In order for LDCs to take full advantage of liberalisation
of EGS technical and financial assistance is essential.

Such considerations should be part of LDCs’ priority
areas for resource mobilisation in the context of AfT
initiative.

In LDCs SME dominate the industrial sector and thus
are not in a position to buy clean technologies.
36
Thank you
for your attention
37