Contribution of Trade Opening to Contribution of Trade Opening to Access to Climate-Friendly Access to Climate-Friendly

Goods and Services Goods and Services

Vesile Kulaçoğlu

Director, WTO Trade and Environment DivisionDirector, WTO Trade and Environment Division

WTO Side Event at WTO Side Event at

COP 16, 8 December 2010COP 16, 8 December 2010

““31. With a view to enhancing the mutual supportiveness 31. With a view to enhancing the mutual supportiveness of trade and environment, we agree to negotiations, of trade and environment, we agree to negotiations, without prejudging their outcome, on:without prejudging their outcome, on:

(iii) the reduction or, as appropriate, elimination of (iii) the reduction or, as appropriate, elimination of tarifftariff and and non-tariff barriersnon-tariff barriers to environmental to environmental goodsgoods and and servicesservices. .

““a unique mandate” with both challenges and opportunities... a unique mandate” with both challenges and opportunities...

- improving access to green goods and technologies- improving access to green goods and technologies

- delivering on the trade, environment and - delivering on the trade, environment and development dimensions of the mandatedevelopment dimensions of the mandate

- overlap with other areas of the DDA- overlap with other areas of the DDA

  

Discussions in CTESSDiscussions in CTESS

2002-2005: 2002-2005: Individual lists Individual lists

tabled by 9 tabled by 9 MembersMembers

2005-2007: proposals on 2005-2007: proposals on alternative approaches alternative approaches

(India, Argentina, Brazil)(India, Argentina, Brazil)

July 08: July 08: Work Work

ProgrammeProgramme

Oct. 09: Oct. 09: Revised Work Revised Work Programme Programme

(new timelines)(new timelines)

New submissions on New submissions on identification of EGs identification of EGs of interest and other of interest and other

issues under mandateissues under mandate

April 2007: 153-items April 2007: 153-items list by proponents list by proponents

(“potential (“potential convergence set”)convergence set”)

20022002 20092009 20102010200820082007200720062006200520052004200420032003

““technical technical discussions”discussions”

Identifying goods Identifying goods (product coverage)(product coverage)

Responding to the mandate Responding to the mandate under 31(iii)...under 31(iii)...

Determining treatment Determining treatment (modalities)(modalities)

Identification of environmental goodsIdentification of environmental goods

In the context of a list... In the context of a list...

(9 countries)(9 countries)

In the context of requests and offers... In the context of requests and offers... ((BrazilBrazil))

In the context of the integrated approach... In the context of the integrated approach... ( (ArgentinaArgentina))

Flexibilities for DgC (S&D)Flexibilities for DgC (S&D)

Group of FriendsGroup of Friends

(“potential (“potential convergence set”):convergence set”):

• Japan Japan

• Chinese Taipei Chinese Taipei

• European UnionEuropean Union

• KoreaKorea

• New ZealandNew Zealand

• CanadaCanada

• United StatesUnited States

• SwitzerlandSwitzerland

• NorwayNorway

Other MembersOther Members that have contributed with submissions: that have contributed with submissions:

Argentina, Brazil, China, Colombia, Cuba, India,Argentina, Brazil, China, Colombia, Cuba, India, Peru, Peru, Philippines, Saudi Arabia, Qatar Philippines, Saudi Arabia, Qatar

• Phase of Identification of EGs of interest (“universe”) Phase of Identification of EGs of interest (“universe”) is continuing – exercise started in 2005 with a list of is continuing – exercise started in 2005 with a list of group of 9 OECD countries with additional group of 9 OECD countries with additional submissions in 2009-10 (Saudi Arabia, Qatar, Japan, submissions in 2009-10 (Saudi Arabia, Qatar, Japan, Argentina, Philippines, Singapore)Argentina, Philippines, Singapore)

Identification of Identification of environmental goodsenvironmental goods

• List of goods consolidated in Chair’s Report to TNC List of goods consolidated in Chair’s Report to TNC (TN/TE/3/Rev.1 in December 2010 )(TN/TE/3/Rev.1 in December 2010 )

Examples of categories of goods mentioned

• Renewable energy (wind; solar; geothermal); Renewable energy (wind; solar; geothermal);

• Waste management (Solid and hazardous waste; Waste management (Solid and hazardous waste; waste water); waste water);

• Air pollution control; Air pollution control;

• Environmental technologies for conservation, Environmental technologies for conservation, monitoring, analysis and assessment; monitoring, analysis and assessment;

• Energy efficient products;Energy efficient products;

• Carbon capture and storage, gas flaring Carbon capture and storage, gas flaring emissions reduction, efficient consumption of emissions reduction, efficient consumption of energy; energy;

• Biofuels; Biofuels;

• Organic products.Organic products.

Link to Climate Change

• Argentina (2009): Liberalizing goods required in context of projects under Clean Development Mechanism.

• Japan (2009): Including energy efficient products that contribute to climate change mitigation (time bound concessions, not permanent).

• US-EC proposal (2007): Elimination of tariff and non-tariff barriers on list of climate-friendly goods and technologies on an accelerated timeframe by 2013 (43 items identified in World Bank study).

Some examples of overlap Some examples of overlap between different submissions...between different submissions...

ArgentinaArgentinaFriendsFriends

- Wind turbines- Wind turbines

- Solar water heaters- Solar water heaters

- Biogas production tanks - Biogas production tanks

- Methane collection liners- Methane collection liners

Climate Climate change change focusfocus

Examples of goods that Examples of goods that could be used in CDM could be used in CDM projects: projects:

• No agreed definition or criteria (past work in No agreed definition or criteria (past work in OECD, APEC – “defining by doing”)OECD, APEC – “defining by doing”)

• Coverage: industrial Coverage: industrial andand agricultural goods? agricultural goods?

• Majority of goods proposed have “multiple uses” Majority of goods proposed have “multiple uses” (not just environmental)(not just environmental)

• Technical issues relating to tariff classification Technical issues relating to tariff classification (ability to distinguish at border; use of ex-outs)(ability to distinguish at border; use of ex-outs)

• Constant evolution of the technology (Review Constant evolution of the technology (Review mechanism needed? “one off” exercise?)mechanism needed? “one off” exercise?)

Identifying goods/product coverage: Identifying goods/product coverage: Some challengesSome challenges

Tariff cuts “over and above” what will be Tariff cuts “over and above” what will be agreed in NAMAagreed in NAMA

Group of 9 countriesGroup of 9 countries

S&D treatment could take the form ofS&D treatment could take the form of::

• Lower rates of liberalizationLower rates of liberalization

• Different timeframe for the elimination of tariffs Different timeframe for the elimination of tariffs ((i.e.i.e. longer implementation periodslonger implementation periods))

• Additional flexibilities Additional flexibilities (e.g. product exemptions)(e.g. product exemptions)

• Interested Members would draw their own individual Interested Members would draw their own individual list of goods to be liberalized on an list of goods to be liberalized on an MFN basisMFN basis

•Process of bilateral negotiations Process of bilateral negotiations

• Avoids “one size fits all” (not a unique set of Avoids “one size fits all” (not a unique set of products); more in line with Members’ individual goals products); more in line with Members’ individual goals and level of developmentand level of development

Requests and offers (Brazil)Requests and offers (Brazil)

Integrated Approach (Argentina)Integrated Approach (Argentina)

1- Agree multilaterally on 1- Agree multilaterally on categories of environmental categories of environmental activitiesactivities to combat climate change; to combat climate change;

2- In accordance with categories, 2- In accordance with categories, identifyidentify climate climate change mitigation and adaptation goodschange mitigation and adaptation goods that may be that may be used in national projects; used in national projects;

3- Proceed to reduce/eliminate tariff and NTBs with 3- Proceed to reduce/eliminate tariff and NTBs with respect to goods required in the context of respect to goods required in the context of projects projects under the Clean Development Mechanism (time bound)under the Clean Development Mechanism (time bound)

•Import barriers related to customs procedures, valuation of goods; Import barriers related to customs procedures, valuation of goods; Import prohibitions; Immigration procedures; Local content Import prohibitions; Immigration procedures; Local content requirements; Lack of intellectual property rights protection.requirements; Lack of intellectual property rights protection.

• Some Horizontal examples of NTMs but are these not already Some Horizontal examples of NTMs but are these not already subject to the existing WTO Agreements subject to the existing WTO Agreements

Non-tariff barriers (NTBs) Non-tariff barriers (NTBs)

• Need to establish mechanism to deal with NTBs specific to Need to establish mechanism to deal with NTBs specific to environmental goods environmental goods

Addressing other issues Addressing other issues under the mandate under the mandate

Transfer of technology / TA/ S&D Transfer of technology / TA/ S&D

• Not specifically mentioned in mandate; There is a WTO Not specifically mentioned in mandate; There is a WTO Working Working Group on Trade and Transfer of Technology established as part of Doha Group on Trade and Transfer of Technology established as part of Doha Work ProgrammeWork Programme

• In CTESS: some information exchange on existing projects or In CTESS: some information exchange on existing projects or activities to promote transfer of environmentally-sound technology; activities to promote transfer of environmentally-sound technology; no specific/detailed proposal to date no specific/detailed proposal to date

Addressing other issues Addressing other issues under the mandate under the mandate

• Argentina and BrazilArgentina and Brazil call for developed countries to provide call for developed countries to provide information to enable developing countries to better assess available information to enable developing countries to better assess available environmentally sound technologies in a given field as well as to environmentally sound technologies in a given field as well as to properly apply and manage them to suit their specific needs and properly apply and manage them to suit their specific needs and priorities priorities

Addressing other issues under the Addressing other issues under the mandatemandate

Link to Services negotiations Link to Services negotiations

• Environmental services are covered as part of broader Environmental services are covered as part of broader mandate for Services liberalization (voluntary, request/offer mandate for Services liberalization (voluntary, request/offer basis)basis)

• Members’ Proposals to revise current Environmental Members’ Proposals to revise current Environmental services classification services classification

• Environmental services relevant in context of environmental Environmental services relevant in context of environmental goods identification but negotiations following two separate goods identification but negotiations following two separate tracks tracks

“Universe” of EG Submissions October 2010

EG Submissions

6 Submissions (as of 1 September 2010):

• Submission by the „9 Members“ (Canada, the European Union, Japan, Korea, New Zealand, Norway, Switzerland, Chinese Taipei and the United States): JOB(09)/132 circulated 9 October 2009

• Submission by Saudi Arabia: JOB(09)/169 circulated 6 November 2009

• Submission by Japan: TN/TE/W/75/Add.1 circulated 16 February 2010

• Submission by the Philippines: JOB/TE/2 circulated 16 February 2010

• Submission by Qatar: JOB/TE/4 circulated 14 June 2010

• Submission by Singapore: JOB/TE/5 circulated 23 June 2010

HS2002 Classification used in Submissions:

• All submissions are based on the HS2002 classification. However, data of WTO Members from 2003-2008 are recorded also in the HS1992, HS1996, and HS2007 classifications. To ensure maximum coverage, in this presentation HS6-codes from all 4 HS-Revisions have been used – thus, the number of HS6-codes per submissions are larger than the number of HS6-codes contained in the original submissions.

1 Friends (F): 195 HS6

3 Japan (J): 90 HS6

2 Saudi Arabia (S): 291 HS6

4 Philippines (P): 24 HS6

Universe of EGs: 514 HS6-Codes(Containing both original HS2002-codes AND corresponding HS1992,HS1996,HS2007-codes)

5 Qatar (Q): 20 HS6

6 Singapore (Si): 91 HS6

Overlap between Lists

Example for a Quadruplicate: Gas Turbines 841181/841182 – two submissions (9M,P) only consider the use with bio-gas and landfill gas; two submissions (S,Q) also include use with natural gas

368

102

37

70

50

100

150

200

250

300

350

400

Singles (no overlap) Duplicates Triplicates Quadruplicates

Saudi ArabiaSaudi ArabiaFriendsFriends

92 items in common

Categories from Friends’ list with a Categories from Friends’ list with a high level of convergence arehigh level of convergence are: :

- Waste water management and potable - Waste water management and potable water treatmentwater treatment

-Air Pollution ControlAir Pollution Control

- Heat and Energy ManagementHeat and Energy Management

- Noise and Vibration Abatement Noise and Vibration Abatement

- Natural Risk ManagementNatural Risk Management

263 items (HS) 263 items (HS) used for: used for:

- Carbon capture - Carbon capture and storageand storage

- Gas flaring - Gas flaring emissions emissions reductionreduction

- Efficient - Efficient consumption of consumption of energyenergy

Some examples of overlap Some examples of overlap between different submissions...between different submissions...

WTO Nominal Exports 2003-2008(in Trillions of US$, 514 HS6-Codes, Source: UN Comtrade)

$5.1

$6.3

$7.2

$8.3

$9.6

$11.1

$1.3$1.6 $1.9

$2.2$2.6

$3.0

$0

$2

$4

$6

$8

$10

$12

2003 2004 2005 2006 2007 2008

Total Merchandise Exports

Exports Environmental Goods

(2003-2008: +217%)

(2003-2008: +230%)

Share of EGs in WTO Merchandise Exports 2008

(in Trillions of $; 514 HS6-Codes; Data Source: UN Comtrade)

All Goods: $11 Trillion

Environmental Goods$3

27%

Other Goods$8

73%

WTO Nominal Trade of EGs by Category(in Trillions of US$, 514 HS6-Codes, Data Source: UN Comtrade)

$0.34$0.40 $0.44

$0.49$0.57 $0.60

$0.10 $0.11 $0.14 $0.16 $0.19$0.26 $0.30

$0.65

$0.79

$0.90

$1.02

$1.23

$1.36

$0.15$0.21

$0.30$0.35

$0.41

$0.08$0.10

$0.12 $0.14 $0.17

$0.58

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

$1.60

2003 2004 2005 2006 2007 2008

APC

RE

WM

ET

Oth

Top 15 WTO Exporters 2008 (in Billions of US$, Compilation List, 108 WTO Members available, Data

Source: UN Comtrade)

1. EU27 External, $598, 19%

2. China, $410, 14%

3. USA, $363, 12%

4. Japan, $324, 11%

5. Rep. of Korea, $134, 4%

6. Singapore, $133, 4%

7. Canada, $125, 4%

8. Mexico, $101, 3%

9. Hong Kong, China, $83, 3%

10. Malaysia, $81, 3%

11. Chinese Taipei, $71, 2%

12. Thailand, $57, 2%

13. Norway, $56, 2%

14. India, $50, 2%

15. Turkey, $36, 1%

Others, $415, 14%

1. EU27 External2. China3. USA4. Japan5. Rep. of Korea6. Singapore7. Canada8. Mexico9. Hong Kong, China10. Malaysia11. Chinese Taipei12. Thailand13. Norway14. India15. TurkeyOthers

Top 15 WTO Importers 2008(in Billions of US$, Compilation List, 108 WTO Members available, Data

Source: UN Comtrade)

1. USA, $624, 20%

2. EU27 External, $603, 19%

3. China, $237, 8%

4. Japan, $169, 5%

5. Canada, $116, 4%

6. Rep. of Korea, $113, 4%

7. Singapore, $108, 3%

8. Hong Kong, China, $94, 3%

9. Mexico, $93, 3%

10. Chinese Taipei, $72, 2%

11. Australia, $64, 2%

12. Indonesia, $59, 2%

13. India, $51, 2%

14. Brazil, $47, 2%

15. Turkey, $44, 1%

Others, $623, 20%

1. USA2. EU27 External3. China4. Japan5. Canada6. Rep. of Korea7. Singapore8. Hong Kong, China9. Mexico10. Chinese Taipei11. Australia12. Indonesia13. India14. Brazil15. TurkeyOthers

Average Bound Tariffs 2009 on EGs(514 HS6-Codes, Data Source: WTO Integrated Database, TL-Weighted

Averages)

42%

27%

5%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

LDCs

Developing Countries

Industrial Countries

Average Applied Tariffs 2009 on EGs

11%

6%

2%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

LDCs

Developing Countries

Industrial Countries

Percentage of Duty-Free Tariff Lines 2009

58%

39%

11%

0% 10% 20% 30% 40% 50% 60% 70%

Industrial Countries

Developing Countries

LDCs

Average MFN Tariffs 2009 by Category(Data Source: WTO Integrated Database, TL-Weighted Averages)

14.4%

10.7% 10.9% 10.8%11.2%

10.0%

6.1%5.5% 5.5%

6.1%

3.0%

1.9% 1.9%1.5% 1.8%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

APC RE WM ET Oth

LDCs

Developing Countries

Industrial Countries

• Linkages with other areas of DDA negotiations (NAMA/Ag Linkages with other areas of DDA negotiations (NAMA/Ag modalities) modalities)

Next StepsNext Steps

• Further discussions needed starting with cross-cutting and Further discussions needed starting with cross-cutting and development-related issues in parallel to the work on the development-related issues in parallel to the work on the identification of goods within categoriesidentification of goods within categories

• 30 November 2010 TNC meeting: 2011 a window of 30 November 2010 TNC meeting: 2011 a window of opportunity for the Doha Round negotiationsopportunity for the Doha Round negotiations

•Trade and Environment negotiations will accelerate from Trade and Environment negotiations will accelerate from 10 January 10 January

Thank You

•

Trade Negotiations Trade Negotiations Committee (TNC)Committee (TNC)

Negotiating Negotiating Group on Group on

Market Market AccessAccess

Negotiating Negotiating Group on Group on

RulesRules

Special Special Session of the Session of the Committee on Committee on

AgricultureAgriculture

Special Special Session of Session of the Council the Council for Trade in for Trade in

ServicesServices

Special Session Special Session of the Dispute of the Dispute

Settlement BodySettlement Body

CTE CTE Special Special SessionSession

TRIPS Special TRIPS Special SessionSession

GENERAL COUNCILGENERAL COUNCIL

Para 31(iii)Para 31(iii)

FriendsFriends PhilippinesPhilippines

Renewable energyRenewable energy: PV cells; solar water heaters; towers and lattice masts for wind turbines; hydraulic turbines

Heat and Energy ManagementHeat and Energy Management: heat exchangers to be used in RE systems

Waste Management, Recycling and Waste Management, Recycling and RemediationRemediation: parts for biomass boilers; soot removers (air pollution control)

17 items in total, 16 of which are also contained in Friends’ list

Some examples of overlap Some examples of overlap between different submissions...between different submissions...

Submissions identifying EGs of interest:

- Friends (Job(09)/132)

- Argentina (TN/TE/W/74)

- Japan (TN/TE/W/75 and add.1)

- Saudi Arabia (Job(09)/169 and add.1)

- Philippines (Job/TE/2)

- Qatar (Job/TE/4)

- Singapore (Job/TE/5)

- Brazil (JOB/TE/6) (Biofuels)

Some overlaps with respect to products...

State-of-Play under the State-of-Play under the Work Programme Work Programme

Caveats

Trade Data (UN Comtrade Database):

• Based on entire HS6-Lines

• Nominal US$ Values in Time Series using Current Exchange Rates (and not Purchasing Power Parity – Rates)

• Recording Errors and Evaluation Differences between reporting importing and reporting exporting countries

• Officially reported trade flows, when available, otherwise estimated via official reports of trading partners

Tariff Data (WTO Integrated Database and ITC):

• Simple („Tariff-Line-Weighted“) Averages that weigh all scheduled Applied MFN tariff lines equally – regardless of actual trade volumes

Trade and Tariffs:

• HS-Concordance – All EG-lists apply the HS2002 Revision, which currently is only used by 23 Members. The concordance to other Revisions may be imprecise, since many codes have no one-to-one relationship with HS2007 and HS1996 codes.

• „Developed“, “Developing“, „LDCs“: All WTO Members are counted as „Developing“ with the exception of Australia, Canada, the EU27, Iceland, Japan, Liechtenstein, New Zealand, Norway, Switzerland and the USA that are counted as „Developed“, and all LDCs, that are counted as „LDCs“

HS6-Codes per List (Containing both original HS2002-codes AND corresponding

HS1992,HS1996,HS2007-codes)

291

195

91 90

24 20

0

50

100

150

200

250

300

Saudi Arabia 9 Members Singapore Japan Qatar Phillippines

317

86

41 38 32

0

50

100

150

200

250

300

350

EnvironmentalTechnologies

Waste Management /Water Treatment

Air Pollution Control Renewable Energies Others

Maximum Number of HS6-Lines per Category

(Drawn from all HS6-Revisions: HS92,HS96,HS02,HS07)Environmental Technologies:1. Carbon Capture and Storage Technologies (CCS), Gas Flaring Emission Reduction Technologies (GFR), Efficient Consumption of Energy Technologies (EC)2. Cleaner or More Resource Efficient Technologies and Products (CT/P)3. Energy Efficiency (EE)4. Environmental Monitoring, Analysis and Assessment Equipment (M/A)5. Heat and Energy Management (H/EM)6. Natural Risk Management (RM)7. Noise and Vibration Abatement (N/V)

Others:1. Environmentally Preferable Products based on End-Use or Disposal Characteristics (EPP)2. Natural Resources Protection (NR)3. Renewable Products and Energy Sources (RPE)4. Other (OTH)