1st April 2007
WTO Negotiating Strategy on Environmental Goods and Services for Asian Developing Countries
Environmental goods and services (EGS) as a subset of goods and services was singled out for attention in the negotiating mandate adopted at the Fourth Ministerial Conference of the World Trade Organization (WTO) in November 2001. Increasing access to and use of EGS can yield a number of benefits including reducing air and water-pollution, improving energy and resource-efficiency, and facilitating solid-waste disposal. Gradual trade liberalisation and carefully managed market opening in these sectors can also be a powerful tool for economic development by generating economic growth and employment and enabling the transfer of valuable skills, technology and know-how embedded in such goods and services. In short, well-managed trade liberalisation in EGS can facilitate the achievement of sustainable development goals laid out in global mandates such as the Johannesburg Plan of Implementation, the UN Millennium Development Goals (MDGs) and various multilateral environmental agreements.
Rapid liberalisation in EGS, whether including traditional ‘end-of pipe’ goods and preventive technologies only, or environmentally preferable products (EPPs), will create enormous market opportunities for EGS firms and for countries that have a competitive domestic capacity in EGS. In order to capture a share of this growing market, developing countries must build up their domestic capacities for production and export of EGS. At the moment, the greatest potential for doing so lies in Asia. While constituting a small part of the environmental services sector globally, the sector has witnessed double-digit growth in Asia. Asia is also a region characterised by rapid economic growth, urbanisation and increasing pressure on available urban infrastructure to meet human needs. There are also significant environmental problems such as air-pollution and solid waste that EGS may help to prevent or mitigate.
At the same time production of traditional ‘end-of pipe’ goods and clean technologies is concentrated in developed countries and many developing countries are concerned that EGS negotiations may not offer them much in terms of export opportunities and are worried about impacts on revenues from import duties if tariffs are lowered. Where export opportunities exist for developing countries, there may be significant trade barriers, especially non-tariff ones to contend with in the major export markets. While a number of Asian countries have established domestic firms producing not only EPPs but also ‘traditional’ environmental goods as well as environmental services such as environmental consultancy, these are still mainly concentrated in SMEs. While the role of imports, foreign investment and partnerships in the introduction of new technologies and know-how is acknowledged, there are serious concerns about the impact of imports on domestic jobs and viability of domestic firms including SMEs. There are also concerns that imports by themselves will not lead to the development of a sound technological base and learning process, or result in meaningful access to technologies and know-how by domestic firms.
Thus, while Asian countries have many common elements of concern regarding the sustainable development impacts of EGS liberalisation, they are also characterised by diverse interests and priorities resulting from varying degrees of development, domestic capacities and environmental concerns. All of this implies that they will need to carefully tailor their negotiating strategies on EGS at the WTO to reflect these common and diverse elements of concern.
This paper by Vicente Paolo-Yu provides a number of options for Asian developing countries to craft a negotiating strategy based on ‘developmental’ approaches that would respond to the sustainable development needs and concerns of these countries. The paper advocates carefully tailoring EGS liberalisation so that it can deliver meaningful trade and development benefits while responding to environmental priorities in Asian developing countries. This could be done through a strategy of selecting specific sectors within EGS and obtaining appropriate flexibilities within WTO that would deliver import and export benefits in the context of countries’ own strategic sustainable development policies.
Mr. Vicente Paolo Yu is the Programme Coordinator for the Global Governance for Development Programme of the South Centre, an intergovernmental thinktank for developing countries based in Geneva, Switzerland. He is a lawyer by training, has taught law at the University of the Philippines, and has written extensively on international trade, environment, and development law and policy.
The paper is part of a series of issue papers commissioned in the context of ICTSD’s Environmental Goods and Services Project, to address a range of cross-cutting, country specific and regional issues of relevance to the current EGS negotiations. The project aims to enhance developing countries’ capacity to understand trade and sustainable development issue linkages with respect to EGS and reflect regional perspectives and priorities in regional and multilateral trade negotiations. We hope you will find this paper to be stimulating and informative reading and useful for your work.