Introduction to WTO Environmental Goods and Services Negotiations

Introduction to WTO Environmental Goods and Services Negotiations

Background information for Parties to the Basel Convention

This note provides background information of relevance to Parties to the Basel Convention on negotiations taking place at the World Trade Organization on the liberalization of trade in environmental goods and services.

Context

In Decision VI/29, the Conference of Parties to the Basel Convention emphasizes the need for cooperation with international organizations and requests the Secretariat “to continue and further strengthen its cooperation in critical areas for the effective and concrete implementation of the Basel Convention, the Basel Protocol and Amendments with relevant organizations, including the … World Trade Organization.”

In Decision VI/30, the Conference of the Parties requested the Secretariat inter alia to “monitor developments in the World Trade Organization Committee on Trade and Environment meeting in special session and report to the Parties thereon.”

The WTO Committee on Trade and Environment meeting in special session is mandated to address the following three negotiating items which are identified in Paragraph 31 of the WTO Doha Ministerial Declaration:

Paragraph 31(i) requires WTO Members to negotiate on “the relationship between existing WTO rules and specific trade obligations set out in multilateral environmental agreements”.
Paragraph 31(ii) requires WTO Members to negotiate on “procedures for regular information exchange between MEA Secretariats and the relevant WTO committees, and the criteria for the granting of observer status”.
Paragraph 31(iii) requires WTO Members to negotiate “the reduction or, as appropriate, elimination of tariff and non-tariff barriers to environmental goods and services”.

This note provides background information of relevance to Parties to the Basel Convention on negotiations taking place under Paragraph 31(iii) of the Doha Ministerial Declaration with a particular focus on the negotiations on the liberalization of trade in environmental goods, which are taking place in the WTO Committee on Trade and Environment meeting in special session. Negotiations on environmental services are taking place in the WTO Council for Services in special session and are addressed in this note where appropriate.

Environmental goods and services and the Basel Convention

Environmental goods and services are relevant in the context of the effective implementation of the Basel Convention and its protocols and amendments. The preamble to the Convention notes the awareness of Parties to the Basel Convention “of the need to continue the development and implementation of environmentally sound low-waste technologies, recycling options, good house-keeping and management systems with a view to reducing to a minimum the generation of hazardous wastes and other wastes …”

Article 10(2) (c) of the Convention states that Parties shall cooperate “in the development and implementation of new environmentally sound low-waste technologies and the improvement of existing technologies with a view to eliminating, as far as practicable, the generation of hazardous wastes and other wastes and achieving more effective and efficient methods of ensuring their management in an environmentally sound manner …”

The Basel Declaration on Environmentally Sound Management similarly emphasizes the need for the “[i]mprovement and promotion of institutional and technical capacity-building, as well as the development and transfer of environmentally sound technologies, especially for developing countries and countries with economies in transition.”

The Open-Ended Working Group has prepared various technical guidelines on the environmentally sound management of hazardous and other wastes, which focus on the technologies and associated services required to implement the Convention. The Basel Regional Centers have also focused on the technologies, goods and services required by developing countries and the means for transferring and applying them.

Relevance of WTO environmental goods and services negotiations

WTO negotiations on environmental goods and services are relevant to Parties to the Basel Convention. Underlying the WTO mandate in Paragraph 31(iii) is the view that reducing tariff and non-tariff barriers to trade in environmental goods and services will promote access to and use of environmental goods and services and, thereby, help in managing a range of environment and development issues.

Since the inception of negotiations in 2002, WTO Members have proposed a number of waste-related environmental activities or categories as suitable for coverage in negotiations. These have included water and waste management, solid waste management, remediation and clean up and environmental monitoring and analysis.[1] In the lists of environmental goods submitted by WTO Members (Canada, the European Communities, Japan, Korea, New Zealand, Qatar, Switzerland, Chinese Taipei and the United States) 108 of the 480 entries address solid and hazardous waste management.[2] The amount and hazardousness of waste generated by a produce along its life cycle has been suggested as a relevant factor in identifying whether a product could be considered “environmentally preferable”.[3] The Basel Convention and other multilateral environmental agreements have also been identified by some WTO Members as instruments that can provide guidance in the identification of environmental goods.[4] Negotiations on environmental services have referred to a 1991 Services Sectoral Classification List that includes four categories: sewage, refuse disposal, sanitation and “other” (MTN/GNS/W/120).[5]

WTO negotiations on environmental goods and services therefore touch on a range of issues that also fall within the ambit of the Basel Convention, and so are of consequence to Parties to the Basel Convention as they consider how best to implement the Convention and fulfill its objectives.

A brief history of WTO negotiations on environmental goods

Since its first meeting in 2002, the Committee on Trade and Environment has met in Special Session nineteen times. At its first meeting on 22 March 2002, the CTESS discussed a range of procedural and substantive issues.[6] On paragraph 31(iii), WTO Members generally supported the idea that the negotiations on environmental goods and services be conducted in the Negotiating Group on Market Access for Non-Agricultural Products and the Council for Trade in Services Special Session, respectively, and that the CTE Special Session focus on clarifying the concept of environmental goods. Some participants noted that while they would not be opposed to definitions being developed in the CTE Special Session, they could not accept any sequencing between this work and that of the Negotiating Group on Market Access. Other members also noted that some environmental goods were agricultural in nature and requested the Special Session to keep track of the work undertake in the Committee on Agriculture Special Session.

At its second meeting on 11-12 June 2002, WTO Members discussed a submission by New Zealand that focused on the definition of environmental goods and noted work undertaken by APEC and the OECD. At this meeting a range of issues were raised about the 31(iii) mandate including:

Whether products with dual and multiple end-uses should be classified as “environmental goods”;
Whether end-use criteria and process and production methods (PPMs) would be required to define environmental goods, and implications for the concept of “like products”;
How goods would be captured by the harmonized system; and
How relativity in the concept of “environmental friendliness” could be addressed when goods considered environmentally friendly in some countries could be seen as unfriendly in others).[7]

These and other issues were discussed in subsequent meetings. A number of WTO Members, while noting the value of APEC and OECD lists of environmental goods, proposed that a “WTO list” should be developed. WTO members also discussed definitions and criteria for the identification of environmental goods, and a number of delegations offered lists of products that they wanted considered as environmental goods for the purposes of the negotiation.

Several participants stated their preference for product end-use criteria as opposed to the use of process and production methods (PPM) as a criterion in the identification of environmental goods.[8] It was questioned whether environmentally preferable, but nonetheless environmentally harmful, products should be included in a list of environmental goods.[9]

A number of delegations emphasized the importance of ensuring that the negotiations reflected the interests of developing countries, and noted that technical assistance was necessary to help identify environmental goods of export interest to developing countries.[10] The question was also raised again whether any list of environmental goods ought to include agricultural products.[11]

Following the Cancun Ministerial Meeting in September 2003, WTO Members discussed a number of proposals for advancing the negotiations. The United States submitted a proposal calling for the establishment of a “core” and a “complementary” list of environmental goods.[12] The core list would include products on which there was a consensus that they constituted environmental goods. The complementary list would include products for which a definitive consensus could not be reached, but for which there was a high degree of acknowledgement that they were significant for environmental protection, pollution prevention or remediation, and sustainability.

China subsequently proposed the creation of two environmental goods lists, a “common” and a “development” list. The common list would include products on which there was a consensus that they constituted environmental goods, with priority given to products of export interest to developing and least-developed countries. The development list would include products selected from the core list by developing countries for special and differential treatment.[13]

During 2004, a number of delegations submitted lists of proposed environmental goods. Some delegations argued that a list-based approach may not work in isolation, and that there could be a need for the development of criteria or a definition of environmental goods. Several developing country delegations stated that they were net importers of environmental goods, and that the negotiations should address their objectives by improving technology transfer and supporting the competitiveness of their domestic industries.[14] As noted above, a number of proposals include technologies relevant to the environmentally sound management of hazardous wastes. A few proposals also sought to include waste and scrap materials as environmental goods for consideration in the negotiations.

In early 2005, New Zealand suggested an approach in which participants would “define by doing” (i.e. adopt an inductive approach to defining goods from lists submitted by Members). It also suggested that certain “reference points” guide the identification of environmental goods, and suggested that any agreed list be updated on a periodic basis to reflect technological change (a “living list”).[15] The European Commission proposed the use of certain “guiding principles” to help identify environmental goods, and suggested that all Members, except least developed countries, should agree to “deeper tariff cuts” on environmental goods.[16] A number of developing countries reiterated the need for a balanced negotiation, with adequate consideration of technology transfer and special and differentiated treatment.

In June 2005, India noted ongoing concerns with the “list approach” and suggested an alternative “environmental project approach” to the negotiations.[17]Under this approach, Members would identify the environmental goods and services they want to liberalize for the purposes of direct inclusion in environmental projects identified by a “designated national authority”. The projects could be aimed at meeting national environmental objectives as well as objectives of any bilateral or multilateral environmental agreement. The criteria for “environmental projects” would be agreed upon in the CTESS with due consideration to the policy space of national governments. India submitted that the project approach provided a number of advantages over the list approach, including addressing issues of multiple-use, capacity building and technology transfer.

At the July 2005 CTESS meeting, Egypt expressed reservations about the inclusion of the category of waste and scrap utilization in the submission of another WTO Member, noting that some Parties to the Basel Convention face difficulties in controlling permissible or non-hazardous wastes. Egypt noted that the Harmonized System of custom codes do not differentiate between hazardous and non-hazardous goods, and that customs officials face challenges of illegal trafficking in hazardous waste, distinguishing between waste and regular recyclable goods, the mixing of hazardous waste in larger legal shipments, mislabeling of containers and false declarations, as well as difficulties in testing, sampling, analyzing, detecting and investigating products to determine if they are hazardous waste or not.

Since mid-2005, discussions have focused extensively on the nature and respective advantages and disadvantages of the list and project approaches to the negotiations.[18] Without prejudice to these approaches, WTO Members subsequently exchange views about the environmental

attributes of goods through a number of Information Exchange Sessions, and presented information on national environmental projects and initiatives.[19]

More recently, Argentina proposed an “integrated approach” to the negotiations that combines some of the elements of each approach.[20] India sought to further refine and clarify the project approach.[21] And proponents of the list approach proposed modalities[22] and undertook an effort to agree on a reduced set of goods based on their importance to the environment and customs workability, which, in their judgment, offer the potential for a high degree of convergence among WTO Members (referred to as a “Potential Convergence Set”).[23] Notably, wastes and recyclable products were not included in this list in consideration of the earlier concerns raised by some WTO Members.

In June 2007, Argentina and India submitted a revised “integrated approach” under which WTO Members would identify and agree on environmental activities (e.g. air pollution control, water and waste water management, and so on) and then identify a list of public and private entities that carry out these activities.[24] These lists would be negotiated and notified the WTO, and all goods imported by the notified entities for use in the agreed activities would be granted preferential tariff treatment, as agreed by WTO Members.

At the end of the June 2007 CTESS, a number of delegations called for efforts to find convergence between two different approaches to the paragraph 31(iii) mandate – the list approach, and the project or integrated approached. Moving a discussion about convergence forward requires an understanding of the two approaches, as well as the views of WTO Members about their respective advantages and disadvantages. It also requires the identification of a number of areas where the approaches overlap or convergence, as the basis of a discussion about a shared effort to move the negotiations forward.

Issues of relevance to the Basel Convention

In the context of Decision VI/29 and VI/30 of the Conference of the Parties to the Basel Convention, which promote cooperation with the World Trade Organization and request the Secretariat to monitor developments in the WTO Committee on Trade and Environment meeting in special session, there are a number of issues raised within the context of the WTO environmental goods and services negotiations which may merit further consideration by Parties to the Basel Convention:

Distinction between wastes, environmental goods and environmental services. One distinction arising in WTO discussions is that between wastes and the goods, technologies and services required to manage those wastes. In order to protect human health and the environment, the Basel Convention seeks to control and limit the transboundary movement of hazardous and other wastes. To achieve this same goal, it actively seeks to promote the transfer of the environmentally sound technologies needed to manage hazardous and other wastes, and promotes practices for the environmentally sound management of those wastes. As noted above, this distinction has been drawn on by some WTO Members, who have suggested that wastes and scrap materials should not be considered an environmental good for the purposes of the negotiation.[25] As discussions in the Basel Convention and WTO progress, how should the distinction between hazardous wastes, non-hazardous wastes and environmentally sound waste management technologies be addressed in discussions about environmentally sound management of hazardous wastes and/or the liberalization of trade in environmental goods? In light of the challenges faced in assessing the characteristics of waste materials, how, for example, might wastes included on “List B” (Annex 9 to the Convention) be addressed in the context of future discussions about the liberalization in environmental goods?
Which technologies, goods and services are required to support implementation of the Convention? The Basel Conventions’ Technical Working Group, and more recently the Open-ended Working Group, have developed a range of technical guidelines and manuals on the environmentally sound management of hazardous and other wastes. A number of these offer recommendations on appropriate approaches for selecting technologies.[26] The Basel Convention Regional Centers have assisted Parties to identify technologies and practices for environmentally sound waste management. In light of these experiences, are there specific technologies, goods or services that warrant further consideration in the context of WTO negotiations in light of the Convention’s focus on environmentally sound management of wastes and fulfillment of the objectives of the Convention?
What is the effect of removing tariff and non-tariff barriers to specific goods and services? Removing tariff and non-tariff barriers to trade in environmental goods and services will likely have different effects for different goods and services and in different national contexts. Reducing domestic tariffs, for example, would, all things equal, reduce the price of imported technologies to domestic consumers and firms and increase the level of competition faced by domestic technology providers. Reducing foreign tariffs on exported technologies, would, all things equal, reduce the price of exported products in foreign markets and improve the market access of domestic exporters. How these issues play out in practice – an consequently how they affect fulfillment of the objectives of the Basel Convention – is an issue for consideration in light of the specific characteristics of specific goods, services, markets and national contexts.
Linkages between environmental goods and services. A number of WTO Members have noted that the provision of environmental services is closely linked to trade in related environmental goods as many environmental activities involve the use of goods and services in conjunction.[27] Some WTO Members have noted that the separation of goods and services in a particular environmental activity can be difficult because these are very often integrated in practice.[28] In the context of the Basel Convention, how should linkages between the environmental goods and services required for the environmentally sound management of hazardous and other wastes be addressed when considering the liberalization of these goods and services at the WTO? Given that negotiations for the liberalization of trade in environmental goods and services are occurring in two separate WTO bodies – the Committee on Trade and Environment and the Services Council – how might these linkages be addressed in practice?
Strengthening cooperation and improving synergies. A number of WTO Members have emphasized the importance of cooperation among relevant ministries and agencies at the national level in order to ensure the realization of synergies among trade and environment agreements. WTO Members and Parties to the Basel Convention have similarly emphasized the importance of cooperation and information exchange among trade and environment organizations, as reflected in Decision VI/29 and VI/30 of the Conference of the Parties to eh Basel Convention and in paragraph 31(ii) of the Doha Ministerial Declaration, which calls for negotiations on “procedures for regular information exchange between MEA Secretariats and the relevant WTO committees, and the criteria for granting observer status”. In light of these considerations, how can representatives to the Basel Convention best input into discussions at the national and international level relating to the liberalization of trade in environmental goods and services and their potential contribution to environmentally sound management of wastes and implementation of the Basel Convention?