TRADE AND ENVIRONMENTand Mahesh Sugathan • “Many studies also point, in particular, to the...

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TRADE AND ENVIRONMENT A RESOURCE BOOK Edited by Adil Najam, Mark Halle and Ricardo Meléndez-Ortiz An excerpt from Environmental Goods and Non-agricultural Market Access – Nathalie Bernasconi-Osterwalder, Linsey Sherman and Mahesh Sugathan Expert Opinion: Liberalization of environmental goods: A double-edged sword or a panacea? – Beatrice Chaytor Expert Opinion: Are environmental goods good for the South? – Magda Shahin ISBN 978-1-895536-99-7

Transcript of TRADE AND ENVIRONMENTand Mahesh Sugathan • “Many studies also point, in particular, to the...

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TRADE AND ENVIRONMENT

A RESOURCE BOOKEdited by

Adil Najam, Mark Halle and Ricardo Meléndez-Ortiz

An excerpt from

Environmental Goods and Non-agricultural Market Access

– Nathalie Bernasconi-Osterwalder,

Linsey Sherman and Mahesh Sugathan

Expert Opinion:Liberalization of environmental goods: A double-edged sword or a panacea?

– Beatrice Chaytor

Expert Opinion:Are environmental goods

good for the South? – Magda Shahin

ISBN 978-1-895536-99-7

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Issues and Debates

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The relationship between the environmentand trade liberalization in industrial goods iscomplex and of great interest to the trade,environment and development communities.Literature and impact studies point to thenegative environmental impact of liberaliza-tion in forestry, fisheries and minerals in theabsence of sound environmental policies. Atthe same time, liberalization may have envi-ronmental benefits. Tariff barriers onprocessed or value-added products are in gen-eral much higher than the raw naturalresource exports from which they are derived.As a result, many developing countries haveexported large quantities of natural resourcesfor the sake of relatively little export revenue.Reducing high tariffs on processed, value-added products could ensure that developingcountries earn more through their exports ata lower cost to their natural resource stocks.

Non-tariff measures (NTMs, referred to inthe negotiations as non-tariff barriers orNTBs) used by developed countries thatoften fulfill important environmental orhealth policy objectives continue to be per-ceived by developing countries as significanttrade barriers to their exports (particularly forfishery and forestry products). Developingcountries, on the other hand, generally apply

high tariffs on manufactured products.Hence, the focus of attention for developedcountries in market access negotiations isoften tariffs, while for developing countries itis NTMs. The exception is developing coun-try demands for the elimination of extremelyhigh tariffs on particular tariff lines (tariffpeaks) and higher tariffs for higher value-added products (tariff escalation) in devel-oped country markets.

Many studies also point, in particular, to thebenefits of eliminating barriers to imports ofso-called “environmental goods.” There is anongoing debate, especially within the contextof World Trade Organization (WTO) negoti-ations, on the scope of what constitutes envi-ronmental goods. While developed countriesenjoy a comparative advantage in the pro-duction of industrial environmental goodsused for environmental remediation, andargue for the definition to include theseproducts, many developing countries areinterested in including environmentallypreferable products (EPPs). However, thestandards these products might have to meetto qualify as “environmental,” such as certifi-cation, standardization and labelling, mightimpose equivalent costs and could be con-strued as barriers to trade.

Environmental Goods and Non-agricultural Market Access

Nathalie Bernasconi-Osterwalder, Linsey Sherman and Mahesh Sugathan

•“Many studies also point, in particular, to the benefits of eliminating barriers toimports of so-called ‘environmental goods.’ There is an ongoing debate, especially

within the context of WTO negotiations, on the scope of what constitutes environmental goods.”

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Relevant WTO Negotiations

The Doha Ministerial Conference in 2001mandated the WTO Committee on Tradeand Environment (CTE) to launch specificnegotiations on trade and environmentincluding on the reduction or elimination oftariff and non-tariff barriers to environmentalgoods and services (EGS) under Paragraph31(iii) of the Doha mandate. This is anentirely new issue for the WTO and it estab-lishes a direct link between negotiations inthe CTE and in the Negotiating Group onMarket Access (NGMA) on industrial goods(or non-agricultural market access, NAMA).(See related discussion on EnvironmentalServices.)

Negotiations relating to NAMA are primari-ly taking place in the NGMA, where much ofthe discussion in the negotiations has cen-tered on cutting tariffs. In that context, dis-cussion has focused on variations of differentformulae that, if agreed, would then beapplied by Members to systematically reducetheir current tariff levels. The type and con-struction of the formula has been a point ofcontroversy and WTO Members have beendivided on the issue largely, but not exclu-sively, along developed-developing countrylines. In addition, small groups of countrieshave begun additional “informal” negotia-tions on the complete elimination of tariffs inspecific sectors, including environmentally-sensitive sectors, such as forestry and fish-eries.

The second significant aspect of currentNAMA negotiations is the discussion relatedto NTMs. At the insistence of developingcountries in Doha, NTMs were included inthe negotiations on NAMA, both to addressthe use of non-transparent NTMs in devel-oped countries and to counterbalance theeffects of reducing their own tariffs. In thenegotiations on NTMs, Members have beenrequested to notify those measures problem-atic for their exporters to the NGMA. SeveralMembers, from both developed and develop-

ing countries, have notified various environ-mental, safety and/or health standards as bar-riers to their exports. It is important to notethat these notifications are not intended toindicate whether or not measures are per-ceived as illegal or whether or not they pur-sue legitimate public policy objectives.Notification simply reflects the perceivedrestrictive effects on trade of these measures.

Interests and Fault LinesTariff Negotiations: Sectoral Agreements

Although sectoral agreements for tariff elimi-nation have generally been opposed by devel-oping countries, this process has moved for-ward informally amongst interestedMembers, such as the United States, NewZealand and Thailand. Most developingcountries have not considered it to be in theirinterest to scatter tariff negotiations into indi-vidual discussion groups on a sectoral basis.However, it is expected that a small group ofcountries will agree to eliminate tariffs in avariety of sectors, which they will present tothe NGMA as finished deals. In this case, thebenefits would be extended to all Members,although the commitments would only bebinding on the small group of countriesinvolved. Sectors that have been proposed foraccelaterated liberalization also include anumber of environmentally-sensitive sectors,such as fisheries, forestry products, chemicalsand raw materials.

There are no indications that WTOMembers are taking environmental consider-ations into account as they engage in tariffelimination negotiations in sensitive sectorsin the NGMA. This, despite the fact thatsome evidence exists to show the likely nega-tive environmental impacts some countrieswill experience as a consequence of completetariff elimination. For example, the EuropeanUnion commissioned a sustainability impactassessment (SIA) of the WTO negotiations,released in June 2005, which focused, interalia, on liberalization of the forestry productssector. Using a model scenario of full liberal-

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ization (zero tariffs), the SIA study predictsthat developing and some transitionaleconomies that have problems with forestgovernance could face significant social andenvironmental costs, which could outweighany economic gains from additional tradeliberalization in the absence of adequate safe-guards.

While some proponents of sectoral agree-ments argue that increased economic activitywill allow developing countries to reinvest inenvironmentally sound infrastructure, theEU SIA finds that complete liberalization ismore likely to magnify existing policy andinstitutional strengths and weaknesses ratherthan drive forest governance change. Duringthe course of discussions at the WTO, someMembers have been in favour of full liberal-ization of all raw materials, citing “win-win”opportunities for exporting countriesthrough increased market access, and forindustrialized countries through cheaper rawmaterials for processing industries. Others,for instance Japan, have recognized thepotential dangers posed to conservation byliberalization of raw materials, such as fish-eries and forestry products.

Currently, only a few countries, such asCanada, the United States and the EuropeanUnion, regularly conduct environmentalimpact assessments of trade negotiations andagreements. In most cases, assessmentsundertaken with respect to developed coun-tries find that these countries have sufficientdomestic regulatory frameworks in place tocounterbalance any negative environmentaleffects in sensitive sectors. However, manydeveloping countries do not yet have theresources to develop strong regulatoryschemes and their domestic environmentmay be unduly affected by the sectoral tariffliberalization being promoted by developedcountry trading partners.

Non-tariff Measures Negotiations

Since agreement on the “July Framework” in2004, the Chair of the NGMA conducted a

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IILiberalizationof environ-mental goods:A double-edged swordor a panacea?By BeatriceChaytor

When I first wrote about the issue of environ-mental goods and services in 2002, my prem-ise was that the negotiations could serve as amodel for so-called “win-win” scenarios in thetrade and environment debate. Wins for bothenvironment and trade objectives and wins forboth developed and developing countries. Athird win—for development—was seen aspossible through the generation of new mar-kets in environmental goods and services. Afew years down the line, however, the negoti-ations continue without much progress, miredin clashes over definition and classification.

Win-win scenarios are still possible followingthe liberalization of environmental goods inparticular, but all World Trade Organization(WTO) Members must find viable economicand environmental interests in the negotia-tions. Firstly, the lists put forward by theOrganisation for Economic Co-operation andDevelopment (OECD) and the Asia PacificEconomic Cooperation (APEC) forum must beupdated to reflect the current state of theenvironmental goods industry, and includeenvironmentally preferable products (EPPs).In this way, developing countries can use theupdate exercise as a way of mainstreamingsome of their core interests in the multilater-al trading system; the focus on developmentand equity with technology transfer andcapacity building as essential aspects of thenegotiations.

Secondly, the definitional discussion is super-ficial if it fails to substantively address someof the most critical issues at the heart of thetrade and environment debate: such as “likeproduct,” process and production methods(PPMs) and eco-labels. Naturally, there iswariness about the consideration of PPMs in

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broadening the definition of environmentalgoods; this could be the slippery slope to theentry of PPMs generally in trade and environ-ment issues and into the WTO. At the same time,liberalization of environmental goods may pres-ent considerable gains in international trade forsome developing countries. Moreover, thesegains would not just be restricted to traditionalareas, such as organic or sustainably harvestedgoods.

Developing countries must surmount the psy-chological hurdle of PPMs and be strategic indefining their interests within the negotia-tions. In what products do they have specificcomparative advantage? What distinguishesthose environmental goods from other prod-ucts? What specific trade barriers are faced bycategories of these environmental goods? Arethey tariff or non-tariff barriers? PPMs shouldbe tackled head on as a useful tool for creat-ing space for comparative advantage, particu-larly where there is a widening of the scopeand definition of environmental goods.Developing countries must decide how toadvance their desired outcome at both thenational and international levels. They shouldachieve their “wins” one step at a time, tak-ing a medium to long-term view.

At the national level, what particular environ-mental issues need addressing? For instance,with respect to cleaner energy, water treatment,air purification and fuel efficiency. Can theseissues be addressed through the use of environ-mental goods? If so, those environmental goodsneed to be assigned customs codes at thenational level to distinguish them from otherproducts. At the international level, developingcountries across the economic spectrum mustparticipate fully in the World CustomsOrganization (WCO) to harmonize these nation-al codes to ensure that environmental productsfor which developing countries have a competi-tive advantage are included in the various clas-sifications. For example, products dealt withunder the Convention on International Trade inEndangered Species of Wild Fauna and Flora(CITES) and the Basel Convention on theTransboundary Movements of Hazardous Wastesand Their Disposal have already being includedin customs codes developed by the WCO.

That said, things are not that simple, especial-ly where huge economic interests are at stake.There is general consensus that the environ-mental industry in OECD countries is wellorganized, with a fairly mature industry in tra-ditional environmental goods. The entry intoforce of the Kyoto Protocol will only add to thedemand for cleaner energy and energy/fuelefficient products that will widen the marketfor such goods. Add to this the rise of biotech-nology products and the environmental goodsindustry potentially widens. Industry analystssuggest that OECD countries will not dominatethe environmental goods industry for long.Some countries in Latin America and Asia arealready competitive in technology thataddresses air pollution, health and sanitationand water quality. I would hazard a guess that,even if the definition of environmental goodsis restricted to the narrow OECD-APEC lists, themore advanced developing countries are stilllikely to emerge as the biggest winners in theenvironmental goods trade. Even though thevast majority of least developed countries donot yet have well developed markets or indus-try in such products (making them “slow win-ners” in this trade), South-South trade in greenproducts would enhance the wins among awider group of developing countries.

All WTO Members need to take a realistic look atthe liberalization of environmental goods that isunderway. The industry, far from exhibiting thestatic nature inherent in the APEC and OECDlists, is a fast moving, dynamic sector that hasthe potential to allow some countries to leapfrog the current technological divide, contrast-ing the impasse in the WTO with the dynamismof the environmental goods industry. Developingcountries have a lot to play for here. While theydiscuss widening the definition of environmen-tal goods in the WTO and work on harmonizationof customs codes in the WCO, developing coun-tries should make sure that the domestic regula-tory and market environment exists for theirproducts (whether technological or otherwise)to remain competitive and innovative.

Beatrice Chaytor, from Sierra Leone, served asa trade negotiator for her country and is nowthe Director of the Policy, Planning andResearch at the Sierra Leone Ministry of Tradeand Industry. This essay is written in her per-sonal capacity.

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notification exercise in which Members wereinvited to notify NTMs that hindered theirexports in various markets to the NGMA.The notification exercise has been perceivedto be extremely difficult and complex formany, especially smaller, developing coun-tries. As a result, many developing countrieshave not notified the NTMs that are prob-lematic for their industry and, therefore, theoverall picture of notifications is not repre-sentative of developing country concerns.

Several proposals support a horizontalapproach to negotiations, which would haveMembers discuss several selected NTMsacross all sectors. Some Members, however,have strongly advocated a vertical approach,according to which Members would focus onNTMs of interest to particular industries.This suggestion could be problematic forsome developing countries that do not wantto establish any formal link between a verticalapproach in NTMs negotiations and the pos-sibility of sectoral initiatives in tariff formulanegotiations. Those Members supporting avertical approach to modalities favour the useof plurilateral group discussions, with theresults to be applied on a most favourednation (MFN) basis. In other words, a smallgroup of interested countries would decide toaddress NTMs in a particular sector and thenapply the benefits of these new rules to allMembers (although those not party to thediscussions would not be bound by therules). Additionally, others have proposedthat NTMs covered in existing WTO agree-ments, such as the Agreement on TechnicalBarriers to Trade (TBT), should be addressedthrough dispute settlement as a “compliance”issue and not through negotiations. Theirargument is that the NTMs faced byexporters in practice sometimes occurbecause Members are not appropriatelyimplementing their commitments.

Some of the NTMs that have been identifiedas problematic to certain industries and noti-fied to the NGMA are important tools fordomestic environmental policies. For

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IIAre environ-mental goodsgood for theSouth?By Amb. MagdaShahin

After over a decade ofrelentless efforts anddifficult negotiations,discussion on the relationship between tradeand environment in the WTO seems to haveentered a vicious circle, which—if it goes outof control—could very well undermine the“Doha Development Round.” Although theongoing debate has not brought the key con-cerns surrounding the relationship much clos-er to being resolved, it has helped clarify theunderlying rationale and purpose of the issuesinvolved.

Before the Doha Ministerial Conference inNovember 2001, developing countries hadnever shown interest in giving additionalground to the environment in the tradedebate, least of all in a round that is supposedto be, at least by proclamation, a developmentround. It had seemed clear that the trade andenvironment debate in the WTO, with its tenitem agenda mandated at the SingaporeMinisterial in December 1996, was leadingnowhere. Had it not been for the maneuveringof the Nordic countries, the trade and envi-ronment relationship would have remained aforlorn issue in the WTO. Disregarding alto-gether the ten items on the agenda of theCommittee on Trade and Environment (CTE),the three items in Paragraph 31 of the DohaMinisterial Declaration were carefully negoti-ated into the “Doha Development Agenda.”The real innovative addition was sub-para-graph 31(iii), which calls for the reduction orelimination of tariffs and non-tariff barriers toenvironmental goods and services.

The issue was force-jumped into the frontseat, and negotiations on the reduction of tar-iff and non-tariff barriers became a priority.With the inclusion of this topic, WTO Membersagreed to venture again into a cycle of end-less debate between environmentalists and

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business interests, who want to see as broada definition as possible for environmentalgoods, and “developmental tradists,” whoresist enlarging the definition. The basic ques-tion that remains unanswered, is: Why shoulddeveloping countries legalize preferentialtrade in terms of zero tariffs for environmen-tal goods?

Even if the narrow definition of environmentalgoods prevails and they are defined accordingto end-use criteria based on a process andproduction methods (PPM)-free rationale, thecomplexities attached to favouring environ-mental goods as exceptions would tilt theentire market access debate in favour ofdeveloped countries. It is worth recalling thatthe original intention of bringing marketaccess and competitiveness concerns into theinterface between trade and environment wasto balance an already lopsided debate. Withthe market access component of the debatenow focused on environmental goods andservices, to the predominant interest of devel-oped countries, the objective of the formermarket access discussions (under Item 6 ofthe Marrakech Agreement agenda for the CTE)have been rendered void and futile.

With the objective of safeguarding the inter-ests of developing countries—which haverefused any automatic linkage between tradeliberalization and environmental protection—Item 6 was the only item on the CTE agendastressing the link between trade, environmentand development and the inter-relatednessbetween poverty and environmental degrada-tion. It was intended to promote goods andservices of export interest to developing coun-tries, with a view to promoting developingcountry participation in the trading systemand enabling them to protect their environ-ment and improve their capability to imple-ment sustainable development.

Importantly, the concept of environmentalgoods is relative. What may be defined as anenvironmental good in one country could betreated very differently in another. Developedcountry recycling regulations, which discrimi-nate against environmentally friendly andbiodegradable products from developing coun-tries, remain a valid example of the subjectiv-ity of the concept. Moreover, using the listsforwarded by European and Asian countries asa basis for defining environmental goods isprone to risks, given that these lists are asbiased towards the interests of the sponsoringcountries. Developing countries should not belured into accepting different lists at theirface value. With regard to environmental serv-ices, why should developing countries con-cede on issues related to the services negoti-ations, when developed countries have not yetbudged on the movement of natural persons—the so-called Mode 4 supply of services—which constitutes the priority issue for devel-oping countries?

On the whole, Doha Round negotiations seemto be in a state of flux. Environmental goodsare not necessarily good for developing coun-tries. A case has not yet been made for whythis issue merits priority in a developmentround. Maybe not coming to a conclusion onthis issue would not be a bad thing. At thiscritical juncture of the negotiations, weshould avoid detracting the developmentround with issues that do not help integratedeveloping countries in the multilateral trad-ing system.

Ambassador Magda Shahin is Egypt’s AssistantForeign Minister for International EconomicAffairs and earlier served as her country’sAmbassador to Greece and its chief trade nego-tiator. This essay is written in her personalcapacity.

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instance, the United States has notified poli-cies that promote fuel efficiency, distinguish-ing between vehicles based on engine size,while China has notified regulations thatpromote energy efficient policies for house-hold appliances, air conditioning units andheating, as implemented for instance in theEU. Bringing such a broad range of measuresinto the NAMA negotiations could weakenexisting environmental standards and limitMembers’ ability to adopt new legislation forlegitimate policy objectives. While thisshould be avoided, it is also important torecall the objectives of the “DohaDevelopment Agenda;” it is essential thatMembers address the relationship betweenlegitimate standards and regulations of devel-oped countries, and the lack of capacity ofdeveloping country exporters to meet thesestandards and regulations. In this regard,effective and operational technical and finan-cial assistance will play an important role.

Defining Environmental Goods

The Doha mandate does not provide guid-ance on the definition of environmentalgoods, or on the modalities for negotiatingtariff reductions. In early 2002, Membersagreed to shift the Paragraph 31(iii) mandateon liberalizing environmental goods to theNGMA. However, since there is no clear def-inition of environmental goods, the CTE inSpecial Session (CTE-SS) has continued toexamine the scope and definitional aspects ofthis mandate. The most commonly discussedapproach to the negotiations is the “list”approach, whereby Members submit lists ofenvironmental goods they wish to negotiate,based on which the CTE-SS would agree ona final list of products to be liberalized. Indiahas suggested an alternative approach, whichwould classify goods as environmental basedon their use in “environmental projects.”

Those advocating the list approach (primarilythe developed countries) propose that, fol-lowing submissions of goods from Members,the CTE-SS would negotiate a final list of

goods considered to be environmental. Manyadvocates of the approach consider this to bethe only practical option for coming to agree-ment on a set of products for which tariffswould be reduced. The Organization forEconomic Cooperation and Development(OECD) and the Asia Pacific EconomicCooperation (APEC) Forum have producedlists of environmental goods, from whichmany WTO Members have drawn in draft-ing their proposals. However, many develop-ing countries have raised concerns aboutfocusing exclusively on these lists, particularlysince they were created largely by developedcountries and do not contain products ofexport interest to many developing countries.Another criticism of the list approach is that itfocuses on goods with an environmental end-use only, and does not include goods pro-duced in an environmentally sound manner.

UNCTAD has done extensive work, outsidethe context of the WTO negotiations, on acategory of goods described as environmen-tally preferable products (EPPs), which hasgenerated substantial discussion. Althoughan agreed definition has yet to emerge,UNCTAD defines EPPs as “products thatcause significantly less ‘environmental harm’at some stage of their life cycle than alterna-tive products that serve the same purpose.”Brazil, Switzerland, New Zealand and theEuropean Union support including EPPswithin the list framework. Members that aresupportive of a narrow list argue that broad-ening the definition would result in theinclusion of “multiple-use” products, whichcould be used for both environmentallysound and destructive purposes.

Given rapid technological advances, there isalso concern that a static list of environmen-tal goods could become obsolete in a fewyears. Therefore, New Zealand and the EUhave proposed the concept of a “living list,”to which products could be added and delet-ed as technology evolves. The fact that “envi-ronmental friendliness” is a relative conceptposes potential problems, especially where

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superior substitutes exist or may be used in thefuture. For instance, some experts believe thatif hydrogen evolved into a fuel for popular use,natural gas would have less claim to be consid-ered an environmental good. Yet, once tariffsfor natural gas have been eliminated, it wouldbe difficult to raise them again.

Some developing countries have also notedthe lack of special and differential treatmentprovisions in current list approach proposals.Cuba has outlined areas where developmentconcerns are not being taken into account inthe CTE-SS discussions and formally sup-ports a proposal from China, which suggestsa “common list” of goods and a “develop-ment list,” “which comprises those productsselected by developing and least-developedMembers from the common list for exemp-tion or a lower level of reduction commit-ment.” New Zealand has also proposed a“dual list” approach, supported by the UnitedStates, with a core list applicable to allMembers and a complementary list, fromwhich Members would self-select an agreedpercentage of products for tariff reduction.

The reality is that most developing countrieslack a comparative advantage in traditionallydefined environmental goods that are capitalor technology-intensive. In many cases,process and production methods (PPMs)would be the only criteria for including suchproducts of export interest to developingcountries. However, most WTO Members,particularly developing countries, want toavoid using PPM criteria to define EPPs,partly based on the fear of setting a precedentfor introducing this concept in the WTO.

India’s environmental project approach was pre-sented as an alternative to the list approach; itwould define environmental goods based ontheir use in a given environmental project.National authorities would grant projects“environmental” status for a set period oftime, during which tariffs and NTBs wouldbe reduced on designated goods for use in theproject. This would be a continuous process,

as new projects become designated “environ-mental” and existing projects are terminated.The CTE-SS would formulate the criteriathat a designated National Authority coulduse to screen projects for approval.

Many developing countries support a proj-ect-based approach, largely because it solvesthe problems associated with multiple-useproducts and directly addresses special anddifferential treatment for developing coun-tries. They argue that the mandate fromDoha is essentially environmental-benefitoriented, and market access is a means to thatobjective; not the objective itself. However,some WTO Members are concerned that thisapproach could prevent small and medium-sized enterprises from benefiting from tariffreductions on environmental goods, becausethey do not have the capacity to mount large-scale projects, or the resources to engage inpossibly complex certification procedureswith national authorities. There are also someconcerns on the appropriate definition of an“environmental project,” as well as how thiswould be administered multilaterally on anMFN basis.

Trends and FutureDirectionsThe outlook for multilateral trade liberaliza-tion in environmental goods remains cau-tious and uncertain. Lists submitted so farhave focused on “end-of-pipe” equipmentand remedial technologies. The environmen-tal and developmental benefits of these envi-ronmental goods should be clearly demon-strated. Moreover, negotiators may also needto consider the environmentally sound anddevelopmentally supportive characteristics ofEPPs. At the same time, negotiators shouldspecifically focus on increasing market accessfor environmental goods produced by devel-oping countries in order for developingcountries to be fully engaged in, and fullybenefit from these potentially importantnegotiations.

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In addition, a transparent negotiating processis essential to assess the environmental trendsthat are likely to result from proposed liberal-ization in sensitive sectors, such as forestryand fisheries products, chemicals and rawmaterials. Negative environmental impactscould be particularly significant in these areasfor countries that do not have establishedstructures of environmental governance.Negotiators should take these challenges intoaccount and identify flanking measures or,where necessary, refrain from negotiating fur-ther liberalization.

It should also be noted, however, that whileWTO negotiations on non-agricultural mar-ket access could have major environmentalconsequences, trade liberalization throughautonomous policies and bilateral andregional trade agreements could be just asinfluential. For example, if a country, such asChina, has enormous demand for environ-mentally-sensitive natural resources anddecides to autonomously reduce its appliedtariffs regardless of the WTO, this could alsohave environmental (and developmental)consequences in the exporting countries.

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