Contribution of Trade Opening to Access to Climate-Friendly

Contribution of Trade Opening to Access to Climate-Friendly Goods and Services WTO Side Event at COP 16, 8 December 2010 Vesile Kulaçoğlu Director, WTO Trade and Environment Division

“ 31. With a view to enhancing the mutual supportiveness of trade and environment, we agree to negotiations, without prejudging their outcome, on: (iii) the reduction or, as appropriate, elimination of tariff and non-tariff barriers to environmental goods and services. “a unique mandate” with both challenges and opportunities. . . - improving access to green goods and technologies - delivering on the trade, environment and development dimensions of the mandate - overlap with other areas of the DDA

Discussions in CTESS 2002 -2005: Individual lists tabled by 9 Members April 2007: 153 -items list by proponents (“potential convergence set”) July 08: Oct. 09: Revised Work “technical Programme discussions” (new timelines) 2002 2003 2004 2005 2006 2007 2005 -2007: proposals on alternative approaches (India, Argentina, Brazil) 2008 2009 2010 New submissions on identification of EGs of interest and other issues under mandate

Responding to the mandate under 31(iii). . . Identifying goods (product coverage) Determining treatment (modalities)

Identification of environmental goods In the context of a list. . . (9 countries) In the context of requests and offers. . . (Brazil) In the context of the integrated approach. . . (Argentina) Flexibilities for Dg. C (S&D)

• Japan • Chinese Taipei • European Union • Korea Group of Friends (“potential convergence set”): • New Zealand • Canada • United States • Switzerland • Norway Other Members that have contributed with submissions: Argentina, Brazil, China, Colombia, Cuba, India, Peru, Philippines, Saudi Arabia, Qatar

Identification of environmental goods • Phase of Identification of EGs of interest (“universe”) is continuing – exercise started in 2005 with a list of group of 9 OECD countries with additional submissions in 2009 -10 (Saudi Arabia, Qatar, Japan, Argentina, Philippines, Singapore) • List of goods consolidated in Chair’s Report to TNC (TN/TE/3/Rev. 1 in December 2010 )

Examples of categories of goods mentioned • Renewable energy (wind; solar; geothermal); • Waste management (Solid and hazardous waste; waste water); • Air pollution control; • Environmental technologies for conservation, monitoring, analysis and assessment; • Energy efficient products; • Carbon capture and storage, gas flaring emissions reduction, efficient consumption of energy; • Biofuels; • Organic products.

Link to Climate Change • US-EC proposal (2007): Elimination of tariff and nontariff barriers on list of climate-friendly goods and technologies on an accelerated timeframe by 2013 (43 items identified in World Bank study). • Japan (2009): Including energy efficient products that contribute to climate change mitigation (time bound concessions, not permanent). • Argentina (2009): Liberalizing goods required in context of projects under Clean Development Mechanism.

Some examples of overlap between different submissions. . . Friends Climate change focus Argentina Examples of goods that could be used in CDM projects: - Wind turbines - Solar water heaters - Biogas production tanks - Methane collection liners

Identifying goods/product coverage: Some challenges • No agreed definition or criteria (past work in OECD, APEC – “defining by doing”) • Coverage: industrial and agricultural goods? • Majority of goods proposed have “multiple uses” (not just environmental) • Technical issues relating to tariff classification (ability to distinguish at border; use of ex-outs) • Constant evolution of the technology (Review mechanism needed? “one off” exercise? )

Group of 9 countries Tariff cuts “over and above” what will be agreed in NAMA S&D treatment could take the form of: • Lower rates of liberalization • Different timeframe for the elimination of tariffs (i. e. longer implementation periods) • Additional flexibilities (e. g. product exemptions)

Requests and offers (Brazil) • Interested Members would draw their own individual list of goods to be liberalized on an MFN basis • Process of bilateral negotiations • Avoids “one size fits all” (not a unique set of products); more in line with Members’ individual goals and level of development

Integrated Approach (Argentina) 1 - Agree multilaterally on categories of environmental activities to combat climate change; 2 - In accordance with categories, identify climate change mitigation and adaptation goods that may be used in national projects; 3 - Proceed to reduce/eliminate tariff and NTBs with respect to goods required in the context of projects under the Clean Development Mechanism (time bound)

Addressing other issues under the mandate Non-tariff barriers (NTBs) • Some Horizontal examples of NTMs but are these not already subject to the existing WTO Agreements • Import barriers related to customs procedures, valuation of goods; Import prohibitions; Immigration procedures; Local content requirements; Lack of intellectual property rights protection. • Need to establish mechanism to deal with NTBs specific to environmental goods

Addressing other issues under the mandate Transfer of technology / TA/ S&D • Not specifically mentioned in mandate; There is a WTO Working Group on Trade and Transfer of Technology established as part of Doha Work Programme • In CTESS: some information exchange on existing projects or activities to promote transfer of environmentally-sound technology; no specific/detailed proposal to date • Argentina and Brazil call for developed countries to provide information to enable developing countries to better assess available environmentally sound technologies in a given field as well as to properly apply and manage them to suit their specific needs and priorities

Addressing other issues under the mandate Link to Services negotiations • Environmental services are covered as part of broader mandate for Services liberalization (voluntary, request/offer basis) • Members’ Proposals to revise current Environmental services classification • Environmental services relevant in context of environmental goods identification but negotiations following two separate 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 HS 2002 Classification used in Submissions: • All submissions are based on the HS 2002 classification. However, data of WTO Members from 2003 -2008 are recorded also in the HS 1992, HS 1996, and HS 2007 classifications. To ensure maximum coverage, in this presentation HS 6 -codes from all 4 HS-Revisions have been used – thus, the number of HS 6 -codes per submissions are larger than the number of HS 6 -codes contained in the original submissions.

Universe of EGs: 514 HS 6 -Codes (Containing both original HS 2002 -codes AND corresponding HS 1992, HS 1996, HS 2007 -codes) 2 Saudi Arabia (S): 291 HS 6 1 Friends (F): 195 HS 6 5 Qatar (Q): 20 HS 6 3 Japan (J): 90 HS 6 4 Philippines (P): 24 HS 6 6 Singapore (Si): 91 HS 6

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

Some examples of overlap between different submissions. . . Friends Saudi Arabia 263 items (HS) used for: 92 items in common Categories from Friends’ list with a high level of convergence are: - Waste water management and potable water treatment -Air Pollution Control - Heat and Energy Management - Noise and Vibration Abatement - Natural Risk Management - Carbon capture and storage - Gas flaring emissions reduction - Efficient consumption of energy

WTO Nominal Exports 2003 -2008 (in Trillions of US$, 514 HS 6 -Codes, Source: UN Comtrade) (2003 -2008: +217%) (2003 -2008: +230%)

Share of EGs in WTO Merchandise Exports 2008 (in Trillions of $; 514 HS 6 -Codes; Data Source: UN Comtrade)

WTO Nominal Trade of EGs by Category (in Trillions of US$, 514 HS 6 -Codes, Data Source: UN Comtrade)

Top 15 WTO Exporters 2008 (in Billions of US$, Compilation List, 108 WTO Members available, Data Source: UN Comtrade)

Top 15 WTO Importers 2008 (in Billions of US$, Compilation List, 108 WTO Members available, Data Source: UN Comtrade)

Average Bound Tariffs 2009 on EGs (514 HS 6 -Codes, Data Source: WTO Integrated Database, TL-Weighted Averages)

Average Applied Tariffs 2009 on EGs

Percentage of Duty-Free Tariff Lines 2009

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

Next Steps • Further discussions needed starting with cross-cutting and development-related issues in parallel to the work on the identification of goods within categories • Linkages with other areas of DDA negotiations (NAMA/Ag modalities) • 30 November 2010 TNC meeting: 2011 a window of opportunity for the Doha Round negotiations • Trade and Environment negotiations will accelerate from 10 January

Thank You •

GENERAL COUNCIL Special Session of the Committee on Agriculture Trade Negotiations Committee (TNC) TRIPS Special Session of the Council for Trade in Services Negotiating Group on Market Access Special Session of the Dispute Settlement Body Para 31(iii) CTE Special Session Negotiating Group on Rules

Some examples of overlap between different submissions. . . Friends Philippines 17 items in total, 16 of which are also contained in Friends’ list Renewable energy: PV cells; solar water Renewable energy heaters; towers and lattice masts for wind turbines; hydraulic turbines Heat and Energy Management: heat Heat and Energy Management exchangers to be used in RE systems Waste Management, Recycling and Remediation: parts for biomass boilers; soot Remediation removers (air pollution control)

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

Caveats Trade Data (UN Comtrade Database): • Based on entire HS 6 -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 HS 2002 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 HS 2007 and HS 1996 codes. • „Developed“, “Developing“, „LDCs“: All WTO Members are counted as „Developing“ with the exception of Australia, Canada, the EU 27, Iceland, Japan, Liechtenstein, New Zealand, Norway, Switzerland the USA that are counted as „Developed“, and all LDCs, that are counted as „LDCs“

HS 6 -Codes per List (Containing both original HS 2002 -codes AND corresponding HS 1992, HS 1996, HS 2007 -codes)

Maximum Number of HS 6 -Lines per Category (Drawn from all HS 6 -Revisions: HS 92, HS 96, HS 02, HS 07) 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)