The construction of the APEC list John Deng

The construction of the APEC list John Deng Deputy Permanent Representative The Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu

Outline Ø Mandates to construct APEC list - Sectors nominated for EVSL Ø EVSL results Ø APEC environmental goods list - Aims - Approach - Comparison between APEC and OECD lists Ø Lessons learned from the APEC list

Mandates to construct APEC list Ø 1995 (Osaka, Japan): Call by Leaders to identify industries for tariff reduction Ø 1996 (Subic Bay, Philippines): Trade Ministers directed to submit recommendations Ø 1997 May (Montreal, Canada): Trade Ministers directed to identify candidate sectors for EVSL; Environmental goods proposed as distinct category by 4 economies Ø 1997 November (Vancouver, Canada): Environmental goods identified as 1 st tier fast-track sector

Sectors nominated for EVSL Ø “A+” (Fast-Track sectors): Environmental goods and services, fish and fish products, forest products, medical equipment and instruments, energy, toys, gems and jewellery, chemicals, and a telecommunications mutualrecognition agreement. (9 sectors) Ø “A” sectors: Oilseeds and oilseed products, food, rubber, fertilizers, automotive and civil aircraft. (6 sectors)

EVSL results Ø 1998 June (Kuching and Kuantan, Malaysia): consolidated environmental goods list finalized Ø 1998 November (Kuala Lumpur, Malaysia): Resultant proposal: a comprehensive package including undertakings on four elements - Tariffs - Services - Non-tariff measures - Economic and technical co-operation (Ecotech) EVSL tariff proposal referred to WTO

APEC environmental goods list • Aims • Approach • Comparison between APEC and OECD lists

Aims of APEC list Obtain more favourable tariff treatment for environmental goods Promote sustainable economic growth

APEC approach Started with nominations Compiled list of goods Experts discussion to determine product coverage and tariff classification

APEC approach Ø Benefits to include environmental sector in EVSL: Dual benefits being sought - Economic benefits - Environmental benefits Ø Participation of developing countries

APEC approach ØEconomic benefits: üImporting members can acquire environmental goods and technologies at lower cost üBoth developing and developed exporting countries can enjoy expanded market opportunity

APEC approach ØEnvironmental benefits: üImproving the effectiveness of environmental investment programmes undertaken by business and government üDirect quality of life benefits

APEC approach • 10 categories: APC = Air Pollution Control H/E = Heat/Energy Management M/A= Monitoring/Analysis N/V = Noise/vibration abatement ORS = Other Recycling Systems PWT = Potable Water Treatment R/C = Remediation/cleanup S/H = Solid/Hazardous Waste WWM = Waste Water Management REP = Renewable Energy Plant

APEC approach ØChallenges: üClassification Can product distinctions be practically implemented by customs officials? üDual use üParts & Components üWTO legal issues

APEC approach ØClassification issues (1) üEnd-use certificate method was not adopted üGoods designated as environmental on the basis of their PPMs were not included

APEC approach Ø Classification issues (2): Many HS headings contain more than just environmental goods üFew HS headings are comprised uniquely of goods that could be considered part of the environmental industry üConsideration was based both upon the prevalence and importance of the environmental goods in a given tariff heading üCore environmental products at the 6 -digit HS category

APEC approach ØClassification issues (3) National HS tariff lines are not uniform below 6 -digit level üA product was included with a detailed break-outs in their own tariff schedule üExample: solar cells

APEC approach • Solutions: – Practical approach – Bottom-up – “Ex-out” heading

APEC approach • Other points: – Chemicals excluded – Medical equipment and instruments + energy sectors also excluded, but there are overlaps

Comparison between APEC and OECD lists Ø Reasons for the lack of overlap: • Some goods on APEC list assigned to different categories on OECD list • Difference of emphasis • In several cases, APEC list provides greater specificity

Lessons learned from APEC list 1. EVSL negotiation failed on: - Tariff elements - Forest and Fisheries sectors 2. Broad coverage and sector segmentation of EVSL enabled APEC to focus on environmental goods listing 3. APEC list limited only to goods readily distinguished by customs agents and treated differently for tariff purposes 4. APEC approach is practical

Lessons learned from APEC list 5. Negotiators may have to consider how to treat goods that have “dual uses”, but if there’s a will to include goods within these categories, there’s usually a way.