Environmental protection must not become an ally for countries to boost market access for industrial goods
Can countries protect the environment while advocating and practising policies that liberalise trade in goods and services? The Doha Work Programme of the World Trade Organisation (WTO) calls for “enhancing the mutual supportiveness of trade and environment” and broadly called for negotiations on three issues: (i) the relationship between existing WTO rules and specific trade obligations set out in multilateral environmental agreements (MEAs); (ii) drawing out procedures for regular information exchange between MEA secretariats and the relevant WTO committees and; (iii) working on the reduction or, as appropriate, elimination of tariff and non-tariff barriers to environmental goods and services.
The Committee on Trade and Environment in the WTO has held discussions on these issues. But the main issue that has been of interest to industry across the globe has been on the reduction or elimination of tariffs on environmental goods and services.
This issue has been given some thought in a recent paper by Singapore at the WTO. The paper titled “Promoting Mutual Supportiveness between Trade and Climate Change Mitigation Actions: Carbon-Related Border Tax Adjustments” takes a broad look at several issues related to trade and environment.
One area of focus in the paper that needs considerable amount of debate and discussion to address emerging market access issues for concluding the Doha Round will be the issue of identifying environmental products on which duties can be reduced or eliminated over the next few years.
Countries have looked at various approaches to identify the products that can be listed for tariff reduction or elimination. These include a list approach, the project approach, the request-offer approach and the hybrid approach. Singapore supports the hybrid approach, which it claims combines the benefits of the project approach and the request-offer approach. However, a hybrid approach can also lead to confusion on the products to be included. India has supported a project approach.
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Even as negotiators may be of the view that progress has been made in the negotiations over the last decade and some of the issues have been sorted out, there may be a need to look at some important issues closely so that industry remains tuned to the current situation. Since many critical negotiations in the Doha Round have remained moving targets due to some major countries bringing in proposals, the issue of tariff reduction or elimination on environmental goods also needs another look.
To begin with, it is important to fix the issue on whether there would be a reduction or elimination of tariffs. Given the fact that there have been divergent views on the criteria to be adopted to identify the products, countries may first agree to the fact that unless proved necessary for some products, there would only be a reduction of tariffs in majority of cases. This may help countries move quickly in finding a solution to identifying the list of products. There could be a debate on what should be the level of reduction based on the applied tariffs on that product in each country.
Second, the focus has to be on which products protect the environment and not about market access for industrial goods. Industry has been of the view that many of the products on the list approach were not even close to being termed an environment product. The criteria have to be that the product’s use will help protect the global environment and not boost market access for the largest exporter of that product.
Third, there is a need to ensure that technology transfer for high-technology products should be looked at so that developing and least developed countries do not lose out because most of the products identified are high-technology products that are produced in the developed world. The modalities of the technology transfer can be worked out to help the companies that spend for developing these high-technology products.
There is no doubt that countries have to be vigilant about protecting the environment and if trade liberalisation can aid in that effort then the WTO can play a role on the issue. However, if environmental protection becomes an ally to boost market access for products then there is a need to step back and reconsider the issue. This issue can be a low hanging fruit for negotiators and a good confidence builder for the Doha Round if countries approach it pragmatically.
The author is Principal Adviser with APJ-SLG Law Offices