IMPLICATIONS OF NEGOTIATION
FAILURES ON ENVIRONMENTAL
GOODS AND SERVICES AT THE
DOHA ROUND
FOR
GLOBAL TRADE GOVERNANCE
Jaime de Melo FERDI
WTO Public Forum, September 26: 16:15-18:15, Room S-1
Outline
(based on paper available at http://www.ferdi.fr/uploads/sfCmsContent/html/112/P28.pdf )
2


Doha art. 31: Countries mandated to negotiate on removing barriers to trade in
EGS
Anatomy of negotiations




Difficulties (Causes of no progress)




Strategic behavior (bargaining chip when negotiations are multi-dimensional)
Problems in Identifying Egs.
Different perceptions and interests
Implications for Global Trade Governance: Go either for



Three approaches: Project; request and offer; list)
WTO ‘combined list’ and ‘core list’ of 26 products (2010)
No visible progress (in relative terms) as tariff Reductions in EGs no greater than for other
goods across country groupings and regions since launch in 2000
regional approach
breakdown negotiations: plurilateral rather than multilateral deals
What future for global trade governance?
Approaches to Negotiations
3

Main Approaches :
(i) «Request and offer» (e.g. Brazil); worked under early GATT
when tariffs high: Now won’t work because tariff levels are
too low
 (iI)«Integrated project» to deal with multiple-end use (e.g.
Argentina and India). To be submitted by national authorities.
 (i) «list» (only proposed by developed countries). By 2008 13
countries proposed lists  411 HS-6 codes with little overlap
(90 duplicates;35 triplicates; 7 quadruplicates)
  Core list in 2010 (26 HS-6 products) (see next slides)

Figure 2 - The WTO Core list: number of HS six-digit codes per HS Chapter
135
140
14
120
4
100
80
65
60
121
46
4
19
20
1
9
3
52
3
26
40
4
61
1
1
1
1
4
45
46
47
43
3
5
1
1
1
53
56
63
69
70
28
48
3
3
1
0
25
27
28
29
38
39
40
WTO combined list only
25= salt, sulphur, earths and stone, lime and cement
27= mineral fuels, mineral oils and products of their distillation
28= inorganic chemicals
29= organic chemicals
38= misclellaneous chemical products
39= plastics and articles thereof
40= rubber and articles thereof
45= cork and articles of cork
46= manufactures of straw or of other plaiting materials
47= pulp of wood, recovered paper
53= vegetables fibres other than silk, wool or cotton
56= wadding, special yarns
4
73
76
84
85
87
89
90
WTO combined list and Core list
63= made up textile articles other than apparel
69= ceramic product
70= glass and glassware
73= articles of iron or steel
76= aluminium and articles thereof
84= nuclear reactors, boilers, machinery and mechanical appliances
85= electrical machinery and equipment
87= Vehicles
89= Ships and boats
90= Optical,.., measuring, checkong and precision instruments
94= Furniture, lamps and lighting fittings
95= toys, games and sports requisites
94
1
95
Core list products (sample): Limited overlap in lists and in
environmental classifications
5
Environmental category
Countries who proposed that good
N°
HS
CODE
2002
HS CODE DESCRIPTION
MEMBERS
CATEGORY(IES)
7
840510
Producer gas or water gas generators, with or without their purifiers; acetylene gas
FRD, SAU, PHL, SGP
generators and similar water process gas generators, with or without their purifiers
APC, RE, WM/WT, ET, CCS
8
840681
Steam turbines and other vapour turbines for marine propulsion: Of an output exceeding
FRD, SAU, PHL
40 MW
RE
9
840999
Parts suitable for use solely or principally with the engines of heading 84.07 or 84.08
FRD, SAU, SGP
other
APC, ET, CCS
10
841011
Hydraulic turbines and water wheels of a power not exceeding 1,000 kW
FRD, SAU, PHL
RE, ET, CCS
11
841012
Hydraulic Turbines and Water Wheels, Power 1, 000-10, 000kw
SAU
ET, CCS
12
841090
Hydraulic turbines, water wheels, and regulators ; parts, including regulators
FRD, SAU, PHL
RE, ET, CCS
13
841181
Other gas turbines of a power not exceeding 5,000 kW
FRD, SAU, PHL, QAT
RE, ET, CCS, OTH
14
841182
Other gas turbines of a power exceeding 5,000 kW
FRD, SAU, PHL, QAT
RE, ET, CCS, OTH
APC=Air Pollution Control, RE=Renewable Energy, ET=Environmental Energy, CCS=Carbon
Capture and Storage, WM/WT=Water Management / Water Treatment, OTH=Other
5
No progress in reducing tariffs (in relative terms)
(No difference in tariff reduction Patterns between ‘core list’ and total trade)
6

Figure 3 - Evolution of the average rate of protection, 1996-2010
Core list and total trade, by income group
Total trade
20
Core list
15
12.66
12.28
11.83
11.60
10
10.72
12.58
12.03
10.44
9.18
8.32
6.75
5
16.26
15.61
14.94
9.18
8.998.55
6.76
5.64
4.63
4.00
4.42
3.81
3.18
0

No «mandate
effect» as no
acceleration in
reduction of
protection
after 2001
relative to
reduction in
protection for
other products
Especially for
low-income
countries
Next slide
shows outcome
under standstill
%, MFN applied

High
income
Upper middleLower middle
income
income
1996-2000
Low
income
High
income
2001-2005
Source: Authors’ calculations, from TRAINS tariff data (see Annex IV)
Upper middleLower middle
income
income
2006-2010
Low
income
Difficulties (I): What is an EG?
(Classifying GEMs and EPPs)
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Figure 1: Identifying and Classifying Goods Related to the Preservation
and Management of the Environment
7
Goods for Environmental
Management (GEM)
(Pollution, Resources)
Multiple end-uses
(pipes for water treatment or for natural gas)
Identification of use
Take a Project Approach
Finer/alternative HS-(10) classification
problematic (lock-in characteristics of HS code)
Environmentally Preferable Products (EPPs):
Single use
Production
-- Aluminium (Prebake
vs. Soderberg)
-- Organic cotton vs
conventional cotton;
Use
-- Solar stoves
-- Solar furnaces
-- Energy efficient
consumer goods
Disposal
--- packaging (glass vs.
plastic)
--- Cotton fiber versus
synthetic fiber
Identification
Relativism: How to deal with like products
Attribute Disclosure (requires an efficient disclosure mechanism (e.g. certification and
harmonization)
Processes and Production Methods (PPMs) and the like products at WTO
Developing countries: PPM-based EGs would be high-jacked by DCs (“social concerns”)
Difficulties (II): Countries submitted goods for
which they had a comparative advantage…
8
% of goods proposed under the 2008 CTESS program with RCA>1(in 2007)
Among the goods
submitted by New Zeland
(ie the 164 goods of the
Friends’ list), 60% are
goods for which it had a
RCA >1 in 2007
Notes: COMTRADE export data, mirror data used for Philippines and Saudi Arabia. 384 products only, countries: Saudi Arabia,
Philippines, Japan, United States, Canada, Korea, Norway, Taiwan, European Communities, New Zealand, Switzerland (ie last
submissions of Qatar and Singapore not included)
Difficulties (II) …and avoided submitting goods
with tariff peaks
Goods not proposed had
significantly higher protection
9
Country
Nb of peaks (over Nb of peaks
the 384 goods)
proposed
Nb of peaks
Nb of goods
retained on the proposed
final list
individually
Average
Average
protection of
protection of
goods not
goods proposed
proposed
Difference
Column
A
B
C
D
E
F
G=F-E
Canada
16
1
9
86
2.04
2.52
0.48*
EU27
20
0
1
92
2
3.32
1.32***
Japan
61
0
11
92
0.25
0.83
0.58***
Korea
0
59
6.17
6.02
-0.15
New Zealand
0
81
3.21
2.59
-0.62**
Norway
0
0
.
.
Switzerland
0
11
0
0
ChineseTaipei
17
0
0
27
3.13
5.19
2.06***
USA
9
2
2
110
1.59
2.73
1.14***
Japan (Add)
61
0
51
0
0.67
0.67***
Saudi Arabia
0
262
4.84
4.47
-0.37***
Philippines
32
17
2.9
4.61
1.71
Nine Members
Other lists
1
Notes: Tariff data for 2008. Tariff peaks defined as number of products (HS-6 codes) for which the average rate of protection is above three times the average rate of protection
of the 384 EGs (e.g. Canada has 16 tariff peaks). Column B shows that of these 16 products, Canada only proposed 1 to figure on the 9M list. Column C shows that 9 of these
16 products were retained to figure on the final list. Colmns E and F show that, on average, the protection is higher for goods that Canada proposed (86 HS-6) than for those it
did not. This difference is significant at 10% confidence level (column g).
*** significant at 1% level, ** 5%, * 10%
Source: authors’ calculations from TRAINS tariff data. Average protection is simple average of HS6 average tariffs.
Implications for Global Trade Governance
10

Members did not act on article 31 mandate






Strategic behavior was encouraged by multi-dimensionality of
negotiations cum consensus
Stakes not sufficiently high (5<tariff<10% range) for «request-andoffer »bargaining to be worthwhile—the locomotive of early GATT
rounds
Technical difficulties in defining EGs (GEMs and EPPs)
Genuine differences in interests (better resolved by negotiations at
regional level)
Political-economy of submissions on lists (only those with low tariffs –
around 3% were proposed)
Implications


Follow the regional route
Drop multilateral negotiations for plurilateral negotiations (allowed
under WTO, e.g. GPA, ITA)
…what future for Global Trade Governance?
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 Growing tensions between environmentalists and trade communities
.. By 2020 China’s contribution to global CO2 stock in atmosphere (since 1980) will
exceed US’  A bilateral world trading system (US-China) with others joining the rules
of the game set by them ? (à la 19th c. with France-GB in the 1860s)
 Tackle environmental problems on a regional basis (e.g. APEC has negotiated on 54
Egs)
 Take inspiration from Montreal protocol on CFCs or MARPOL (convention on
prevention of pollution from ships) for sectoral treaties (e.g. on aluminium, fuel for ships)
 How will adjudication process of AB stand up when cases on energy subsidies will be
brought to them?
 Need for a World Climate Organization?