T S Vishwanath: Is this really about environment?

Developing countries are worried that liberalising trade in environmental goods may become a market access instrument for the developed world.

The negotiations for liberalising trade in environmental goods at the World Trade Organisation (WTO) seem to be generating some intense debate among member countries. Countries such as India, China and Brazil are of the opinion that these negotiations should not become a market access tool for pushing products of interest for some developed countries. However, the developed world feels there is a need to push these negotiations to meet the Doha Round’s objective of “enhancing the mutual supportiveness of trade and environment”. Mexico is suggesting the middle path through a “hybrid approach”.

The debate to “reduce or, as appropriate, eliminate tariffs and non-tariff barriers” on environmental goods and services has generated heat over the years with developing countries forming a view that these negotiations lead to “super sectoral market access negotiations”.

Reports by the Geneva-based International Centre for Trade and Sustainable Development suggest that the Brazilian Ambassador to WTO, Roberto Azevedo, was of the view last week that these negotiations for quick openings in the trade in environmental goods will risk destroying infant green technology industries in developing countries without benefiting the environment.

Interestingly, he argued that the goods that will form part of the list of products for tariff liberalisation should also include agricultural products. The definition of what constitutes an environmental product has been under debate for long. Many countries have adopted a list approach and 153 products have been added to the list for tariff reduction or elimination.

Indian industry and analysts, however, have been of the view that there is a need for a clear definition of what can be clearly defined as an environmental product. The list approach, it has been felt, will not help the process of helping the environment as has been envisaged by the WTO member countries.

The list approach has been questioned for two reasons. The first is the fact that many products on the list could have a dual use and the second is that focusing on technologically superior products would only help the developed countries.

Beijing has recently concluded a tariff reduction simulation of the products on this list and has found that the average cut in tariffs by the developed world on these products would be much smaller when compared with the sharp cuts by countries such as China, India or Brazil. This, it has been pointed out, also goes against the principle of “less than full reciprocity”, which is central to the Doha Development Round.

In a bid to find a solution, Mexico has suggested a hybrid approach under which countries would self-select products that they consider should be on the list and then use the model of request-offer approach to arrive at the final list of products. This may not provide the right results since negotiations will then have to move towards a bilateral discussion mode. Some other countries, too, are said to have supported the request-offer approach. These include Singapore, Hong Kong, Australia and Norway.

The negotiations on environmental goods have been linked to the discussions on sectorals under the tariff liberalisation negotiations for industrial goods by industry in the developing world for many years. Indian industry has been opposed to the negotiations on sectorals as it seeks to eliminate tariffs on some sensitive products since they are largely manufactured by the small and medium sector in the country. These include products like auto components and toys besides chemicals.

The linkage of environment to trade has not been a welcome move for industry in developing countries and they have made a strong attempt to link trade negotiations with environmental concerns. However, industry in the developed world has been keen on taking the paragraph on trade and environment in the Doha declaration to push its agenda of market access in products of interest to them.

Interestingly, much like in the case of negotiations on industrial goods, in environmental goods, too, discussions have mainly focused on the issue of tariff liberalisation and not on identification and elimination of non-tariff barriers as envisaged in the Doha declaration.

The next round of discussions on environmental goods is slated for this month and it will be important for industry to keep a close watch on the progress. Concern for the environment is essential but it must not cloak an objective of market access for products from developed countries to enter developing country markets.

The author is principal adviser, APJ-SLG Law Offices