Environmental Goods: A Comparison of the OECD and APEC Lists E-mail
Friday, May 01, 2009

This report has been prepared in response to a request from the Joint Working Party on Trade and Environment (JWPTE). It was drafted by Ronald Steenblik in the Trade Policy Linkages Division of the Trade Directorate, under the supervision of Dale Andrew. The Secretary-General has agreed to declassify the document under his responsibility, as recommended by the JWPTE, with the aim of bringing information on this subject to the attention of a wider audience.

Paragraph 31(iii) of the Doha Ministerial Declaration calls for negotiations on “the reduction or, as appropriate, elimination of tariff and non-tariff barriers to environmental goods and services.” “Environmental goods” were not further defined in the Doha declaration. However, a substantial amount of work to identify the scope of environmental goods had already been undertaken by the OECD and APEC, culminating in two product lists of candidate goods, one from each organisation.

Counting only entries with corresponding Harmonized System (HS) codes, the OECD list appears to be about 50% longer than the APEC list. However, when one eliminates multiple listings at the 6-digit level, they are more similar in length: there are 132 unique HS codes in the OECD list, compared with 104 in the APEC list. The composite list has 233 entries identified with an HS code, covering 198 different goods. These magnitudes are small compared with the total numbers of lines contained in WTO Members’ national tariff schedules, which range from less than 6 000 (in the schedules of Australia and India) to over 11 000 (in the schedules of Hungary, Korea, Mexico, and Turkey). In all, less than 30% of the goods are common to both lists. The greatest areas of overlap are found in the categories of air-pollution control, recycling, incineration, and measuring and monitoring equipment.

In reviewing the developmental history of the OECD and APEC product lists of environmental goods, it is clear that the two exercises were interlinked and informed each other. For example, the drafters of the APEC list consciously based their categories of environmental goods in large part on the work being undertaken at the time by the OECD/Eurostat informal working group on the environment industry. However, the objectives of the two exercises differed, as did the procedures for generating the lists.

The OECD list was the result of an exercise intended to illustrate, primarily for analytical reasons, the scope of the “environment industry.” The selection of categories of goods could therefore be broad, because there were no specific policy consequences of adding products to the list. Moreover, the OECD’s larger list was created deductively: starting from general categories based on the classifications appearing in the environment industry manual, and adding more specific examples, in order to produce an estimate of average tariffs on a previously undefined class of goods.

The APEC approach started with nominations — not unlike the request/offer procedures traditionally used in trade negotiations — yielding a list of goods which was then arranged according to an agreed classification system. Further, since the aim of the APEC list was to obtain more favourable tariff treatment for environmental goods, APEC member economies limited themselves to considering only those specific goods that could be readily distinguished by customs agents and treated differently for tariff purposes. For this reason, issues related to “like products”, products defined by particular processes or production methods, and products defined by their life-cycle impacts, were not addressed, with the result that some goods were left off the list that could be included on the OECD list. This constraint of practicality could be relaxed in the OECD’s analysis because its aim was merely to illustrate what could potentially be included.

Perhaps the most elementary observation to make from any comparison of the various lists of environmental goods that have been produced to date is that the number of goods that could be included in an eventually agreed list is potentially large. Clearly, both the OECD and the APEC lists have helped frame the current WTO negotiations on environmental goods. But it is also clear that many, if not most, WTO members regard the lists as just that: helpful but not definitive.

 

 
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