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Liberalisation of trade in environmental goods for climate change mitigation: the sustainable development context

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This paper surveys the key issues surrounding liberalised trade in low-carbon goods. It begins with an overview of progress to date in the World Trade Organisation's (WTO's) negotiations on environmental goods and services (EGS). The paper also asks about the limitations of the liberalisation approach. The paper firstly states that the Doha mandate called for a reduction or elimination of tariffs and non-tariff barriers on EGS. However, the negotiations to date have shown this is not a simple proposition. The paper wonders about further efforts that need to be considered to lowering tariff barriers for low-carbon goods and technologies. Nevertheless, it finds that trade barriers are only one of an array of factors. Other factors include:

fiscal incentives
the nature of investment frameworks
the availability of finance
intellectual property-rights-related costs that determine access to and affordability of climate mitigation technologies

The paper therefore reformulates the question, asking what modalities are available for liberalising trade in low-carbon goods, both within and outside the WTO.Since the WTO is the only trade negotiating forum with a specific environmental goods and services (EGS) mandate at present, the paper surveys the key negotiating issues and challenges that have arisen in the WTO context. Related to this, the paper figures out the following issues:

defining and classifying climate-friendly goods
processes and production method, relativity and evolving technology
the dual-use problem
the distribution question

In addition to issues of product coverage, the paper notes that the question of how to approach the liberalisation exercise has been another big stumbling block to progress in the negotiations on EGS.The paper indicates that a number of creative proposals have been put forward to resolve the issues of product coverage as well as the approach to liberalisation. In this sense, the paper also suggests the possibility of combining list and project approaches based on whether the products were single-environmental use, or dual-use. Products could be further selected after screening on the basis of:

their dynamism in exports
sensitivity in terms of import liberalisation
their use in the delivery of environmental services and subject to differentiated treatment in terms of depth
pace and sequencing of liberalisation

Nonetheless, the paper deems that the question of what is an "essential" environmental good will remain subject to debate.The paper also presents alternative possibility for environmental goods (EG) liberalisation, which is to pursue it through regional trading agreements. In such cases there usually is no need for a separate EG mandate, as the objective is to liberalise all trade. Yet, it may be possible to single out certain EG for earlier liberalisation.