Transcript Tariffs and Trade in Environmental Goods

Tariffs and Trade in
Environmental Goods
WORKSHOP ON ENVIRONMENTAL GOODS
Geneva, 11 October 2004
Bijit Bora and Robert Teh
WTO Secretariat
Outline
• Trade in environmental goods
• Link between trade in environmental
goods and environmental quality
• Tariffs on environmental goods
– Will not cover non-tariff barriers
• Summary and conclusions
I. Trade in environmental
goods
Definitions
• Environmental goods in this paper will refer only to goods
defined by APEC and OECD lists
– Lists are products of long international effort
– One list has been created for the purpose of trade
liberalization
– They cover a wide range of subsectors that alternative lists
will most likely contain some subsets of these goods
• Trade and tariff data are aggregated at the HS 6 level.
• Trade and tariff data based on UN Comtrade and WTO IDB
sources
Differentiating between APEC and
OECD lists
• There are some differences such as:
– Large group of chemicals are excluded from APEC
list
– Clean technology is in OECD but not APEC list
• But otherwise many more similarities
– Sectors in one list can be easily mapped into sectors
in the other list
– Bulk of trade is in common tariff subheadings
APEC and OECD lists
A. Pollution Management
1. Air pollution control
1. Air pollution control
2. Wastewater management
2. Heat/energy management
3. Solid waste management
3. Monitoring/analysis
4. Remediation and cleanup
4. Noise/vibration abatement
5. Noise and vibration abatement
5. Other recycling systems
6. Environmental monitoring, analysis and assessment
6. Potable water treatment
B. Cleaner Technologies and Products
7. Remediation/cleanup
1. Cleaner/resource efficient technologies and processes
8. Solid/hazardous waste
2. Cleaner/resource efficient products
9. Waste water management
C. Resources Management Group
10. Renewable energy plant
1. Indoor air pollution control
2. Water supply
3. Recycled materials
4. Renewable energy plant
5. Heat/energy savings and management
6. Sustainable agriculture and fisheries
7. Sustainable forestry
8. Natural risk management
9. Eco-tourism
10. Other
Bulk of trade is in tariff
subheadings common to both lists
•APEC-only 24%
•OECD-only
31.4%
•Common
Subheadings 76%
•Common
Subheadings 68.6%
Trends in overall trade in
environmental goods
•
In 2002, total exports of environmental goods amounted to about $
238.4 ($ 215.3) billion when one uses the OECD (APEC) defined list,
representing between 3.6 to 4.0 per cent of world exports.
•
It is smaller than textiles trade; a third the size of chemicals trade;
and a tenth of trade in machinery and transport.
•
But n the past dozen years (1990-2002), trade in environmental
goods has grown more than twice as fast (14%) as total merchandise
trade (6%).
•
Factors fuelling this dynamism
– Greater awareness of the value of the environment and concern about
pollution (Conca and Dabelko)
– Institutionalization of environmental protection in countries around the
globe (series of OECD country studies)
Env. goods compared to other
sectors
2,500
2,250
2,000
1,750
$ Billions
1,500
1,250
1,000
750
500
250
APEC Env. Goods
Chemicals
Textiles
Machinery & Transport
Equipment
Growth of environmental goods
trade, 1990-2002
600
500
APEC Env. Goods Exports
Index (1990=100)
400
OECD Env. Goods Exports
300
200
Total Merchandize Exports
100
0
1990
1991
1992
1993
1994
1995
1996
Year
1997
1998
1999
2000
2001
2002
Trade by regions and level of
development
•
The major traders are Western Europe, Asia and North America making
up over 90 per cent of exports of environmental goods and over 80 per
cent of imports of environmental goods.
•
Western Europe alone accounted for almost half of environmental goods
exports and is a net exporter whether the APEC or OECD definition is
used. Asia is the second largest trader of environmental goods and is a
net importer whether the APEC or OECD definition is used. North
America is a net exporter only if the APEC definition is used. All the
other regions are net importers of environmental goods, whichever
definition is used.
•
Developed countries make up 79% of environmental goods exports;
developing countries about 20%; and LDCS less than 1%. Developed
countries make up 60% of environmental goods imports; developed
countries 39%; and LDCs less than 1%.
Regional distribution of trade,
2002
120
100
US $ Billions
80
60
40
20
0
Western Europe
Asia
North America
OECD Exports
Latin America
OECD Imports
Central and Eastern
Europe
APEC Exports
APEC Imports
Middle East
Africa
Share of env. goods trade, by
level of development
Share of Exports
Share of Imports
•LDCs 0.2%
•LDCs 0.04%
•Developing
22%
•Developed
78%
•Developing
37.7%
•Developed
62%
Trade in env. goods by level of
development
200
OECD Exports
180
160
APEC Exports
OECD Imports
140
APEC Imports
$ Billions
120
100
OECD Imports
APEC Imports
80
60
OECD Exports
APEC Exports
OECD Imports, 0.36
40
APEC Imports, 0.27
20
OECD Exports, 0.10
APEC Exports, 0.01
0
Developed
Developing
LDCs
Top traders of environmental
goods
•
A list of the top 20 exporters and importers of environmental
goods for the year 2002 has been drawn up.
•
19 of the top 20 exporters are the same (although the ordering is
slightly different) whether the APEC or OECD list is used. For
importers, the top 20 countries are the same.
•
There are a fair number of developing (mostly from Asia) and
transition countries in the top 20 traders.
•
The top 20 exporters of environmental goods accounted for
about 93 per cent of world exports in those goods while the top
20 importers comprised nearly 87 per cent of world imports of
environmental goods. This degree of concentration is greater
than in overall merchandise trade where the top 20 exporters in
2002 accounted for just a little over 82 per cent of world exports.
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Top 20 exporters of env. goods
(OECD list), 2002
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Top 20 importers of env. goods
(OECD list), 2002
45
40
35
30
25
20
15
10
5
0
Major categories of environmental
goods trade
• Biggest traded sectors are waste water
management, environmental monitoring
and analysis, solid waste management,
air pollution control, noise and vibration
abatement
Trade by categories of (OECD)
environmental goods
•Resource Management
•10%
•Air pollution control
•10%
•Cleaner Technologies
•1%
•Environmental monitoring
•analysis and assessment
•15%
•Waste water management
•34%
•Noise and vibration abatement
•12%
•Remediation and clean-up
•5%
•Solid waste management
•13%
Trade by categories of (APEC)
environmental goods
•Renewable Energy Plant
•4%
•Noise/vibration abatement
•7%
•Remediation/cleanup
•0%
•Air Pollution Control
•12%
•Other Recycling Systems
•1%
•Solid/Hazardous Waste
•9%
•Heat/Energy Management
•1%
•Potable Water Treatment
•5%
•Monitoring/Analysis
•35%
•Waste Water Management
•26%
II. Trade in environmental
goods and environmental
quality
Trade in environmental goods and
environmental quality
•
It would strengthen the argument that liberalization of environmental
goods would not only increase trade in these goods but also improve
environmental quality if we can find econometric support that
countries which trade more environmental goods also achieve better
environmental outcomes.
•
Environmental indicators analyzed: nitrogen oxide (NOx),
biochemical oxygen demand (BOD) and per capita energy
consumption.
•
International data (from over 200 countries) on environmental
indicators is available only for 1995 & 1999. Source: The Emission
Database for Global Atmospheric Research (available from World
Resources Institute) and the World Bank.
Results and qualifications
•
Equation: Qi = α0 + α1(GDP/Cap)i + α2(GDP/Cap)i2 + α3(GDP/Cap)i3 +
α4(Envtrade)i + α5Zi + ui
•
Explanatory Variables: GDP per capita (following Grossman and
Krueger), value of environmental goods trade, land area, OPEC
membership, etc.
•
Conclusion: There is a negative (i.e., α4 < 0) and statistically
significant link between trade and environment. Countries which
trade more environmental goods have less pollution or consume
energy more efficiently. This holds whether the OECD or APEC list is
chosen as the explanatory variable in the regressions.
•
Qualifications: This is an ongoing exercise. Need to expand the
range of environmental indicators beyond those indicated. There is a
need to look at more recent international data.
Environmental goods trade and
nitrogen oxide emissions
50
45
40
NOX emissions with env.
goods trade
Kgs of NOX per person
35
NOX emissions w/out env. goods
trade
30
25
20
15
10
5
-
5,000
10,000
15,000
GDP per capita (PPP)
20,000
25,000
30,000
Environmental goods trade and
biological oxygen demand
14
Water Pollutant Emissions (kg per day)
12
BOD without env. goods trade
10
BOD with env. goods trade
8
6
4
2
-
5,000
10,000
15,000
GDP per capita (PPP)
20,000
25,000
30,000
Environmental goods trade and
energy consumption
14,000
Energy Consumption per capita (MT)
12,000
10,000
Energy consumption (w/out env.
goods trade)
8,000
6,000
Energy consumption (w/
env. goods trade)
4,000
2,000
0
0
5,000
10,000
15,000
20,000
25,000
GDP per capita (PPP)
30,000
35,000
40,000
45,000
III. Tariffs on environmental
goods
Tariff issues
• Level of tariffs based on APEC and
OECD definition
• Cross-country distribution of tariffs
• Binding coverage
• Modality by which tariff reductions on
environmental goods will be addressed.
Binding coverage
100
80
60
40
20
0
APEC
Developed
OECD
Developing
Non-Ag
LDC
Average applied tariff
14
12
10
8
6
4
2
0
APEC
Developed
OECD
Developing
Non-Ag
LDC
Applied and bound Rates
•APEC
OECD
60
50
60
Avg. Applied
Avg. Bound
50
40
40
30
30
20
20
10
10
0
0
Developed
Developing
Avg. Applied
Avg. Bound
LDC
Developed
Developing
LDC
Avg applied tariff by category
LDC
Developing
Developed
Other Recycling Systems
Heat/Energy Management
Potable Water Treatment
Renewable Energy Plant
Remediation/Cleanup
Solid/Hazardous Waste
Monitoring/analysis
Air Pollution Control
Waste Water Management
Noise/vibration abatement
0
2
4
6
8
10
12
14
DDA and environment
• Mandate from para 31 (iii)
• Broader mandate for NAMA in para 16
• Tariff issues
– Binding
– Tariff reductions
– Less than full reciprocity
Approaches to tariff reductions
• Formula
– Line by line reduction
– Will not target environmental goods
• Sectoral approach
– Deeper reductions on agreed sectors
– Environmental goods have not been
discussed
July package
• No agreement on specific elements
• Broad contours of interest to para 31(iii)
mandate
– Exempt LDCs from tariff reductions
– Exempt low binding countries [35%] from
formula reductions
July Package
• 16. We furthermore encourage the
Negotiating Group to work closely with
the Committee on Trade and
Environment in Special Session with a
view to addressing the issue of nonagricultural environmental goods covered
in paragraph 31 (iii) of the Doha
Ministerial Declaration.
Summary of tariff issues
• Binding coverage is high for most countries and
slightly better than the non-agricultural average.
• Applied tariffs on environmental goods are lower
than the Non-agriculture average for most
countries.
• Large gap between bound and applied rates.
• Developed countries have lower tariffs on
environmental goods than developing and LDC
countries.
IV. Summary and conclusions
•
Trade
– Env. goods trade is still small but growing rapidly
– Mostly intra-developed country trade
– Developing countries are net importers of environmental goods
•
Trade and environment
– there is some statistical evidence that link more trade in env. goods to
lower pollution levels
•
Tariffs
– Binding coverage is slightly better for environmental goods than for nonagricultural goods
– Applied tariffs on environmental goods are also lower on average than on
non-agricultural goods
– Binding coverage of developed countries is high and applied tariffs low.
Binding coverage is lower in developing countries, but higher applied
tariffs.
Summary and conclusions (cont.)
• DDA and environment
– Continue to enhance co-operation between
NAMA and Trade and Environment (SS).
– Sequence environment and nonenvironment, or do together?