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Tariffs and Trade in Environmental Goods

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... traders are Western Europe, Asia and North America making up over 90 per cent ... of environmental goods and over 80 per cent of imports of environmental goods. ... – PowerPoint PPT presentation

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Title: Tariffs and Trade in Environmental Goods


1
Tariffs and Trade in Environmental Goods
  • WORKSHOP ON ENVIRONMENTAL GOODS
  • Geneva, 11 October 2004
  • Bijit Bora and Robert Teh
  • WTO Secretariat

2
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

3
I. Trade in environmental goods
4
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

5
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

6
APEC and OECD lists
7
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

8
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)

9
Env. goods compared to other sectors
10
Growth of environmental goods trade, 1990-2002
11
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.

12
Regional distribution of trade, 2002
13
Share of env. goods trade, by level of development
  • LDCs 0.2
  • LDCs 0.04
  • Developing 22
  • Developing 37.7
  • Developed 62
  • Developed 78

14
Trade in env. goods by level of development
15
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.

16
Top 20 exporters of env. goods (OECD list), 2002
17
Top 20 importers of env. goods (OECD list), 2002
18
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

19
Trade by categories of (OECD) environmental goods
  • Resource Management
  • Air pollution control
  • 10
  • 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

20
Trade by categories of (APEC) environmental goods
  • Renewable Energy Plant
  • 4
  • Air Pollution Control
  • Noise/vibration abatement
  • 12
  • 7
  • Other Recycling Systems
  • Remediation/cleanup
  • 1
  • 0
  • Solid/Hazardous Waste
  • 9
  • Heat/Energy Management
  • 1
  • Potable Water Treatment
  • 5
  • Monitoring/Analysis
  • 35
  • Waste Water Management
  • 26

21
II. Trade in environmental goods and
environmental quality
22
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.

23
Results and qualifications
  • Equation Qi a0 a1(GDP/Cap)i a2(GDP/Cap)i2
    a3(GDP/Cap)i3 a4(Envtrade)i a5Zi 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., a4 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.

24
Environmental goods trade and nitrogen oxide
emissions
25
Environmental goods trade and biological oxygen
demand
26
Environmental goods trade and energy consumption
27
III. Tariffs on environmental goods
28
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.

29
Binding coverage
30
Average applied tariff
31
Applied and bound Rates
  • APEC

OECD
32
Avg applied tariff by category
33
DDA and environment
  • Mandate from para 31 (iii)
  • Broader mandate for NAMA in para 16
  • Tariff issues
  • Binding
  • Tariff reductions
  • Less than full reciprocity

34
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

35
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

36
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 non-agricultural
    environmental goods covered in paragraph 31 (iii)
    of the Doha Ministerial Declaration.

37
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.

38
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 non-agricultural
    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.

39
Summary and conclusions (cont.)
  • DDA and environment
  • Continue to enhance co-operation between NAMA and
    Trade and Environment (SS).
  • Sequence environment and non-environment, or do
    together?
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