Implications of negotiation failures on Environmental Goods and Services at the Doha Round for global trade governanc

1. Implications of negotiation failures on Environmental Goods and Services at the Doha Roundfor global trade governance Jaime de Melo FERDI WTO Public Forum, September 26: 16:15-18:15, Room S-1

2. Outline(based on paperavailableathttp://www.ferdi.fr/uploads/sfCmsContent/html/112/P28.pdf ) • Doha art. 31: Countries mandated to negotiate on removingbarriers to trade in EGS • Anatomy of negotiations • Threeapproaches: Project; request and offer; list) • WTO ‘combinedlist’ and ‘corelist’ of 26 products (2010) • No visible progress (in relative terms) as tariffReductions in EGs no greaterthan for othergoodsacross country groupings and regionssincelaunch in 2000 • Difficulties (Causes of no progress) • Strategicbehavior (bargaining chip whennegotiations are multi-dimensional) • Problems in IdentifyingEgs. • Different perceptions and interests • Implications for Global Trade Governance: Go either for • regionalapproach • breakdown negotiations: plurilateralratherthanmultilateral deals • What future for global tradegovernance?

3. Approaches to Negotiations • Main Approaches : • (i) «Request and offer» (e.g. Brazil); workedunderearly GATT whentariffshigh: Nowwon’tworkbecausetarifflevels are toolow • (iI)«Integratedproject» to deal with multiple-end use (e.g. Argentina and India). To besubmitted by national authorities. • (i) «list» (onlyproposed by developed countries). By 2008 13 countries proposedlists411 HS-6 codes withlittleoverlap (90 duplicates;35 triplicates; 7 quadruplicates) •  Corelist in 2010 (26 HS-6 products) (seenextslides)

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5. Corelistproducts (sample): Limited overlap in lists and in environmental classifications Environmentalcategory Countries whoproposedthat good APC=Air Pollution Control, RE=Renewable Energy, ET=Environmental Energy, CCS=Carbon Capture and Storage, WM/WT=Water Management / Water Treatment, OTH=Other 5

6. No progress in reducingtariffs (in relative terms)(No difference in tariffreduction Patterns between ‘corelist’ and total trade) 6 • No «mandate effect» as no acceleration in reduction of protection after 2001 relative to reduction in protection for other products • Especially for low-income countries • Next slide shows outcome under standstill

7. Difficulties (I): Whatis an EG?(ClassifyingGEMs and EPPs) Figure 1: Identifying and Classifying Goods Related to the Preservation and Management of the Environment Goods for Environmental Management (GEM) (Pollution, Resources) Multiple end-uses (pipes for water treatment or for natural gas) Environmentally Preferable Products (EPPs): Single use 7 Production -- Aluminium (Prebake vs.Soderberg) -- Organic cotton vs conventional cotton; Use -- Solar stoves -- Solar furnaces -- Energy efficient consumer goods Disposal --- packaging (glass vs. plastic) --- Cotton fiber versus synthetic fiber Identification Relativism: How to deal with like products Attribute Disclosure (requires an efficient disclosure mechanism (e.g. certification and harmonization) Processes and Production Methods (PPMs) and the like products at WTO Developing countries: PPM-based EGs would be high-jacked by DCs (“social concerns”) Identification of use Take a Project Approach Finer/alternative HS-(10) classification problematic (lock-in characteristics of HS code) 7

8. Difficulties (II): Countries submittedgoods for whichtheyhad a comparative advantage… % of goodsproposedunder the 2008 CTESS program with RCA>1(in 2007) Among the goodssubmitted by New Zeland (ie the 164 goods of the Friends’ list), 60% are goods for whichithad a RCA >1 in 2007 Notes: COMTRADE export data, mirror data used for Philippines and SaudiArabia. 384 products only, countries: Saudi Arabia, Philippines, Japan, United States, Canada, Korea, Norway, Taiwan, European Communities, New Zealand, Switzerland (ie last submissions of Qatar and Singapore not included)

9. Difficulties (II) …and avoidedsubmittinggoodswithtariffpeaks Goods not proposedhadsignificantlyhigher protection

10. Implications for Global Trade Governance • Membersdid not act on article 31 mandate • Strategicbehaviorwasencouraged by multi-dimensionality of negotiations cum consensus • Stakes not sufficientlyhigh (5<tariff<10% range) for «request-and-offer »bargaining to beworthwhile—the locomotive of early GATT rounds • Technicaldifficulties in definingEGs (GEMs and EPPs) • Genuinedifferences in interests (betterresolved by negotiationsatregionallevel) • Political-economy of submissions on lists (onlythosewithlowtariffs –around 3% wereproposed) • Implications • Follow the regional route • Drop multilateralnegotiations for plurilateralnegotiations (allowedunder WTO, e.g. GPA, ITA)

11. …what future for Global Trade Governance? • Growing tensions betweenenvironmentalists and tradecommunities • .. By 2020 China’s contribution to global CO2 stock in atmosphere (since 1980) willexceed US’  A bilateral world trading system (US-China) withothersjoining the rules of the game set by them ? (à la 19th c. with France-GB in the 1860s) • Tackleenvironmentalproblems on a regional basis (e.g. APEC has negotiated on 54 Egs) • Take inspiration fromMontrealprotocol on CFCs or MARPOL (convention on prevention of pollution fromships) for sectoraltreaties (e.g. on aluminium, fuel for ships) • How will adjudication process of AB stand up when cases on energy subsidies willbebrought to them? • Need for a World ClimateOrganization?