WORLD TRADE
ORGANIZATIONTN/TE/W/34
TN/MA/W/18/Add.4
19 June 2003
(03-3266)
Committee on Trade and Environment Special Session
Negotiating Group on Market AccessOriginal:  English
LIBERALIZING ENVIRONMENTAL GOODS IN THE WTO:
APPROACHING THE DEFINITION ISSUE
Submission by the United States
Paragraph 31 (iii)
1. In Paragraph 31(iii) of the Doha Ministerial Declaration, Ministers instructed delegations to
carry out negotiations on “the reduction or, as appropriate, elimination of tariff and non-tariff barriers
to environmental goods and services”.  During the course of negotiations since the Doha Ministerial,
delegations have identified the issue of the definition of environmental goods as a key point thatrequires further clarification in the process of developing relevant negotiating modalities.  Various
delegations have pointed to the fact that there is no clear definition of “environmental goods” in the
Harmonized System tariff nomenclature.  Information has also been circulated regarding attempts by
other organizations, notably the OECD and APEC, to  create a listing of environmental goods.  Of
these two, the APEC list was developed in a context and for a purpose that closely mirrors themandate from WTO Ministers.  That is, the APEC list was created in a process involving developing
and developed countries with a view to it serving as a basis for trade liberalization in the
environmental goods sector.
2. The United States believes that the underlying process and environmental rationale that went
into developing the APEC list deserves attention as WTO Members undertake a similar process for
identifying environmental goods for purposes of trade liberalization negotiations.  Accordingly, we
offer the following background information for WT O Members regarding the process by which the
APEC list was developed.  Irrespective of the specific approach that is ultimately adopted for these
negotiations, delegations may wish to consider the lessons learned from the APEC process.
I. REASONS FOR THE LIBERALIZATION OF ENVIRONMENTAL GOODS
3. Before describing how the APEC chose to define environmental goods, it is useful to focus
briefly on why it is important to identify and reduce or eliminate barriers that impede trade in thissector.
• Ministerial Mandate:  WTO Ministers singled out environmental goods and services
for liberalization.  Apart from agriculture, no other sector was specifically identified
in the Doha mandate for market access liberalization.  Ministers directed that these
products merit particular attention in terms of tariff and non-tariff barrier
liberalization in the Doha Round.  A significant liberalizing result in this sector alsowill help demonstrate to various constituencies, including civil society, that trade
liberalization and environmental protection are indeed mutually supportive
• Economic benefits: With the reduction/elimination of barriers to market access and
increased trade flows, domestic purchasers, including business and governments at all
levels, will be able to acquire environmental technologies at lower costs.  The savings
realized will help business and governments to stretch their capital investmentbudgets further.TN/TE/W/34
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• Environmental benefits:  Improved access to high quality environmental goods at
lower costs should help improve the effectiveness of environmental investment
programmes undertaken by business and governments.  This can lead to direct quality
of life benefits for citizens in all countries in terms of a cleaner environment and
indirectly to developing greater regulatory capacity in environmental protection.
• Sustainable development benefits:  Liberalization will not only improve the
availability of environmental technologies  at lower cost, but also will allow locally
based, globally competitive industries to expand their market opportunities.  As
barriers are removed to products for which developing countries have, or develop,
competitive advantage, these countries can realize economic growth and development
patterns that are more environmentally sustainable over time.  Furthermore,
liberalization in this sector can assist developing countries in obtaining the tools
needed to address key environmental priorities as part of their on-going developmentstrategies, such as those they have identified in the WSSD Johannesburg Plan of
Implementation.
II. DIFFERENCES IN APPROACH TO DEFINING ENVIRONMENTAL GOODS -
APEC VERSUS OECD
4. The APEC and OECD environmental goods list s were created for significantly different
reasons and thus have different characteristics.   The OECD list was developed as part of an analytical
exercise to define the conceptual scope of the sector.  As such, analysts who drew up the list were
focused on creating a broad-brush view of goods that could be considered as part of the environment
industry.  In drawing up the OECD list, analysts we re focused on the particular industrial usages for
these goods and did not need to focus on practical questions of how the goods they were defining as
“environmental” differ from identical or similar products used in other industries.
5. The APEC list, on the other hand, was clearly intended to serve as the basis for tariff
liberalization/elimination among participating economie s.  As such, the negotiators who drew up the
APEC list were constrained by a number of practical realities.  While these will be discussed in somedetail below, these factors included, inter alia , questions of customs administration, “dual use” issues,
differing national nomenclatures below the HS 6-digit level and WTO legal issues  (e.g., like products
and process and production methods or PPMs).  It was often for these practical reasons that products
were left off the APEC list that might otherwise have been worth including from a purely conceptual
perspective.
III. WHAT ARE ENVIRONMENTAL GOODS?
6. The APEC list is made up of a combination of goods in the following two categories:
1. Environmental remediation/pollution preven tion  (e.g., smokestack scrubbers, sewage
treatment equipment, solid waste recycling systems).  Goods used to clean the
environment or to contain or prevent pollution.  APEC economies began by
concentrating on goods of this type.
2. “Clean technologies”  (e.g., solar cells and water heating systems, wind and hydraulic
turbines).  Goods which are designed for a particular industrial or consumer function
whose use or disposal results in lesser impact on the environment than alternative
goods designed for similar functions.  APEC economies also sought to include clean
technologies proposed by participants.TN/TE/W/34
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7. Some WTO Members have also argued that the environmental goods should include goods
produced in an environmentally friendly manner (e.g., goods identified on the basis of PPMs). They
argue that this would seek to reward industrial or consumer goods produced in a manner  that has
lower impact on the environment than alternative goods with similar functions.  APEC economies did
not include goods produced in a manner that is arguably “environmentally friendly” (i.e.,
differentiated on the basis of PPMs) in the APEC list.  The main reasons for not including such goods
were the practical and WTO-legal issues surrounding tariff discrimination on the basis of PPM
criteria.  In the Doha negotiations, there similarly appears to be an overwhelming majority view that
WTO rules should not be changed to introduce tari ff differentials between otherwise like products
solely based upon differences in their method of production.
IV. APEC APPROACH
8. During APEC early voluntary sectoral libe ralization (EVSL) negotiations, economies made
strong progress in tackling the most difficult definitional issues in developing a list of environmental
goods.  As discussions proceeded, ideas for dealing with these difficulties in defining environmental
goods for purposes of tariff liberalization were evaluated against several criteria.
(a) Can the product distinctions be practically implemented by customs officials? -
Clearly customs officials need to be able to effectively implement liberalized tariff
treatment for the environmental goods identi fied.  APEC economies agreed that this
precludes the use of end-use certificates, where, for example, importers would certify
that pumps were to be used for sewage treatment plants in order to receive favorable
tariff treatment, even though the same pumps could equally be used for otherindustrial purposes. It is noteworthy that ITA participants also rejected the use of
end-use certificates in the implementation of liberalized tariff treatment for
information technology goods.  This practical implementation test also precluded use
of goods designated as environmental on the basis of their PPMs.
(b) Many Harmonized System Tariff headings contain more than just environmental
goods  -  “Environmental goods”are not a discrete section of the tariff code, nor are
all goods within a single HS tariff line item necessarily part of the environment
industry.  Few HS headings at the internationally harmonized six-digit level are
comprised uniquely of goods that could be considered part of the environmental
industry.  APEC economies decided to follow a pragmatic approach based both upon
the prevalence of the environmental goods in a given tariff heading and the
importance of the good for the environment industry.  For example, if all or themajority of a six-digit HS category served an environmental purpose, all products
within that six-digit HS category were included on the list.  If a minority of products
of a six-digit category was environmental, but APEC economies agreed that these
products were critically important to the environmental sector, again the entire
six-digit HS category was included on the list.  This was the rationale for inclusion ona list of what might be viewed as “core” environmental products at the six-digit HS
level, including filters to purify industrial emissions into the air and water, sewage
treatment equipment, potable water treatm ent equipment, recycling equipment, etc.
(c) National HS tariff lines are not uniform below the 6-digit level - In other cases,
economies wanted to include a specific environmental good that was best described
in terms of the product descriptions found at the narrower, national tariff line level
(i.e., the eight- or nine-digit level, as appropriate).  There was still an issue regarding
how to address these situations in the APEC  list since HS product descriptions are not
necessarily consistent at the national tariff-line level.   In fact, this issue is not uniqueTN/TE/W/34
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to the environment industry, but is a feature of the international tariff nomenclature
system.  Again, APEC economies chose a pragmatic approach.  If economies could
not reach agreement at the internationally harmonized six-digit level but still felt that
coverage of a specific good was warranted, economies agreed to incorporateenvironmental products by including the detailed break-outs in their own tariff
schedule .  Basically, economies would agree, for example, to cover a product like
solar cells and leave it up to each individual economy to reflect that coverage in their
national tariff schedule in an appropriate manner.  This explains the use of “ex”
headings in the APEC list.
(d) What can be done about “dual use” issues? - Goods which are important to the
environmental industry often have dual or multiple uses, including
non-environmental as well as environmental uses.  As in the above example, a given
type of pump might be able to be used for sewage treatment or other
non-environmental purposes.  Given that end-use certificates were deemed to be
impractical, APEC economies next faced the question what to do about goods that
could be used both for environmental and non-environmental purposes.  Here APECeconomies made choices to include products that were viewed to be important tools
or components for environmental protection.
V. CONCLUSIONS
9. As the United States has said in submissions and interventions in both the Negotiating Group
on Non-Agricultural Market Access and the CTE in Special Session, we encourage delegations toconsider the APEC list of environmental goods as th e starting point for discussions.  Such an exercise
would allow all Members to benefit from the core lessons learned of previous trade negotiators who
found workable solutions to some of the most inherently difficult aspects of environmental goods
negotiations.   It is in this spirit that the United States submits these highlights and clarifications of the
APEC negotiations for delegations that were not involv ed in that process.  The lessons learned in that
context could be helpful in informing our current work in the WTO
10. Ultimately, WTO Members must style an environmental goods modality that fits their broad
and diverse interests.  This includes identifying environmental products of interest to developed and
developing countries alike.  This should be done in a manner than can be readably implemented by
customs officials and that, in turn, will allow for both economic and environmental benefits.
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