RESTRICTED  WORLD TRADE  
ORGANIZATION  TN/TE/R/10 
3 December 2004 
 
 (04-5277) 
Committee on Trade and Environment 
Special Session  
 
 
SUMMARY REPORT ON THE TENTH MEETING OF THE COMMITTEE 
ON TRADE AND ENVIRONMENT IN SPECIAL SESSION 
 
12-13 OCTOBER 2004 
 
Note by the Secretariat  
  1. The Committee on Trade and Environment Special Session (CTESS) held its tenth meeting 
on 12-13 October 2004 on the basis of the agenda set out in the convening airgram, WTO/AIR/2372. 
I. PARAGRAPH 31 (I) - WTO RULES AND SPECIFIC TRADE OBLIGATIONS IN 
MEAS 
2. The representative of Australia
 presented a new Australian submission under this item, 
document TN/TE/W/45.  The submission was intend ed to build on the experience exchange on the 
negotiation and implementation of specific trade ob ligations (STOs) in multilateral environmental 
agreements (MEAs) that had taken place at recent m eetings.  It also built on document TN/TE/W/7 in 
which Australia had suggested a concrete, rather th an a hypothetical, way forward on this particular 
negotiating mandate.  Australia found the two papers presented by Hong Kong, China and the 
United States (US) on their experiences to have been useful (TN/TE/W/28 and TN/TE/W/40).  
3. In its submission, Australia had chosen  to focus on the Basel Convention, the 
Montreal Protocol, and the Convention on Interna tional Trade in Endangered Species (CITES), since 
these MEAs had been in force for many years and were familiar to WTO Members.  National 
coordination between different domestic agencies and stakeholders had been a critical factor in 
ensuring that international obligations were fully  understood and taken into account in the negotiation 
of these MEAs, and in the domestic implementation of their STOs.  The submission set out the processes that had been established to ensure th at national coordination occurred in all stages of 
negotiation, ratification and implementation.  In the negotiations phase, coordination was an 
interdepartmental process involving all relevant agenci es and consultations with stakeholders, such as 
State and Territory Governments, non-governmental  organizations (NGOs), industry and the general 
public.  It also took the form of including representa tives from many different agencies in Australia's 
delegation to international c onferences and negotiations.   
4. At the ratification stage there was another exte nsive consultations process, particularly when 
treaties were tabled before parliament.  This tri ggered scrutinization by the Joint Standing Committee 
on Treaties.  A "national interest analysis" w as conducted on why Australia should join a treaty, 
taking a range of factors into account.  A similar coordination process operated with respect to Australia's domestic implementation of interna tional commitments, which was tailored to the 
agreement and obligations in questio n.  Under the Basel Convention, for instance, the permit system 
to control trade in hazardous waste was admini stered by the Department of Environment and 
Heritage.  Consultations took place with all stak eholders, including, when required, with the 
Department of Foreign Affairs and Trade on issues with  implications on multilateral or bilateral trade.  
This ensured that the permit system under Basel, or the comparable permit system under CITES, and 
the licensing system under the Montreal Protocol, were  designed not only consistently with Australia's TN/TE/R/10 
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obligations under these MEAs, but also with WTO obligations.  Science-based decision-making 
played an important role in both CITES and the M ontreal Protocol, and was a key feature of their 
mutually supportive relationship with the WTO.  Th e US had come to a similar conclusion when it 
had analysed the Rotterdam Convention on Prior Informed Consent for Ha zardous Chemicals and 
Pesticides in International Trade (PIC), the St ockholm Convention on Persis tent Organic Pollutants 
(POPs), and CITES. 
5. The Australian experience lent weight to th e conclusion that the trade and environment 
relationship was working well, and that effectiv e national coordination w as key.  Harmony between 
MEAs and trade obligations required good governance mechanisms.  The five common ingredients to 
the conventions that Australia had been involved in  included:  (1) consultation, consisting of the 
engagement of stakeholders, including industry and NGOs;  (2) coordination, in order to inform the 
right hand of government of what the left ha nd was doing; (3) legislation, to implement the 
conventions and ensure their accountability to the gene ral population;  (4) information, to ensure that 
decision-making was based on science and technical advice;  and (5) transparency, so that all stakeholders understood the range and limits of their obligations. 
6. The representatives of India
, Hong Kong, China , the Philippines , Brazil , Thailand , Mexico , 
the United States , China , Argentina , and Indonesia welcomed the approach of national experience 
sharing.  In addition, the representatives of India,  Brazil , Thailand  and Mexico  shared the conclusion 
reached by the US and Australia that greater national coordination was the key to achieving 
compatibility between different international obligat ions.  The representative of India called for the 
continued sharing of national experiences in the CTESS, including by deve loping countries and the 
"demandeurs," as this would shed light on how the mandate worked in practice.  The representative of 
the Philippines  agreed with Australia's selection of th ree MEAs which seemed to fit the criteria 
suggested by Colombia at the last meeting, and w ith the conclusion reached in paragraph 30 of the 
Australian submission.  The representatives of Brazil , Thailand and Mexico  also agreed that the 
MEA-WTO relationship was already working well, and Brazil and Mexico supported paragraphs 29 
and 30 of the Australian paper.  Brazil added that  the national experience sharing was still at a very 
early stage in the CTESS, since only a few submissi ons had thus far been tabled.  The representative 
of the United States  appreciated the way in which the Australian paper had teased out some of the 
elements in MEAs that contributed to their su pportive relationship with WTO rules, such as 
science-based procedures and inclusiveness, and calle d for a further sharing of national experiences. 
7. The representative of Japan  believed that national coordina tion was important.  Japan had 
always coordinated domestically on issues involving more than one ministry, and believed that the 
continued sharing of national experiences would certa inly be helpful to the CTESS.  However, while 
Members believed that there were no substantia l conflicts between MEAs and WTO rules, Japan 
argued that it would nevertheless be helpful to explore the development of an "interpretative 
understanding" as had been called for in its submission, document TN/TE/W/10. 
8. The representative of Chinese Taipei  posed three questions to Australia.  The first was on 
paragraphs 13 and 20 of its paper, in which it w as argued that Australia had implemented the permits, 
and import and export licensing requirements, of th e Montreal Protocol and the Basel Convention 
consistently with the requirements of those ME As and of WTO rules.  Chinese Taipei wondered 
whether that meant consistency with GATT Article  XI.  The second question was on paragraph 29 of 
the paper, where Australia suggested that the re lationship between STOs and WTO rules was working 
well.  It wondered how Australia re sponded to the argument that the f act there had been no conflict to 
date did not necessarily preclude future conflicts fro m arising.  The third question was on Australia's 
statement that Ministers had not instructed the CTE SS to make changes for change's sake.  Did that 
mean that there would be no changes possi ble pursuant to the Paragraph 31(i) mandate? 
9. The representative of Chile  agreed that national coordination was important, not just for the 
WTO-MEA relationship, but for the relationship be tween WTO rules and any set of international  TN/TE/R/10 
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obligations.  It pointed out that in the UN ESCO Convention on Cultural Diversity, which was 
currently under discussion, many Members had ta ken conflicting positions to the ones which they 
were advocating in these negotiations.   
10. Turning to the Australian paper, Chile found that it had mainly focussed on Australia's 
national coordination in the implementation of ME A obligations, and wondere d how the coordination 
process was undertaken during the negotiations phase.  Second, it found it interesting that Australia 
had to implement international obligations through national legislation.  In Chile, this was not the 
case, since international obligations were automa tically implemented domestically, requiring only 
regulations and not legislation.  It wondered how Australia addressed the concerns of third parties 
when converting international obligations into domestic legislation.  Third, it enquired about 
Australia's experience in the implementation of CI TES, and its reasons for focussing in its paper on 
"detriment assessment" under that Convention.  Had more problems been encountered with respect to 
this particular provision than with other MEAs? 
11. The representative of Senegal  explained that Senegal ha d taken several measures to 
implement the Montreal Protocol, including to  establish a permit system for ozone-depleting 
substances.  It believed that it could useful for the WTO to recognize the right of Members to 
implements the STOs in the MEAs to which they were  a party.  This would ensure respect for what 
was another important set of international obliga tions.  Members that were not parties to MEAs 
would, of course, not be bound by them. 
12. The representative of Korea  agreed with the importan ce of national coordination, 
transparency and accountability in the negotiation of MEAs, and with the fact that the WTO-MEA 
relationship was working well.  Recently, Korea had conducted a study on industry's awareness and 
preparedness for the implementation of STOs in sev en MEAs.  These were the Kyoto Protocol, the 
Basel Convention, PIC, POPs, the Biosafety Prot ocol, the Montreal Protocol and CITES. To its 
disappointment, the level of awareness turned out to be relatively low, especially in the case of small 
and medium sized enterprises (SMEs).  One of the justifications given was that MEAs were difficult 
to comprehend.  While they had not been involved in any particular conflicts between trade and the 
environment, many industries seemed to be seriously  concerned about the potential for trade disputes 
at the national and international levels concerning MEAs.  They hoped that governments could step 
up their information sharing and consultation mechan isms for conflict prevention.  It was Korea's 
hope that the national experience sharing of the C TESS could contribute to drawing useful lessons for 
the mutual supportiveness of the WTO and MEAs. 
13. The representative of the European Communities  (EC) believed that national experience 
sharing was an important building block of the mo re detailed analysis of the relationship between 
MEAs and WTO rules which would need to follow.  The first point which the EC wished to make in 
relation to the Australian paper c oncerned paragraph 4, which sugg ested that the CTESS had agreed 
on the MEAs that contained STOs.  The EC wished to remind delegations that there were MEAs 
beyond those six, and that it was important to ex amine how national coordination took place in their 
regard as well.  With respect to the need for MEAs  to be science-based, the EC's position was that an 
MEA's formulation of trade measures had to be left entirely up to that MEA.  WTO Members were only responsible for ensuring that their implementati on of MEAs was consistent with WTO rules.  It 
was that implementation process that the EC wished  to discuss, in particular in relation to the 
statement by Senegal about the need to ensure th at WTO Members that were parties to MEAs had 
sufficient leeway to implement their MEA obligations.  
14. Paragraph 5 of the Australian paper, which cl early stated that domestic coordination was 
important, seemed to fit very well with one of  the principles espoused in the EC's paper, 
TN/TE/W/39.  It was the principle that stated that:  "when governments around the world develop positions for MEA negotiations it is desirable that they  give consideration to relevant WTO rules so as 
to ensure a mutually supportive relationship."  Therefore, the EC believed that the CTESS was TN/TE/R/10 
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coming close to agreeing on a "good governance" pr inciple.  Once other national experiences were 
tabled, it could foresee that other principles would eventually emerge and come to underpin the WTO-
MEA relationship. 
15. In relation to science-based decision making in MEAs, the EC believed that another principle 
that it had advanced in its paper had captured it.  The EC had argued that multilateral environmental 
policy should be made within MEAs, and not in th e WTO, in accordance with each body's respective 
competence and mandate. Therefore, this pr inciple had already addressed the issue of 
decision-making in MEAs.  This showed the potential for the national experience sharing approach to 
complement the conceptual approach.  The EC wondered whether other Members had objections to 
this principle, and was willing to discuss it further.  On another note, the EC felt that the Australian 
paper had addressed, somewhat dismissively, the hypothetical scenarios of conflict between MEAs 
and WTO rules.  There was nothing hypothetical about Paragraph 31(i) negotiations.  There was a mandate from Ministers which needed to be addressed.  The mandate had to go beyond mere experience sharing.  The Australian paper woul d contribute to going beyond this, but through a 
bottom-up approach, and hence the EC welcomed it.   The EC hoped that the CTESS could gradually 
come to "push the envelope a little further" by di scussing "international" coordination as well.  This 
was linked to Paragraph 31(ii). 
16. The representative of Switzerland
 was pleased that Australia had shared its experience, which 
would certainly be valuable for the Swiss administ ration to examine.  Switzerland was interested in 
the five principles set out by Australia of consu ltation, coordination, legislation, information and 
transparency.  They could be useful concepts to draw upon in this discussion.  However, with respect 
to the Australian conclusion that "everything was fine," and its comment on not making changes for 
change's sake, it was important to point out that effective national coordination did not mean that 
there would be no other problems.  Coordination at  the international level and WTO-inconsistent 
"implementation" also needed to be addressed.  Therefore, the discussion could not end with the Australian paper.  In the US paper, interesting ob servations had been made on the need to carefully 
design export restrictions and STOs so as to ensure  that they were science-based, the need to pay 
attention to the procedures for changing existing ag reements, and so on.  These were certainly useful 
concepts which required further discussion. 
17. Switzerland also wished to share its national experience with the CTESS.  Switzerland 
undertook extensive consultations be fore the negotiation of an envir onmental agreement, and prior to 
preparing implementing legislation.  Consultations  involved the different cantons, and the relevant 
organizations at the federal level.  Issues presente d to parliament required cantonal support.  There 
was another important step in the consultations  process, which was the consultation of NGOs, the 
private sector and interested individuals.  In add ition, parliamentary commissions were also consulted 
and invited to comment.  Early consultations of th ese commissions facilitated the ratification process, 
as well as the process of developing implementing legislation.  Switzerland stood ready to provide 
additional information on its domestic processes if CTESS Members required. 
18. However, it wished to draw the attention of  Members to how national coordination had been 
achieved on the issue of the precautionary principle.  The principle had been particularly challenging 
in terms of domestic coordination.  Switzerland had found that many different areas of the 
government held different interpretations of the princi ple.  Those dealing with health, with veterinary 
issues, with the environment and with trade all ha d different views.  Thus, an Inter-Ministerial 
Working Group at high level was established to fulfil three objectives:  (1) to develop a catalogue of 
criteria for the implementation of the principle, b ased on international obligations and international 
law;  (2) to coordinate the different interpre tations;  and (3) to develop guidelines for Swiss 
negotiators of specific agreements, in case the prin ciple arose.  The Working Group proved to be very 
useful, and it developed a broad paper on the subject.  TN/TE/R/10 
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19. In the context of current negotiations, Switzer land believed that it w ould be important to 
identify principles that could lead to mutual supportiveness, no-hierarchy, and deference between 
MEAs and the WTO.  The concept of "no-hierarchy" was particularly challenging to implement, since 
each agency (dealing with intellectual property, envir onment, trade, etc.) tended to think that its area 
was the most important.  On mutual supportiven ess, the United Nations Framework Convention on 
Climate Change (UNFCCC) provided a particular ly good example of how the objectives of an 
environmental accord could go hand in hand with WTO rules.  While the objective of the UNFCCC 
was to stabilize greenhouse gases (GHGs), and of th e WTO to enhance economic welfare, sustainable 
development had been recognized in the WTO as a key objective.  Furthermore, the UNFCCC had 
itself upheld the need for an open, equitable and non-discriminatory multilateral trading system, and 
for special and differential treatment (S&D) for de veloping countries.  The principle of deference 
ensured that issues were not taken in the wrong fo rum simply because that was more convenient.  
This also applied to dispute settlement, where there was a temptation to use the WTO dispute 
settlement mechanism to settle many different kinds of disputes.  Members had to be careful with 
such matters, so that different legal regimes did not  interfere with each other.  Whereas the principles 
which Switzerland proposed were relatively clear, th ere was still room for their discussion.  Even 
though there were no problems today, some could ari se in future, and Members needed to ensure that 
the WTO and MEA systems coexisted peacefully. 
20. The representative of New Zealand  saw value in national experience exchange, and in 
national coordination, which would minimize the risk  of conflict between diffe rent legal regimes.  
Conflict or problem prevention was the first-best  outcome in these negotiations, and good processes 
could go a long way to building fences and reduc ing the need for WTO dispute settlement.  As 
Australia had pointed out, national coordination,  both in the negotiation of MEAs and in their 
implementation, could play a key role in conflict prevention, and in fact New Zealand had similar 
processes in place to the ones descr ibed by Australia.  In extending the discussion of practical 
experiences into the future, the CTESS could look  at similar experiences of coordination and due 
process at the international level in the negotiation of MEAs.  Part 6 of the Australian paper, which 
examined the features of STOs that facilitated their supportiveness of WTO rules, actually provided a good starting point.  New Zealand agreed with th e EC that the CTESS should not negotiate MEA 
provisions in this forum, but could examine the features of STOs that helped prevent conflict.  
Paragraph 31(ii) could also contribute to conflict prevention and had to be explored. 
21. The representative of Canada
 found the US and Australian papers  to have been very useful.  
They demonstrated the importance of bringing releva nt governmental departments together to ensure 
"whole-of-government" perspectives on the nego tiation of MEAs.  Cana da had had a similar 
coordination process in place since the early 1990s.  It had helped inform different governmental 
departments, and reduced differences between them, although not entirely eliminating them.  It was 
Canada's impression that in the Biosafety Protocol, in PIC and POPs, countries had spent a significant 
amount of time examining the trade measures to be contained in these agreements, and therefore to 
avoid potential clashes with the WTO.  Despite this , it still seemed that countries that were taking a 
"coordinated" position were in the minority, which created a potential for conflict.  Therefore, a 
recommendation for countries to undertake national leve l coordination could be a useful outcome of 
this mandate.   
22. The paper presented by the Convention on Biological Diversity (CBD) in document 
TN/TE/INF9/Rev.1 reminded delegations that deci sions of the Conferences of the Parties (COPs) 
were taken by consensus, and so were the listi ng and de-listing procedures of the PIC and POPs 
Conventions.  The benefit of consensus, althou gh admittedly more time-c onsuming and onerous, was 
the mitigation of conflict at the implementation stag e.  The two tendencies of increased participation 
and consultation across all governmental and do mestic stakeholders, coupled with decision 
procedures in MEAs that required consensus, lessen ed the possibility of conflict.  The CTESS could 
construct outcomes on the basis of this.  Canada ask ed both Australia and the US to explain how their 
national coordination processes resolved strongly held, conflicting, views by different departments.  It TN/TE/R/10 
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wondered if these conflicts were resolved at senior le vel or by cabinets, or if any particular agencies 
intervened.  
23. The representative of Peru
 enquired about the types of problems that Australia encountered in 
domestic coordination, and highlighted that for developing countries coordination was even more 
difficult to undertake.  The national experience sh aring would eventually allow the CTESS to draw 
conclusions and should be continued.  On a preliminary basis, Peru supported paragr aphs 29 and 30 of 
the Australian paper. 
24. The representative of Venezuela  explained that Venezuela would try to follow Australia's 
example of sharing its experien ce with the CTESS, particular ly since there were some good 
experiences to report.  Venezuela highlighted the im portance of technical and financial assistance, as 
well as of capacity building, for national coordi nation.  A discussion of technical assistance could 
usefully be undertaken within the context of th e national experience sharing. It had coordinated 
domestically on issues pertaining to the Basel and PI C Conventions, but was encountering difficulties.  
Finally, Venezuela believed that Australia should not be criticized for having only addressed three 
MEAs, since the national experience sharing needed to be undertaken gradually and required time.  
The representatives of Cuba  and Ecuador  agreed with the challenges that developing countries faced, 
and with the need for technical and financial assistan ce.  Furthermore, Ecuador called for attention to 
be paid to coordination at the interna tional level.  The representative of Chad  believed that even in 
order to follow these negotiations, some Me mbers would require technical assistance. 
25. The representative of Egypt  found the "national interest analysis" referred to by Australia to 
have been very interesting and worthy of consid eration.  Like Canada, Egypt also wondered how 
difficult coordination issues were resolved (as men tioned under paragraph 12 of  the Australian paper), 
and whether superior governmental au thorities were asked to intervene. 
26. The representative of Zimbabwe  shared Zimbabwe's experience of CITES and the 
Montreal Protocol.  Whereas the objectives of CI TES were very noble, Zimbabwe's experience had 
not been very positive, particularly with regard to  elephants.  The elephant population had so grown 
that it had come to exceed the capacity of nationa l parks to manage it, turning into a menace.  
Elephants had spilled into areas that they were not supposed to inhabit.  Zi mbabwe also encountered 
problems with respect to its ivory stocks, which it was not allowed to sell externally, and for which 
there was insufficient domestic demand.  As far as the Montreal Protocol was concerned, Zimbabwe was in the process of phasing out ozone-depleting s ubstances and refrigerants.  It was also in the 
process of training customs officials to keep abreast of changes relevant to the implementation of the 
Protocol. 
27. The representative of Australia
 provided preliminary responses to the questions posed.  
Australia was pleased that other Members had also sh ared their national experiences at this meeting.  
There were a number of common themes throughout most interventions.  One, was that national 
coordination was an objective that most Members shared;  and two, was that there seemed to be an 
absence of real-life problems.  With respect to the question by Chinese Taipei on the relationship 
between the Basel Convention and GATT Article XI, Australia pointed out that the Basel Convention 
had been in force for a long time and that no problems had arisen vis-à-vis  that article of GATT.  On 
Chinese Taipei's comment that there could be confli cts in future, Australia did not wish to make a 
quantum leap from a discussion that showed no pr oblems into a discussion that would anticipate 
problems.  The problem first needed to be clearly identified, hence the importance of national 
experience sharing.  Australia was not yet ready to  decide on the outcome of the negotiations, since a 
body of evidence first needed to be constructed.   The "interpretative understanding" proposed by 
Japan, on which Australia had previously commented, took the CTESS outside its mandate.   
28. In response to Chile's comments, Australia em phasized that a two-way coordination process 
between trade and environment officials was requi red.  As an example, a representative from the  TN/TE/R/10 
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Department of Environment and He ritage had been part of the Au stralian delegation to this CTESS 
meeting.  With respect to Chile's question on the impact of Australia's domestic legislation on third 
parties, Australia emphasized that its legislation di d not have extra-territorial effect.  Australia had 
implemented all its MEA obligations, including vis-à-vis  non-parties, but in a WTO compatible 
manner through close coordination between its differe nt governmental bodies.  On why it had referred 
to CITES and the non-detriment study, it explained th at it had done so simply in order to provide 
concrete examples. 
29. Australia felt that the EC intervention had show n how different the two approaches were that 
some CTESS Members were pursuing.  The vast majo rity of Members seemed to be interested in a 
continuation of the national experience sharing approa ch, and not the EC approach.  In response to the 
EC's comment on the selection of MEAs in the Au stralian paper, Australia reiterated that it had 
simply chosen three of the MEAs that had been in force the longest and which were familiar to 
Members.  It added that it did not believe that its paper passed judgement on MEAs, but rather it was 
intended to illustrate how national coordination could enhance mutual supportiveness.  In situations of 
overlapping jurisdiction between the WTO and MEAs , if such situations arose, Australia was 
confident that this could be addressed at the nationa l level.  It did not agree with the EC that the 
CTESS was close to agreeing on governance principles as a problem had not even been established.  
With respect to the Swiss interv ention, while Australia believed th at certain Members continued to 
approach the negotiations in a very different f ashion, it welcomed its sharing of its national 
experience.  
30. In response to Peru's question, Australia indi cated that difficulties in national coordination 
were indeed encountered.  However, it seemed to Au stralia that even the most difficult problems were 
resolvable through the right players being brought  together for the development of a coordinated 
view.  To answer Egypt's and Canada's related qu estion, on the governmental bodies that intervened 
in situations of strongly held and conflicting view s, decisions would ultimately be referred to the 
cabinet.  However, there was a whole range of levels  that such situations would need to pass through 
first, and which would involve discussions between different agencies.  Australia was pleased that 
Venezuela, Peru, Ecuador and Chad had all empha sized the importance of technical assistance and 
capacity building to ensure national coordination.  Finally, it welcomed the submission of additional 
national experiences.  
31. The representative of Japan  clarified that Japan was not opposed to national experience 
sharing, which it had found to be quite useful.  Ho wever, it had simply agreed with the EC that it 
would be important at some stage to draw conclusions from these discussions. 
32. The representative of th e European Communities  was pleased that Australia agreed that the 
CTESS should not pass judgement on MEAs.  The EC was dissatisfied with the use of the term "demandeur," since all Ministers had agreed to th ese negotiations.  There were no demandeurs;  there 
was simply a mandate to which all Members needed  to respond.  The success of this mandate was 
vital to the overall success of the Round.  With resp ect to the comment made on the fact that there was 
no problem to be fixed, the EC pointed out that the negotiating mandate had nowhere suggested that a 
particular problem needed to be solved.  The manda te was designed to clarify an existing relationship, 
and there was no need to first identify a problem .  However, the EC saw the national experience 
exchange as valuable, since it show ed the processes required at the national level.  It complemented 
the conceptual approach. 
33. The EC believed that Australia was mistaken in arguing that the CTESS was "quantum leaps" 
away from discussing principles.  A principle was a statement of general application, and the 
Australian paper had itself contained one such princi ple – that of furthering national coordination.  
However, the EC was willing to spend more time on these discussions, so that no delegation would 
feel that it was being rushed.  This negotiatio n could equally examine why there had been no 
problems, and the factors that had helped maintain this situation.   TN/TE/R/10 
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34. The representative of Australia
 clarified that Ministers knew exactly what they had signed up 
to, and that the Paragraph 31(i) mandate had been ve ry heavily negotiated, and tightly circumscribed.  
Australia was contributing to the achievement of that  mandate through its paper.  It was not ready to 
"codify" principles in the CTESS, prior to discussing national experiences.  
35. The representative of the United States  was pleased with the many interventions made on 
national experiences.  The US did not see national coordination as a principle, but rather as an 
exercise of good governance.  To answer Canada's  question on how conflicting views were resolved, 
the US explained that the United States Trade Re presentative's (USTR) Office had the authority to 
coordinate trade policy across the US government.  USTR was part of the Executive Office of the 
President, and so did not fall under any particular ministry.  The US had a Trade Policy Staff 
Committee (TPSC) which was composed of seventeen  agencies with permanent seats.  Depending on 
the issues which were discussed, other agencies coul d also be included.  Some of the agencies that 
were regularly involved included the Department of  Commerce, the Department of Agriculture, and 
the Department of the Interior, from which the US delegation to this CTESS meeting had in part been 
composed.  
36. Various Sub-Committees operated under the TPSC , and one of them prepared for CTE 
meetings.  Therefore, all work started at Sub-Comm ittee level, and if agreement could not be reached, 
the issues were referred to the TPSC.  If disagreem ents arose at the TPSC, although that was fairly 
uncommon, then they would be referred to a body  known as the Trade Policy Review Group (TPRG).  
Disagreements at the TPRG level, in turn, were refe rred to a cabinet-level gr oup that considered the 
issue.  However, this was seldom required. 
37. With respect to recent developments in MEAs , the representative of the Convention on 
Biological Diversity  read out the statement contained in document TN/TE/INF/9/Rev.1. The 
representative of the European Communities  welcomed the information, which also related to 
Paragraph 31(ii) of these negotiations.  Many of the issues raised were of direct relevance to trade, 
such as those on notification and the provision of information.  The representative of Burundi  drew 
attention to the problems which developing countri es experienced in dealing with living modified 
organisms (LMOs), which they could not control.  It was important to assist developing countries in 
controlling the importation of LMOs.  
38. To conclude, the Chairman  indicated that the CTESS had been pursuing two tracks in parallel 
under Paragraph 31(i) negotiations - the national expe rience-sharing track and the conceptual track - 
and that both tracks had been complementary.  Th e former Chair of the CTESS had pointed to the 
complementarity between these two tracks in a re port to the Trade Negotiations Committee (TNC), 
document TN/TE/6.  With respect to the national experience sharing approach, the Chairman called 
on additional national experiences to be submitted to the CTESS, and on the proponents of this track 
to begin working together between CTESS meetings  to identify emerging "common ground."  With 
respect to the conceptual appr oach, the Chairman called on its proponents to also begin working 
together between CTESS meetings to reflect on th e many reactions expressed to their proposals to 
date.  In addition, he called on the proponents of bo th approaches to work together more closely to 
start bridging their differences, and to explore poten tial synergies between Paragraphs 31(i) and (ii) of 
the negotiations.   
II. PARAGRAPH 31 (II) – INFORMATION EXCHANGE AND CRITERIA FOR THE 
GRANTING OF OBSERVER STATUS 
39. The European Communities  believed that the list of issues under Paragraph 31(ii) that had 
been compiled by Ambassador Yolande Biké contin ued to be valid, and that further discussions of 
these issues was required (TN/TE/7).  Paragraph 31(ii) was a fundamental component of good 
governance, and more attention needed to be paid to  it.  The EC had previously proposed a number of  TN/TE/R/10 
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ideas for exploration under this mandate, such as an  increased visibility of the WTO Secretariat at 
MEA COPs, but believed that it could be useful if more ideas were tabled.   
40. In response to a suggestio n by the EC, the Chairman  indicated that the Secretariat would 
update document TN/TE/S/2. 
III. PARAGRAPH 31 (III) – ENVIRONMENTAL GOODS AND SERVICES 
41. The representative of Chinese Taipei  presented a new submission under this item, document 
TN/TE/W/44, which contained an initial list of environmental goods. Document TN/TE/W/44 was a 
new and improved version of a pr evious "room document" that Chinese Taipei had circulated, 
containing eight more items that had been added on the basis of "direct-use." In its deliberations on 
this mandate, the CTESS had made numerous refere nces to the Asia Pacific Economic Cooperation 
forum (APEC) and Organisation for Economic Cooperation and Developm ent (OECD) lists.  
However, Chinese Taipei believed that each of these lists had been developed for a specific purpose.  
The APEC list offered a much more practical appr oach for identifying environmental goods and for 
the assignment of product groupings.  The main reas on for this was that the list had been developed 
through product nominations by APEC members, wh ich eventually led to a list and a classification 
system.  The idea behind the list was to prom ote sustainable economic growth through trade 
liberalization in the environmental goods sector.  Th is mirrored the objective of the Doha Ministerial 
Declaration, where Members had been also been instructed to liberalize trade.   
42. Chinese Taipei's list included a total of 78 environmental goods, all in the category of 
pollution control.  They had been divided into six distinct groups which were:  air pollution control, wastewater management, solid/hazardous waste management, remediation/clean-up of soil and water, 
noise/vibration abatement, and monitoring/analysis  and assessment.  These goods had been chosen on 
the basis of the "direct-use" criterion and because of  the frequency of their use in pollution control 
processes.  Chinese Taipei's APEC experience demons trated that "direct-use" was the most practical 
and effective criterion for the identification of environmental goods in po llution management.  It 
could be a useful criterion for other Members to focus on in the development of their lists.   
43. The representative of India
 wondered if it would be possible for delegations that presented 
their lists to explain why they believed that th e products they suggested were environmental.  
Whereas in paragraph 7 of the TN/TE/W/44, Chinese Ta ipei stated that its list had been based on the 
concepts of direct use and pollution control, Indi a enquired whether the criterion that been mentioned 
by that delegation at the last meeting had also applie d;  namely, that of a trade surplus in the products 
in question.  It also enquired about the way in which "direct-use" had been assessed.  The 
representatives of Venezuela  and Malaysia  supported India on the need to explain the environmental 
benefits of any list.  The representatives of Peru , Argentina  and Senegal  requested additional 
information on the methodology used to construct the Chinese Taipeian list. 
44. The representative of Chile  wondered if it would be possibl e for delegations that submitted 
lists to inform the CTESS of the tariff and non-tariff barriers (NTBs) facing their products in the event 
that they were importers, and, if they were expor ters, of the obstacles encountered upon export.  The 
WTO Environmental Goods Workshop (EGW) that had been held on 11 October 2004 demonstrated 
that environmental goods were not always subjected to high tariffs.  Having said that, Chile wished to 
point out that it was not yet in a position to agree to a "list" as the outcome of these negotiations.  The 
representative of Peru  agreed with Chile on the need for trade da ta to be provided along with lists.   
45. The representative of Japan  welcomed the Chinese Taipeian list, and indicated that Japan 
would welcome the submission of lists by any other Member.  It would be helpful if those lists took 
account of CTESS discussions and did not include  products based on process and production methods 
(PPMs). TN/TE/R/10 
Page 10  
 
46. The representative of th e European Communities
 indicated that the CTESS had been pursuing 
two approaches on this item:  a "bottom-up," list- driven, approach;  and a "top-down" discussion on 
criteria.  The EC welcomed the Chinese Taipeian  submission which pursued the bottom-up approach.  
It did not believe that any of the products suggested  in that submission would be problematic for the 
EC.  They seemed to be fairly "classic" pollution co ntrol products.  However, the EC believed that it 
would be fairly important to underpin the produ ct identification exercise with environmental 
objectives, such as the ones that were multilaterally agreed within the Millennium Development Goals 
and MEAs.  National environmental prior ities could also guide the debate.   
47. The EGW that had just been held demonstrated  that there were many issues that merited 
further discussion in this group.  They included:  dual use, tariff structures for different goods, 
pollution prevention, and HS issues, in order to ensure that whatever outcome was reached could 
make sense for customs officials.  It could be he lpful to draw up a list of those issues for a more 
structured debate.  The work being undertaken in  other fora, such the United Nations Conference on 
Trade and Development (UNCTAD), could also fe ed into CTESS work.  Delegations needed to 
reflect on what the CTESS could do with the issues raised in the EGW. 
48. The representative of Thailand  indicated that Thailand would reflect more closely on the 
Chinese Taipeian list, in consultation with its indus try.  Thailand believed that, while the submission 
of lists was useful, Members needed to reach a cons ensus on the criteria for, and scope of coverage of 
potential environmental goods.  The most important criteria were that the products have pollution 
control, remediation and prevention as their end use, and that they be classifiable under the HS.  Definitions based on multiple end use and PPMs had to be avoided.  On another note, Thailand 
observed that UNCTAD had indicated in document TN/TE/INF/7 that developed countries already 
applied fairly low rates on the goods on the APEC a nd OECD lists, of around 10%, and that they were 
net exporters of those goods.  It appeared to Tha iland that developed countries had relatively little to 
do in order to fulfil the Paragraph 31(iii) mandate.  Developing countries, wh ich were net importers, 
and who imposed higher tariffs, would bear the brunt of the work.  Therefore, a mechanism was 
required to address this imbalance.  It was for this  reason that Thailand supported China's proposal of 
the creation of a development list, which gave developing countries a certain flexibility.   
49. The representative of Ecuador
 agreed with Thailand that it was necessary to draw up criteria 
to guide the negotiations.  Any list to be drawn up in  the CTESS had to be a WTO list, and not just an 
APEC or OECD list.  The list would have to reflect  the interests of developing countries and to avoid 
using PPMs.  The representative of Malaysia  agreed with Thailand that many developing countries 
were net importers of products on the APEC list.  Th ey already applied relatively low tariffs to them, 
such as 2% for laboratory equipment in Malaysia  and no tariffs at all on these products within 
ASEAN due to preferential rates.  It remained to  be seen, therefore, what market access developing 
countries would gain from these negotiations.  
50. The representative of Kenya  believed that many developing countries faced problems in the 
area of environmental policy, in their industrial co mpetitiveness, and in their use of state-of-the-art 
clean technology, all of which impacted upon these negotiations.  Kenya was concerned that the individual submission of lists by all WTO Member s could be very time c onsuming, and suggested 
that the WTO Secretariat prepare a guide, or crite ria to guide, the identification of environmental 
goods.  
51. The representative of Peru
 believed that at this stage of the negotiation it would be best to 
follow a practical approach.  However, the concep tual debate that the EC was proposing could be 
useful towards the end of these discussions, when  a critical mass of products would be submitted, 
from which criteria could be deduced.  Hence, it was important for delegations to explain their choice 
of products.    TN/TE/R/10 
 Page 11 
 
 
52. The representative of Korea  believed that the six categories proposed by Chinese Taipei could 
serve as a useful basis for CTESS discussions .  Korea enquired about the way in which 
Chinese Taipei had reflected the views of industry  in the construction of  its list, and whether 
consultations with industry had been held.  It indi cated that it was currently finalizing its own list, 
which contained 95-105 products.  These had been c hosen on the basis of the following criteria:  the 
likely acceptance of the goods by WT O Members, based on the discussions  held to date;  practicality 
in terms of customs administration and other implem entation issues;  and par ticipation by developing 
and developed countries in their trade.  In additi on, Korea had adhered to the following guidelines:  
(1) that the end use be for an environmental purpo se;  (2) that the product be one that would be 
classifiable under the HS code, or for which ex -outs could clearly be developed based on its 
characteristics;  and (3) that the selection not be PPM-based.  Korea hoped to submit its initial list to 
the next CTESS meeting. 
53. The representative of the United States  welcomed the Chinese Taipeian list, and reiterated the 
US' support for the approach taken in APEC.  In r esponse to the EC, the US explained that it saw the 
current discussions as progressing quite well, and that th e practical approach of the submission of lists 
was the best way to proceed.  The US was not convi nced that trying to define environmental goods or 
to discuss concepts and principles, nor MEAs or the Millennium Development Goals, would advance 
these negotiations.  Such discussions could in fact l ead to the CTESS being "out of synch" with the 
Negotiating Group on Non-Agricultural Market Access (NAMA).  The US was not opposed to more 
structure, but there were questions which Members would never be able to answer.  The submission 
of lists allowed countries to consider specific sets of products that were put before them.  Submitting 
categories of products to the CTESS, as  Canada had done at the last me eting, could also be useful for 
the work of the Committee.   
54. The representative of Venezuela  agreed with the US that it would be better not to engage in a 
definitional exercise, and indicated that Venezuel a was in favour of the creation of a WTO list.  
Venezuela commented in a preliminary manner on the Chinese Taipeian list.  In the EGW, the World 
Customs Organization (WCO) had explained that for the purposes of HS classification, it would be 
better if countries were to use objective, physical, criteria for the identification of products.  Venezuela wondered which objective and physical criteri a Chinese Taipei had used in drawing up its 
list.   
55. The representative of Tanzania
 associated his delegation with the statements made by India, 
Venezuela, Thailand and Senegal.  Tanzania emphasized that the main problem which developing 
countries faced was that of poverty, and that only when this problem was addressed could progress be 
made on this negotiating mandate, which had to  be addressed by NAMA.  The representatives of 
Tunisia  and Nigeria  emphasized the importance of technical assistance for developing countries in 
this area of negotiations.  
56. The representative of Israel  indicated that Israel was fu lly committed to these negotiations, 
and saw the development of a specific list of pro ducts as the way forward.  Other approaches could 
lead to a loss of momentum.  Moreover, these negotia tions had to be kept as simple and focussed as 
possible in order to achieve concrete results, as had been done in Chinese Taipei's paper and in the US 
paper that proposed a core and a complementary list.  Israel believed that, at least for the moment, 
focus had to be placed on end use, which had also been the criterion used in the APEC list.  The 
CTESS needed to expedite its wo rk so as to feed into NAMA. 
57. The representative of Australia  welcomed the Chinese Taipeian paper, and agreed that the 
APEC process had been very practical.  It had not  been a hypothetical or an analytical exercise but, 
rather, a concrete negotiation.  It would therefor e be useful for the CTESS to look at the practical 
experience which APEC had gained.  One such expe rience lay in how APEC had decided to approach 
the issue of PPMs.  The APEC rejection of the PPM criterion had been done for good reason, for it 
was neither workable nor rational, and would no t have produced increased market access and trade TN/TE/R/10 
Page 12  
 
liberalization.  Instead, there was serious concern that the reverse could occur, with PPMs opening the 
door for disguised protectionism.  Therefore, Australia was comforted by the emerging consensus in the CTESS to not employ this criterion.  It wondered if it would be possible for the Committee to take 
an early decision on not using PPMs in these ne gotiations, so as to raise comfort levels.   
58. There had been references at the EGW to classi fication issues, particularly to dual use.  
Australia believed that the APEC experience demons trated that this problem could be tackled, and 
suggested that the CTESS explore how APEC had done this.  Australia was also interested in the 
categories put forward by Canada, and Chinese Taipei's  concept of direct use.  Lists and categories 
would be the best way forward.  Australia suppor ted tariff reductions on as wide a range of goods as 
possible to achieve environmental benefits.  It was currently working on the types of categories that 
needed to be subjected to further liberalization, with a view to making a more detailed contribution 
soon.  
59. The representative of Switzerland
 agreed with the EC that it would be useful to pursue two 
approaches in parallel under this item;  a top-dow n and a bottom-up approach.  The development of 
criteria would allow environmental objectives to be  addressed in a coherent manner.  Switzerland 
intended to submit a new document to the next meeti ng that would act as a tool in the definition of 
environmental goods.  On Chinese Taipei's paper, Swit zerland agreed that "direc t-use" was a practical 
and effective criterion for Members to use in the area of pollution management.  However, it enquired 
about how the concept of direct-use would be applie d in practice.  At previous meetings, China had 
suggested the development of a "common list" and a "complementary list," with the former satisfying 
the market access interests of developing and l east-developed countries, and the latter protecting 
infant industries.  While there was a rationale behind this proposal, Switzerland felt that it would 
increase the complexity of the negotiations.  Furt hermore, a development list could not cover all 
developing countries irrespective of their level of economic development and vulnerability.  Any 
exemption would need to be commensurate with a country's economic standing, and should mainly be 
granted to the economically weak.   
60. With respect to the EGW, Switzerland had found the trends in the environmental goods 
industry to be particularly useful.  It was estimate d that the industry had attained a value of 550 billion 
Euros in 2002, and to have included SMEs and niche players.  Thus, it was an industry with 
significant potential, allowing not only for North-South trade, but also South-South trade eventually.  These trends had to be taken into account in the current negotiations.  Finally, on the PPM issue, 
Switzerland reiterated that it itself had pointed to the difficulties involved in using the PPM criterion 
in past discussions, in particular due to the absence of international standards.  However, it felt that 
Australia's proposal to have a Committee decisi on preventing PPMs from ever being raised was 
premature.  Such a discussion could not be completely  precluded in future, in particular if good ideas 
emerged. 
61. The representative of China
, responding to Switzerland's comme nt on the dangers of having a 
development list cover all devel oping countries, explained that it would be a potentially explosive 
issue to begin selecting the countries that could or could not participate in that list.  Even though China recognized that many developing Members ha d different concerns, it preferred not to go down 
the suggested road of distinguishing between Member s.  One option to consider was to have Members 
nominate products for the development list on a volu ntary basis.  The representative of Switzerland 
explained that Switzerland's intention was by no m eans to ignite an explosive issue.  Switzerland 
wanted these negotiations to deliv er benefits to developing c ountries, particularly since the 
discussions so far had focussed on developed country concerns.  It had simply wanted to make the 
point that many developing countries had different interests which would need to be reflected in any list, as China had itself recognized.   
62. The representative of Canada
 welcomed the Chinese Taipeian pa per, and was interested in the 
work undertaken by UNCTAD on the environmental goods of interest to developing countries.   TN/TE/R/10 
 Page 13 
 
 
UNCTAD had mentioned at the EGW that it had deliberately avoided using PPMs, which was 
interesting, since PPMs could indeed be a barrier for some products.  It would be useful to examine the UNCTAD list in greater detail to determine the interests of de veloping countries.  Developing 
countries were obviously free to table their own lis ts to the CTESS, but it seemed that some were 
reluctant to actually do so.  Canada  wondered if this process could be encouraged by further analytical 
work on products of interest to these countries,  and on the trade barriers which they faced.  It 
encouraged UNCTAD, and WTO Members, to do further work on the UNCTAD list. 
63. The representative of Indonesia
 shared the view that the APEC list provided a practical 
approach, but emphasized that it should only be taken as a starting-point, since there were many developing countries that were competitive in produc ts that were not on that list.  Indonesia agreed 
with those delegations that suggested that the best  way forward was the continued submission of lists, 
as opposed to conceptual and theoretical discussions.  Furthermore, it wished to remind delegations 
that market access was not the sole objective of th ese negotiations, and that there were environmental 
objectives too, which required technical assistance and capacity building for developing countries.  
64. The representative of Argentina
 agreed that the best way forward would be the continued 
submission of lists, as had been done by Chinese Taip ei.  While numerous references had been made 
to the APEC and OECD lists, Argentina believed that these lists had not been drawn up for the 
purposes of the negotiations, and that further work w as therefore required.  Neither of these lists fully 
reflected the interests of developing countries.  The UNCTAD list presented an interesting alternative.  
In terms of structuring future work, Argentina belie ved that Members needed to identify the coverage 
of the negotiations in terms of actual goods, and to  then deal with modalitie s.  The US had already 
broached the latter issue, and Memb ers needed to reflect on whether there would be one list, or a main 
list and a supplementary one.  China's idea of a "d evelopment list" required additional consideration, 
and Argentina asked if it would be possible for China to explain its idea further at future meetings.  
The negotiations needed to take account of all tari ffs, as well as NTBs.  But the first stage in the 
negotiations needed to be that of tari ff reduction.  The representative of Cuba  agreed with Argentina's 
comments, and with Venezuela's observation that there needed to be a WTO list.  The different stages 
of a country's economic development needed to be considered.  Therefore, China's two-list proposal 
was worthy of further consideration. 
65. The representative of New Zealand  welcomed the Chinese Taipeian paper.  While some 
referred to the paper as containing "classic" envi ronmental goods, New Zealand still believed that it 
would be important to have inform ation on the methodology used to construct the list.  For instance, 
on how dual use was addressed, and tariff classification handled.  It would also be useful, as Chile had 
suggested, to have information on the trade barri ers facing certain products.  Work done by UNCTAD 
and the OECD could be drawn upon.  With resp ect to the two approaches mentioned by the EC, 
New Zealand explained that there could be harm ony between these approaches through explanations 
being provided of the products whic h Members listed.  For instance, the problem of dual use would be 
very interesting to discuss with specific products in  mind.  Finally, New Zealand wished to remind 
delegations of the importance of linking work under this item to progress made in NAMA, and 
maintaining a similar pace.  
66. The representative of Qatar  explained that the Qatari list of environmental goods that had 
been submitted to the CTESS was not associated with the OECD list.  It was a stand-alone list, which 
in some ways complemented the OECD list in one cat egory, that of clean energy and technology.  The 
representative of Kuwait , on behalf of Kuwait, Bahrain, the United Arab Emirates and Saudi Arabia, 
expressed support for the Qatari list .  The representatives of Senegal , Gabon , Jordan and Tunisia  also 
joined in supporting the Qatari list.  
67. The representative of Chinese Taipei  responded to questions raised on the Chinese Taipeian 
list.  The list had been developed on the basis of  two criteria, "direct-use" for an environmental 
purpose, and "pollution management."  To make the direct-use criterion workable, Chinese Taipei TN/TE/R/10 
Page 14  
 
employed end-use certificates to identify environm ental goods, and exempt them from tariffs.  At 
present, pollution control equipment was tariff exem pted in Chinese Taipei.  It was from its trade 
statistics that Chinese Taipei discerned the products that  could be classified as environmental.  It had 
tried to submit to the CTESS products that would be  the least controversial, which basically meant 
pollution control equipment.  With respect to envi ronmental benefits, Chinese Taipei's experience had 
shown that the importation of high-quality environmen tal goods did indeed benefit the environment.  
There were economic benefits as well from the trad e liberalization process.  On the issue of industry 
consultation, it was the Industrial Development Bureau that had been put in charge of developing this 
list.  The Bureau maintained contact with many  different agencies and associations, including 
manufacturers' associations.  Furthermore, as Ch inese Taipei's tariffs on environmental goods were 
already at zero, the list had been deemed  unlikely to affect manufacturers.   
68. As agreed at the last meeting of the CTESS,  the representatives of UNCTAD, the OECD and 
the World Customs Organizations (WCO), presented their work to the Committee.  The representative 
of UNCTAD
 introduced document TN/TE/INF/7, which UNCTAD had submitted to the CTESS.  
UNCTAD treated environmental goods as more than a trad e issue, to be seen in the broader context of 
sustainable development, where access to envi ronmental goods, services and technologies was an 
important precondition for environmental and resour ce management in developing countries, as well 
for their competitiveness in interna tional markets.  However, in th e context of the negotiations on 
market access, this proposition was neither simple no r straightforward.  Developing countries were 
clearly not substantial suppliers of environmental goods  and services.  It was clear that a situation in 
which the environmental benefits would flow to one set of WTO Members, but the trade benefits to 
another, would not be acceptable in these negotiati ons.  This issue was the main problem in these 
negotiations. 
69. A starting-point for discussions on product cove rage had been provided by the APEC and 
OECD lists.  UNCTAD had prepared statistics on these lists, and its briefing note had shared these figures.  Essentially they showed that the products  on these lists represented a fraction of the NAMA 
mandate and included few products of interest to  developing WTO Members as exporters.  There 
were no specific tariffs that targeted environmen tal goods more than any other set of goods.  A 
significant share of developing country trade consis ted of multiple end-use products, which implied 
that these countries faced a trade-off between redu ced tariff revenues and uncertain environmental 
benefits.  However, the applied rates in developing countries in practice were low. 
70. One coverage-related issue that had arisen rep eatedly in many of the proposals submitted to 
the CTESS was that of PPMs.  Ther e seemed to be a broad convergence of views that such a criterion 
should be avoided.  Most proposals tended to fa vour end-of-pipe pollution management equipment , 
except for items with other significant industrial uses.  This was not surprising, considering that these 
environmental goods were derived from an absolute classification criterion, closely linked to 
environmental services, and covered a great numbe r of HS codes.  Developing countries were 
naturally interested in capturing the technological benefits of these negotiations.  However, proposals 
for cleaner technologies  were  more difficult to entertain, as these were often identified based on 
subjective criteria, were not necessarily linked to environmental services, and covered fewer HS codes.  There would be a need for WTO Members to ci rcumscribe this category in order to be able to 
negotiate on particular goo ds and technologies.   
71. Claims had been made with respect to other e nvironmentally preferable  products (EPPs), such 
as sustainable agricultural goods, including:  organi cs;  tropical produce;  sustainable fisheries and 
forestry products;  natural fibres;  bio-pestic ides, non-timber forestry products and products made 
using natural dyes.  In the context of the WTO ne gotiations, some of these claims might give rise to 
problems.  PPMs, in the case of sustainable agri culture, fishery and forestry;  the absence of a 
negotiating track for agricultural e nvironmental goods such as ethanol or organics;  and difficulties in 
finding appropriate HS codes were all problems for most EPPs.  It seemed clear that any agreement 
on environmental goods would necessitate dealin g with very diverse pr oduct groups, and was  TN/TE/R/10 
 Page 15 
 
 
therefore bound to be different fr om other possible sectoral deals, which required the reduction of 
tariffs in the same or approximate HS chapters.  
72. Thus far, there had been no agreement on th e sectoral modality.  Developing country 
Members had argued for special arrangements that w ould take into account their interests as exporters 
as well as their development status, and their ambiti on to develop an environm ental industry of their 
own.  Product coverage could certainly be sens itive to these objectives, as could tariff phase-outs, 
where it might be agreed that longer periods could be granted on a product-by-product and country-by-country basis.  WTO Members could also designate an appropriate number of tariff lines to be treated as sensitive products.  These products could be put on a development list or a complementary 
list, depending on which particular approach was agreed upon.  Given the interest of developing 
countries in EPPs, difficulties in capturing some of th ese in the HS, and the low tariffs that prevailed 
with respect to these products, it might prove easi er and more productive to focus the negotiations 
concerning EPPs on NTBs.  For instance, certifica tion procedures for products could be simplified 
and mutual recognition agreements (MRAs) encouraged. 
73. The negotiations on Paragraph 31 (iii) might become politically and procedurally linked to 
other ongoing negotiations and discussions.  With rega rd to NTBs, a link could be made to the trade 
facilitation negotiations.  Matters re lating to technology transfer mi ght be seen in conjunction with 
Articles 66.2 and 67 of TRIPS.  The Working Group on Trade and Technology Transfer could be requested to look into the relationship between trad e in environmental goods and the transfer of clean 
technology.  Of course, it would be very important to keep abreast of the negotiations in the Council 
on Trade in Services as well. 
74. UNCTAD's future work on Paragraph 31(iii) cons isted of, first, assisting developing countries 
in identifying environmental goods that were mo st likely to provide "win-win" opportunities.  
UNCTAD's second line of work was aimed at fac ilitating consultations on environmental services 
at the national and regional levels, as well as with Geneva-based delegations.  Such consultations, supported by national studies, had proved very useful.  The third approach was the provision of 
support to voluntary WTO-compatible market-bas ed initiatives for the creation and expansion of 
domestic and international markets for environmenta lly friendly goods and services, as called for by 
the World Summit on Sustainable Development.  In this respect, UNCTAD's three vehicles for the 
delivery of technical assistance would be particularly relevant.  The first was the BioTrade Initiative;  
the second was the International Task Force on  Harmonization and Equivalence in Organic 
Agriculture, which UNCTAD had set up together w ith the FAO and the International Federation of 
Organic Agricultural Movements;  and finally,  UNCTAD's joint venture with United Nations 
Environment Programme (UNEP) - the Capacity Building Task Force.   
75. The representative of the OECD
 introduced document TN/TE/INF/8, explaining that the 
OECD's work in this area went b ack over a decade, and had arisen initially as part of its work on 
environmental policy and industrial competitiveness.   There had been considerable interest in 
obtaining better information on the size and activiti es of this sector, and several reports had been 
published in the early 1990s.  These prompted num erous questions, for example, on the measurement 
of exports, and on the modification of environmen tal and economic policy to encourage and support 
growth, job creation and trade in environmental goods and services. 
76. It had soon become apparent, however, th at exploring these questions would involve 
statistical and methodological challenges.  A task fo rce was therefore created in cooperation with the 
European Statistics Office (EUROSTAT) to addr ess classification and description issues.  The fruits 
of this collaboration were published in a document in 1996, entitled:  "The Environmental Goods and 
Services Industry - Manual on Data Collection and Analysis."  This exercise did not, however, 
address trade aspects.  That task was subsequently  taken up by the OECD's Joint Working Party on 
Trade and Environment (JWPTE).  This group decided to deepen the analysis, first by identifying a 
list of representative goods (identified only to the six-digit HS code) and services, for the purpose of TN/TE/R/10 
Page 16  
 
gaining a better understanding of the extent of intern ational trade in this sector, and of the tariff and 
non-tariff barriers affecting it.  The results were  published in a document entitled "Environmental 
Goods and Services – the Benefits of Further Global Trade Liberalization." 
77. Following the WTO Ministerial decision to launch negotiations in this area, the JWPTE, 
in 2003, again turned its attention to this topic.  The current phase of its work aimed to explore some 
of the practical issues likely to arise in the nego tiations as well as the options for addressing them;  to 
explore issues associated with particular categories of goods;  to develop, through analysis, a better 
understanding of the market and of the complement ary policies that could be adopted to ensure 
maximum benefits from liberalization;  and fina lly, to document the synergies between goods and 
services. 
78. The first study undertaken by the OECD had a si mple objective, to explain the origins, and 
the similarities and differences, between the OECD a nd APEC lists.  Another study undertaken by the 
OECD examined the practical issues involved in  liberalizing trade in environmental goods. The 
OECD had also studied the institutional and pro cedural implications of considering different 
categories of goods. The experience with various othe r sectoral liberalization initiatives demonstrated 
that there could be some scope for an agreement on goods coverage to be  reached under Paragraph 
31(iii) before an initiative on environmental goods was implemented.  This could obviate the need for 
protracted ex post  negotiations on classification. 
79. One of the categories of problematic goods in which some OECD countries were interested 
were goods that were defined by their superi or environmental performance, for example 
energy-efficient electrical appliances.  As had been  seen in Japan's proposed list, several goods that 
were energy or resource efficient had been gi ven as an example, but those goods were easily 
identified by their particular physical characteris tics and their design.  A number of other household 
and office electrical appliances did not differ fundamentally, at least in a customs classification manner, except in terms of their energy perfo rmance.  The OECD had produced a paper on the 
problems which could arise if countries were to define these as environmen tal goods, and had found 
that there were many problems;  for example, th e fact that minimum energy performance standards 
were applied by only some countries, and that testing requirements differed. 
80. The study considered whether there could be  ways of reducing tariffs for relatively 
energy-efficient electrical appliances, but foun d that many problems would be encountered.  
However, it did show that ongoing work towards the harmonization of testing procedures was vital to 
moving forward in this area, and was helpful in ove rcoming NTBs.  Another body of work consisted 
of national case studies.  This was undertaken in recognition of the importance of liberalization for 
both importing and exporting countries, whatever their stage of development.  The OECD had commissioned eight country-specific case studies, one of which was a study from Kenya, and which aimed to identify complementary measures to ensu re the maximum realizat ion of benefits from 
liberalization.  At the same time, UNCTAD and the United Nations Development Programme were 
also commissioning similar country-specific studies, and recently the OECD had undertaken a 
synthesis of those reports.  The OECD was curren tly engaged in a study exploring the connections 
between trade in environmental goods and trade in environmental services, which it hoped would be a 
useful aid to those involved in Paragraph 31 (iii) negotiations. 
81. The representative of the WCO
 explained that the WCO consisted of 164 members, and that, 
over the years, these members or customs administ rations had evolved from purely revenue-collecting 
agencies into agencies dealing with  issues of social and environmental concern.  One of the WCO's 
most important instruments was the HS Conve ntion.  The Convention, which applied in 
approximately 200 countries and in economic and cu stoms unions, was the basis for customs tariffs 
and international trade statistics.  The HS refl ected commodities or groups of commodities on the 
basis of their physical characteristics or objective cr iteria.  So far, the WCO had ruled out end-use and  TN/TE/R/10 
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PPM criteria for the classification of commodities, gi ven the fact that these could create identification 
problems at the import or export stage.   
82. The HS had grown with the need s of its users.  The WCO had received various requests from 
the Basel Convention, the Montreal Protocol and PIC to have their products reflected in the HS.  This 
had been done so far for a number of commodities,  and these amendments were implemented every 
four to six years.  The last one was implemen ted on 1 January 2002, and the next one would be 
implemented on 1 January 2007.  Any amendment to the HS Convention, including its nomenclature, 
had to be accepted by all contracting parties.  This meant that there was a veto right for any 
contracting party that objected to proposed amendmen ts.  The procedure to amend the HS could take 
several years.  For example, for the amendments wh ich came into effect on 1 January 2002, the first 
discussions had started in 1996.  The WCO invite d WTO Members to approach the WCO if they 
wished to have any item classified in the HS.  It had responded to a request made by the Qatar in 
February 2003, designed to help with Qatar's CTESS submission.  The WCO looked forward to 
further collaboration with the CTESS. 
83. The representative of Venezuela  was interested that the presentations highlighted that the 
APEC and OECD lists did not represent the full in terests of developing countries.  As UNCTAD 
suggested, future work could usefully focus on assi sting developing countries in the preparation of 
their lists and could involve cons ultations and voluntary initiatives.  Paragraphs 9 and 14 of the 
UNCTAD paper demonstrated certain inconsistencie s at the six digit level between the APEC and 
OECD lists.  Many statistics had been overblown an d exaggerated the volume of international trade.  
With respect to the OECD presenta tion, Venezuela wished to emphasize that tariff reduction, and not 
elimination, was the objective of the present mandate, and that this had to be borne in mind when the 
word "liberalization" was used.  Venezuela wonde red whether the OECD saw any linkage between its 
paper and the Paragraph 51 mandate  of the Doha Development Agenda.  With respect to the EGW, 
Venezuela wished to encourage the Secretariat to hold other such events.  However, in the 
presentation made by the WTO Secretariat at that Workshop, references were only made to the APEC 
and OECD lists, and no mention had been made of the Qatari list.  It would be  important to reflect all 
existing lists in future.  Furtherm ore, account had to be taken of the UNCTAD list, which consisted of 
39 products. 
84. The representative of Korea  pointed out that this was the first time that the WTO had 
ventured into the area of environmental goods, and that there was no agreed-upon definition of what 
constituted those goods.  It would be extremely diffi cult to develop criteria for environmental goods.  
However, further work was required on internati onal standards that could serve as a basis for 
identifying environmental goods, and on review and ve rification methods.  Such work needed to be 
conducted in close collaboration with UNCTAD, the OECD, and the WCO.  Korea was interested in 
the statement made by the OECD that there were gains for all countries in liberalizing environmental 
goods, irrespective of their stage of economic development.   It wondered if there statistics to back this 
statement, which would be an important motivating factor for these negotiations. 
85. The representative of Japan  welcomed all three presentations by UNCTAD, the OECD and 
the WCO, and looked forward to examining the ne w study of the OECD which could inform these 
negotiations.  
86. The representative of the United States  found that UNCTAD's work revealed that developing 
countries had important export interests in the e nvironmental goods sector.  For example, several 
developing countries were net expor ters of goods on both the APEC a nd OECD lists, like ethanol in 
Argentina, Bolivia, Brazil and Guatemala.  UNC TAD had also found that many environmental goods 
were basic intermediate goods, such as filters, pumps  and valves;  and that not all the goods on the 
APEC and OECD lists were high-t ech in nature.  Furthermore, it had found that most of the goods 
comprising developing countries' top environm ental good exports were also among their top 
environmental goods imports.  In addition, UNCTAD had reported that there might be potential for TN/TE/R/10 
Page 18  
 
increased South-South trade in environmental goods, and the EGW had itself pointed to the potential for increased regional trade amongst developing countries, particularly in Africa.   
87. The US wished to encourage developing countries to submit their lists to the CTESS.  It also 
wished to hear more from UNCTAD about the potent ial developmental benefits  of these negotiations, 
particularly in areas such as water pollution control, wastewater treatment, and potable water 
treatment.  With respect to the OECD presentation,  the US looked forward to seeing the outcome of 
its latest project, which was investigating the syne rgies between the liberalization of environmental 
goods and environmental services.  Certain case studies would also be conducted within this project to 
look at the potential benefits to developing coun tries from the interplay between goods and services 
markets.   
88. The representative of Gabon
 wondered if UNCTAD could assist Gabon in carrying out a 
study on the impact of liberalization on tax receipts, and in seeing how technical assistance could be directed to countries that would be negatively affected. 
89. The representative of Qatar
 invited UNCTAD to organize a workshop in Qatar for developing 
countries on the methodologies that could be used to identify environmental goods.   
90. The representative of th e European Communities  was pleased that UNCTAD had identified a 
number of objectives for future work, which the EC  could support.  UNCTAD was doing very helpful 
work on EPPs, and it would important to address deve loping country interests in these negotiations.  
The EC was also pleased that the OECD had worked  in this area, and was currently completing a 
study that could inform these negotiations.  It enc ouraged the WCO to share more information with 
the CTESS on the issue of end use and PPMs.  Within  the framework of the ITA, some countries had 
used end-use certificates.  Furthermore, the EC be lieved that hand-woven rugs, for example, were 
classified within the HS Convention, and th at their classification was based on a PPM.   
91. The representative of Canada  took special note of the fact that 18 developing countries were 
currently involved in various projects with th e OECD, UNCTAD and the UNDP on the identification 
of environmental goods of export interest to them .  Canada would strongly encourage the countries 
involved in those studies to share their results w ith the CTESS, particularly if these involved the 
identification of EPPs.  Canada also looked forward to the work of the JWPTE. 
92. The representative of UNCTAD  stated that UNCTAD's work had contributed to, and 
benefited greatly from, project-based activities that were conducted in Central America on 
environmental goods and services, with the financial assistance of the Department for International 
Development of the UK.  UNCTAD also highlighted that an Expert Meeting on Environmental Goods 
and Services had been organized in July 2003.  Th e Chairman's Summary of that Expert Meeting had 
been made available to the CTESS (TN/TE/INF/6).  Responding to the US comments, UNCTAD stated that its statistics did indeed show that de veloping countries, not necessarily individually, but as 
a group, were net exporters of certain items.  To be precise, they exported 26 out of 182 goods on the 
combined APEC and the OECD lists, and UNCTAD had a list of those 26 goods.  However, it 
indicated that, when considering statistics at the six- digit level, the HS could lead to overestimation of 
the volume of trade.  It was important to bear in  mind that only nine developing countries exported 
environmental goods, and that their exports represe nted 90 per cent of total developing countries' 
exports in 2002.  There were various possible explan ations for the fact that developing countries were 
importers and exporters of the same goods.  There coul d be intra-industry trade, but this could also be 
the result of broad HS classifications.  UNCTAD par ticularly welcomed the proposal by China of a 
"development list." 
93. The representative of the OECD
 pointed out that the OECD case studies involving developing 
countries had been conducted through consultants and not governments.  Although some of these 
studies demonstrated that there were goods of import and export interest to developing countries, this  TN/TE/R/10 
 Page 19 
 
 
was an ancillary result of these studies.  The OECD was looking more at relations between liberalization and other types of measures, such as a country's environmental policies.  With respect to 
the term "liberalization," it clarified that it did no t mean full tariff elimination, but only reduction.  
With respect to Korea's question on the gains from li beralization, the OECD indicated that it would be 
possible to quantify these, but that that would involve  a substantial general equilibrium analysis.  The 
GTAP project could be approached to conduct such an  analysis.  The OECD felt confident in making 
the assertion since it was based on work  that the OECD had done and which showed benefits for all 
countries.  In the WTO, discussions were mercantilist in nature, but much of the work that the OECD 
had done had shown how important it was for count ries to have access to environmental goods for 
reasons other than trade.  For instance, at the EG W, Mr. Moses Ikiara's presentation had demonstrated 
how sound environmental policies could attract investment.  That meant having access to pollution 
control equipment, to monitoring services, and so on. 
94. The representative of the WCO
 responded to the EC by saying that any country was free to 
implement a PPM and end-use based system at the nati onal level, but that this was not an issue which 
was taken on board under the present HS Convention.   
95. The Chairman  expressed his appreciation for the various lists of environmental goods 
submitted to the CTESS, and was pleased that several ot hers had been promised for the next meeting.  
While there had been discussion at this meeting of two approaches under this item, a conceptual 
approach, involving criteria and definitions of e nvironmental goods, and anot her approach consisting 
of the submission of lists, the Chairman believed that they could complement each other.  He 
encouraged Members to pursue this complementarit y by submitting their lists to the CTESS while, at 
same time, providing some explanation of the me thodology employed in their construction.  Members 
were free to draw on the work of UNCTAD, the OECD and APEC in that process.   
IV. OTHER BUSINESS  
96. The representative of Japan  suggested that the ad hoc invita tion to the International Tropical 
Timber Organization (ITTO) be renewed, but the representative of Malaysia  objected to the renewal.  
There was no consensus  reached by the CTESS on this matter.  
97. The Chairman  indicated that the ad hoc invitation to  all the organizations that had been 
invited to this meeting would be renewed1 and indicated that he would be communicating the date of 
the next CTESS meeting to delegations in the coming week.2 
__________ 
                                                      
1 These organizations were listed in the Annotated Agenda, document JOB(04)/145.   
2 The date was subsequently set for 24-25 February 2005.