WORLD TRADE  
ORGANIZATION  TN/TE/INF/6 
14 July 2004 
 
 (04-3015) 
Committee on Trade and Environment 
Special Session Original:   English/ 
                  French/ 
                  Spanish 
 
REPORT OF THE EXPERT MEETING ON DEFINITIONS AND DIMENSIONS OF 
ENVIRONMENTAL GOODS AND SERVICES  IN TRADE AND DEVELOPMENT 
 
Held at the Palais des Nations, Geneva,  
from 9 to 11 July 2003  
 
 
 The following United Nations Conference on Trade and Development (UNCTAD) report is 
being circulated to the CTESS for its informati on, as agreed at the 22 June 2004 meeting.1 
 
_______________ 
 
 
TABLE OF CONTENTS 
 
 
Chapter           Page  
 I. Chairperson's Summary ........................................................................................... 1  
II. Organizational Matters............................................................................................. 16 
 
Annex 
 Attendance ..................................................................................................................... ....... 17 
 
  
CHAPTER I:  CHAIRPERSON’S SUMMARY 
  
1. The Expert Meeting was attended by a large nu mber of government experts (from both trade 
and environment ministries) from developed and de veloping countries and countries with economies 
in transition, representatives of private companie s supplying environmental services, academics, and 
representatives of intergovernmental organizations and non-governmental organizations (NGOs).  
Participants expressed their apprecia tion of the fact that the Meeting had been scheduled back to back 
with the regular and special sessions of the WTO Committee on Trade and Environment (CTE).   
2. Experts addressed issues relati ng to trade liberalization in en vironmental goods and services 
(EGS) from two perspectives.  Firs t, they considered definitions, classifications and negotiating 
approaches in the context of the WTO mandate pr ovided for in paragraph 31 (iii) of the Doha 
Ministerial Declaration.  Second, they discussed the role of EGS in sustainable development, in 
particular policies and measures that could be carri ed out at the national and international levels to 
                                                     
 
1 The UNCTAD symbol of this report is TD/B/COM.1/59, TD/B/COM.1/EM.21/3 (27 August 2003). TN/TE/INF/6 
Page 2  
 
 strengthen the various EGS sectors in developing countries and to contribute to achievement of the 
Millennium Goals and the implementation of the J ohannesburg Plan of Action adopted at the World 
Summit on Sustainable Development (WSSD). 
3. A large part of the discussions focused on potentia l benefits from the liberalization of trade in 
EGS.  Most experts referred to the need to secure “win-win-win” outcomes for trade, environment and 
development.  As net importers of EGS, developing countries were more likely to benefit from 
increased availability of cheaper EGS than from increased exports.  Deve loped countries expected 
benefits in terms of improved ac cess to emerging environmental markets in developing countries and 
countries with economies in transitio n.  Several experts said that while  environmental benefits were of 
key importance to developing countries, a situation in  which environmental benefits went to one set of 
countries and trade gains to another would not be  a balanced outcome of the negotiations.  The 
negotiations should therefore take fully into account  EGS of export interest to developing countries. 
I. POTENTIAL BENEFITS FOR DEVELOPING COUNTRIES 
4. Experts enumerated a number of potential be nefits of EGS liberalization for developing 
countries, including the following in particular:  access to environmentally sound technology (EST) 
and know-how;  possible reduction in the relative prices of EGS;  economic, environmental and 
developmental gains resulting from upgraded enviro nmental infrastructure, more efficient resource 
management and improved environmental condition s;  and enhanced capacity to comply with 
environmental requirements in dom estic and international markets. 
5. However, many experts expressed the view that caution and a gradual approach to 
liberalization commitments were needed in view  of insufficient regu latory frameworks and 
institutional capacities, difficulties in assessing de mand and supply, and insufficient understanding of 
the implications of liberalization, in  particular in sub-sectors for whic h data were largely unavailable.  
Several experts indicated that there was a need to study the experiences of developing countries that 
had already liberalized certain environmental services sub-sectors.  Several developing countries had 
liberalized certain sub-sectors and allowed foreign direct investment, although no commitment had 
been made in the context of the General Agreemen t on Trade in Services (GATS).  A number of 
experts said that no commitments could be made for services that were provided under government 
authority.  Others stated that a balanced outcome of the negotiations would require commitments to be 
made on Mode 4 concerning sectors of  interest to developing countries. 
6. Many experts underscored that in order to "level the playing field" for developing countries it 
would be important to link the negotiations and discussions on EGS with a range of issues − for 
example, treatment of horizontal issues in services, namely emergency safeguard mechanisms, 
government procurement and classification;  the ro le of subsidies for both environmental goods and 
services, particularly in developed countries;  existing market structures of EGS and related 
anti-competitive practices;  the key role of access to, and transfer and effective and efficient use of,  
ESTs;  linkages to other negotiating areas of WTO, notably agriculture and market access;  the relationship with objectives and instruments in relevant multilateral e nvironmental agreements 
(MEAs);  standards as a market entry barrier for EG S;  supply capacity;  and capacity building and 
policy coherence, at both national and international levels. 
II. ENVIRONMENTAL INDUSTRY:  TRENDS, MARKETS AND TRADE FLOWS 
7. The total size of the global environmental mark et is estimated at $550 billion in 2003.  The 
United States, Japan and Western Europe accounted for 85 per cent of revenue generation in 2001.  
Annual growth in developed countries was 1.6 per cent in 2000 and 2001, and in developing 
countries 7
−8 per cent.  Environmental infrastructure services (water, wastewater, solid waste) 
constitute 62 per cent of the global market.  TN/TE/INF/6 
 Page 3 
 
 
 8. Markets in developed countries are "mature":  they are highly competitive, with a highly 
sophisticated customer base, and experience slow or negative growth in many segments.  Conversely, 
markets in developing countrie s represent many environmental needs .  Translating these needs into 
consistent market demand  required for investment by the private sector in business development 
hinges on a number of factors:  regulations and enforcement;  capital and companies;  and ownership 
and/or contract mechanisms to ensure collection of fees, especially for water and waste infrastructure 
projects and the like.  Capital requirements, in pa rticular in water and wa stewater management, are 
driving privatization and liberalization.  In spite of environmental regulatory  drivers, environmental 
markets are very sensitive to economic cycles. 
9. Market determinants also differ.  In develope d countries, demand for services related to 
pollution control, compliance and clean-up or remedi ation is declining, and has been replaced by 
demand for services such as environmental consulting, eco-design of products, risk assessments and 
similar services.  In many develo ping countries, on the other hand, market development is still 
determined by the need for basic environmental infrastructure services, and pollution control and 
clean-up services.   
10. The largest environmental companies are concen trated in developed countries.  However, 
participation by companies from developing countries in the water and wastewater and consulting 
sub-sectors is increasing.  These are often companies from Asian and Latin American countries, 
which have acquired technological and services capac ities, in part through joint venture investment in 
the environmental sector in their own country.  A recent publication by UNCTAD, Energy and 
Environmental Services:  Negotiating Objectives and Development Priorities , sets out important 
evidence of how capacity to provide and export environmental services has been developed in a 
number of developing countries. 
11. A great number of environmental solutions are "low-tech" and re quire engineering and 
management skills as well as capital rather than  proprietary technology.  Clean, or "green", 
technology, as opposed to end-of-pipe, "brown" envi ronmental technology, is difficult to pursue as a 
discrete business, and is difficult for researchers and policy makers to assess. 
12. Ozone depletion, climate change and the manage ment of hazardous substances, chemicals and 
waste, to name but the most important, are issues that require and have already led to some globalization of environmental policy.  Market inst ruments offer potential for augmenting regulations 
in some segments, and create an incentive for "bet ter than compliance" throug h partial internalization 
of environmental costs. 
III. ENVIRONMENTAL SERVICES 
13. Environmental services differ greatly in market structure and behaviour, regulatory 
frameworks and technological development.  Ther efore, it is useful to distinguish between 
(a) environmental infrastructure services, main ly related to water and waste management;  
(b) non-infrastructure, commerci al environmental services, comprising most of the activities in 
Central Product Classification (CPC) Division 94, for example site clean-up and remediation, 
cleaning of exhaust gases, noise abatement, and nature and landscape prot ection;  and (c) related 
services with environmental end-use, classified under different divisions in the CPC, for example 
construction or engineering services. 
14. Environmental infrastructure services have some  of the characteristics of a “public good”.  
Key concerns in these services are universal access and prices.  These services are highly subsidized 
in many developing countries as well as in some de veloped countries, and are provided largely by the 
public sector.  However, there are experiences of pr ovision of these services through private suppliers 
or through different modalities of public −private arrangements.   TN/TE/INF/6 
Page 4  
 
 15. Environmental commercial services are knowle dge-intensive and provided on an integrated 
basis.  They are generally not subject to market access and national treatment limitations.  The key 
issues with regard to these services are access to technology and know-how, capacity building, 
certification and recognition of qualifications (for bo th natural persons and companies), and "tied aid" 
as a restriction on trade. 
16. There is a range of services related  to the environment.  These are "multiple-use" services for 
which the questions of definition and coverage are as relevant as they are for most environmental 
goods. 
17. A number of industrial or services sectors in  developing countries could benefit from the 
provision of efficient environmental services.  On the other hand, environmental support services are 
essential for commercially meaningful liberalizat ion of environmental infr astructure services.  
Developing countries might increasingly find export  opportunities in some environmental support 
services, for example environmental assessments, consultancy services, implementation and auditing 
of environmental management systems,  evaluati on and mitigation of environmental impact, and 
advice in the design and implementation of clean technologies.  Partnerships with companies from 
developed countries can expand the scope for business opportun ities for developing countries’  
services suppliers, while at the same time allowi ng transfer of technolo gy and capacity building. 
18. Countries’ level of environmental protection and the use of environmental services are  
determined by a number of factors, for example environmental regulatory frameworks, including 
enforcement, the evolution towards pollution pr evention approaches and the implementation of 
MEAs.   
19. The main way to trade environmental servic es is through commercial presence and the 
temporary movement of natural persons, given the ne ed for highly specialized professionals in many 
of these services.  The importance of Mode 4, especially for environmental support services, is 
growing.  Individual service providers from developing countries are sometimes subject to 
discriminatory treatment.  In this context, it was asked whether there is a compilation of existing 
qualification and certification requirements. 
20. Environmental services are playing an import ant role in ongoing negotiations under GATS 
Article XIX.  Most developing count ries have received requests to undertake specific commitments in 
all environmental services, largely from de veloped countries.  Some WTO Members have 
incorporated new commitments or improvements in existing commitments:  out of 26 initial offers, 
nine have incorporated environmental services.  The task of the negotiations is to set the right 
framework, which would require agreeing on clas sification and identifying and reducing the main 
barriers to trade. 
21. At their current stage, the negotiations on envi ronmental services raise the following issues:  
convergence on the classification of environmenta l services for negotiations purposes;  a common 
understanding of what is meant, in a commercial se nse, by some proposed new categories of services 
such as biodiversity protection;  remediation and clean-up of soil and water;  the need for a clear 
picture of the extent and scope of subsidization of environmental services;  problems associated with 
the recognition and certification of professional services;  "tied aid", that is situations in which a 
service provider is pre-selected as part of a development assistance package;  qualification and 
certification requirements for in dividual service providers;  and transfer of technology. 
22. 
National classifications of environmental se rvices have not been drawn up for trade 
negotiations and differ greatly.  The two main in struments used in the WTO are the Provisional 
Central Product Classification and the Services Sect oral Classification List (W120).  However, no 
classification is obligatory and WTO Members are free to use any classification they prefer or to  TN/TE/INF/6 
 Page 5 
 
 
 develop a classification of their own.  Both nati onal and international classifications are rather 
removed from market realities.  Some participants expressed concern that different classifications are 
used in the bilateral requests and offers process instead of classification issues being addressed 
multilaterally in the competent body, the Committee on Specific Commitments. 
23. Proposals have been made to update the classification of environmental services to better 
reflect market realities.  In addition, attempts ha ve been made to take account of environmental 
“end-use” services or services with an “environmental component” in order to secure commercially 
meaningful commitments. 
24. The most far-reaching proposal for updating the W/120 comes from the European Union 
(EU).  It is based on, though not identical with, the OECD/Eurostat definition of environmental 
services, which goes beyond the classification proposed by the EU for the purpose of trade 
negotiations.  In particular, it addresses the entir e water cycle and the protection and preservation of 
landscape, eco-systems and biodiversity. 
25. The proposal by the EU is indicative of the strong trade interest of EU companies in all 
environmental services.  The EU has made requests fo r liberalization of environmental services to 64 
WTO Members, but on a differentiated basis, taki ng into account their level of  development.  
Conversely, the EU did not include liberalization of water distribution services in its initial offer, 
mainly because there was only one request. 
26. While Governments may resort to their preferre d classification, the use of new definitions, 
overlaying the CPC classification, may have implicati ons, for example when included in the schedule.  
It has been pointed out that any new classification may give rise to adaptation problems with respect 
to existing commitments from the Uruguay Round.   The translation of commitments from one 
classification to another might imply a modification of such commitments. 
27. Arguably, the specific commitments of market access (GATS Article XVI) and national 
treatment (GATS Article XVII) have the greatest po tential impact on national regulatory regimes.  
Since commitments are made on a sectoral basis, classification of services is of vital importance in 
this context.  Classification is th erefore also of relevance in the current GATS 2000 negotiations about 
future commitments. 
28. It is important to realize that trade in enviro nmental services can take place, and does take 
place, in the absence of commitments under the GATS .  While there are barriers to international trade 
in services, the main problem is not so much restrictions on trade as the lack of demand.  The main 
issue therefore is how to strengthen demand for environmental services and promote appropriate 
implementation of environmental policy, including  through the establishment and enforcement of 
environmental standards and regulation. 
29. According to some experts, environmental infrastructure services, such as water and 
wastewater management, are essentially a development issue rather than a trade issue.  Therefore, the 
liberalization of trade in these services should be seen in a broader context of sustainable 
development. 
30. The more traditional environmen tal infrastructure services, such as water and waste 
management, are provided mostly by the public sector.  Moreover, these services often are, or are 
close to being, natural monopolies, or are provided through monopolies for public policy reasons.  
Even when the provision of these services is handed over to, or shared with, the private sector, this 
often happens under monopolistic structures.  Ther efore, competition takes place for markets, rather 
than in markets.   TN/TE/INF/6 
Page 6  
 
 31. The private sector provides water distribution services to about 5 per cent of the world's 
population.  The private provision of water service is a politically an d socially sensitive issue.  The 
main concerns have to do with pr ice increases, unsustainable use of water resources, loss of public 
ownership and rent-seeking practices.  Few countrie s have their water servic es fully privatized.  
Public−private partnerships (PPPs), especially conc essions, are preferred to full privatization. 
32. Companies operating in the environmental industr y use various contractual arrangements to 
form PPPs, which are adapted to local and national co nditions, in order to meet the expectations of 
municipalities and Governments, and to comply with  national regulations.  The perceived gains of 
PPPs for developing countries are of  a financial (capital inflow), te chnical (optimized operations;  
technical assistance from other countries;  trai ning of personnel) and managerial nature (more 
efficient organizational structure;  billing and fe e collection;  financial savings on purchases). 
33. Issues relating to charges for wate r and subsidies have to be seen in a pragmatic perspective.  
Pricing is not exclusively a private sector problem.  In a subsidized environment, the private sector 
may sometimes operate in a manner similar to that of a public company operating in a non-subsidized 
environment. 
34. Large private operators currently have a very small market share in developing countries.  
Small-scale independent water providers, operating sm all pipe networks, distribution at kiosks and 
water trucks, currently play a majo r role in developing countries, where in many cities half of the 
population or more is served by water supplie rs other than the utility.  Until now the trade 
liberalization and water services debate has focuse d on large-scale operators and ignored small-scale 
operators.  It is important to broaden the debate to address issues specific  to decentralized water 
systems, particularly the ways and means of pr omoting partnerships involving local engineering 
companies and engineering companies from developed countries. 
35. Given the sheer magnitude of intergovernment al commitment on water and sanitation, the 
public sector should be central to the developm ent and use of water resources, and remains a 
necessary option in water management.  Public sect or water undertakings (PWUs) are the providers of 
water and sanitation services for the great majority  of the population in developed and developing 
countries.  Ignoring a public sector option means that the main competitor of any of the private 
companies is being excluded. 
36. There is evidence of problems with PPPs, and at the same time there is evidence that the 
public sector can successf ully operate PWUs in developing countries.  Therefore, policy makers 
should always construct and consider a public sect or option, and always evaluate any PPP proposal 
against a public sector option in a public process. 
37. The GATS neither requires nor precludes a pa rticular regulatory regime.  WTO Members are 
free to design a regime of  infrastructure services regulations acc ording to their national priorities and 
development strategies.  They must, however, obse rve certain GATS disciplines when adopting and 
implementing particular regulatory instruments.  They must also be aware that the GATS creates a 
certain momentum towards liberaliz ation of services regulation.  Hence, WTO Members choosing a 
regulatory regime that relies on government interv ention in the market and restrictions on economic 
activities may have to be more aware of possible GATS constraints on national regulation than 
Members opting for solutions relying on competition and market forces.   
38. 
WTO Members that want to rely on domestic se rvices and service suppliers in a particular 
sector or to retain a maximum degree of regulatory  flexibility may consider remaining unbound in that 
sector − that is, not making any commitments.  Members that want to commit certain sectors should 
carefully assess their regulatory regime and the implications of market access and national treatment  TN/TE/INF/6 
 Page 7 
 
 
 for it, and should also consider their need for futu re regulatory flexibility when scheduling limitations 
to their commitments. 
39. Water regulation often pursues goals that are specific to the water sector, such as managing 
scarce resources, guaranteeing drinking water quality, and aiming at or securing universal access to 
water.  It can also aim at other goals such as effici ency of distribution, transfer of technology or rural 
and agricultural development.  Some of these goals may require instruments that could be 
incompatible with market access and national trea tment, and may therefore require scheduling limited 
commitments, refraining from commitments altogeth er, or carefully scheduling the limitations a 
country wishes to maintain.   
40. WTO Members should also assess the ongoing negotiations on disciplines for domestic 
regulation in the Working Party on Domestic Regulation in the light of their regulatory requirements.  
Pursuant to GATS Article VI:4, such disciplines should ensure that certain  domestic regulations 
(measures relating to licensing and qualification requirements and procedures, and technical 
standards) are no more burdensome than is necessary to achieve  national policy objectives.  
Depending on the scope of future disciplines and th e specific design of a "necessity test" in such 
disciplines, certain domestic regulat ions such as quality standards or universal service obligations 
could be seen as more burdensome than necessary .  This may put them under pressure from the 
multilateral trading system. 
41. It is very rare that water servic es are fully privatized.  Usually, they are provided directly by 
central or local government authorities, or throug h various public–private arrangements.  In this 
context, there is a need to clarify the meaning of services provided under governmental authority  and 
of market access .  With respect to services provided under governmental authority, there are differing 
interpretations of the scope of the exclusion from the GATS.  According to some, for the exclusion to 
apply, the service must be supplied neither on a comm ercial basis nor in competition;  if one of those 
conditions is not met, the exclusion does not apply.  For others, however, it is su fficient that one of the 
conditions is met for the exclusion to apply.  With  respect to market access, it was asked whether the 
right to participate in the bidding process amounts to granting market access, and whether some concessions may fall within the realm of government procurement and therefore be excluded from 
GATS provisions. 
42. According to some participants, some of the various forms of relationship between 
government authority and a private supplier would correspond to government procurement and are 
therefore exempted from the relevant GATS discip lines.  However, the di stinction between these 
various forms is not always clear, and this prompts questions about what types of water contract could 
or could not be considered government procurement. 
43. The GATS is a flexible instrument, but only if it is used in a flexible way.  Options available 
to developing countries in managing the impact of  liberalization of public services under the GATS 
include the following:  horizontal exclusion of public services (e.g. Dominican Republic);  
sector-specific exclusion of public services (e.g. Norway and Switzerland);  commitments limited to private sector suppliers (e.g. sewage services in the United States);  sub-sectoral "carve-outs" (e.g. for 
infrastructure);  and specific limitations to excl ude certain regulatory measures (e.g. subsidies). 
44. Countries have the possibility of tailoring their commitments through the bottom-up 
approach, so as to define their way to market access.  However, there is a great deal of pressure on 
national and local regulatory authorities, which of ten lack the necessary resources and capacity.  
Regulations are crucial to ensuring the "quality" of the liberalization process.   There is a need to 
sequence regulatory cons olidation and liberalizatio n.  Detailed knowledge of regulations are also 
crucial to negotiations.  In a sense, it would be fa ir to say that trade negotiators should know what 
regulators know, and vice versa. TN/TE/INF/6 
Page 8  
 
 IV. ENVIRONMENTAL GOODS 
45. The Doha mandate explicitly calls for the libera lization of trade in environmental goods.  
From a policy perspective, relevant questions are (a ) whether to grant special treatment to such goods 
and, if so, in what form;  and (b) to which goods special treatment would be granted.  The relative 
importance of tariffs and no n-tariff barriers and supply capacity should also be considered.  The Doha 
mandate appears to impose two sets of conditions.  First, paragraph 31 suggests that in order to benefit 
from special treatment, environmental goods should be identified "with a view to enhancing the 
mutual supportiveness of trade and e nvironment".  This in turn raises the question of how to deal with 
“multiple-use” products.  Second, negotiations on environmental goods should take into account the 
overall objectives of market access negotiations.  They should therefore also be guided by paragraph 16 of the Doha Ministerial Declaration an d pay particular attention to “products of export 
interest to developing countries”;  take full acco unt of the special needs and concerns of developing 
countries;  require “less than full reciprocity in  reduction commitment” from developing countries;  
and promote capacity building. 
46. Current approaches do not adequately reflect deve loping countries’ intere sts.  Several experts 
made proposals aimed at achieving a more balanced outcome of the negotiations, in particular by 
identifying products of export interest to developi ng countries;  excluding “multiple-use” products 
that may have little environmental application;  and addressing technology and capacity-building 
needs.      
47. As there is no agreed definition of environmental goods in the WTO, experts focused their 
discussions on various "lists" of environmental go ods rather than on issues of definition.   
48. The Organisation for Economic Co-operation a nd Development (OECD) and Asia-Pacific 
Economic Cooperation (APEC) have developed lists of “environmental goods”.  While the OECD list 
was developed for analytical purposes, the APEC list was compiled  on the basis of proposals by 
individual APEC members as a bottom-up approach to the Early Voluntary Sectoral Liberalization 
(EVSL) initiative, which in cludes the environmental sector.  The OECD list does not go beyond 
the 6-digit Harmonized System (HS) classifica tion, whereas the APEC list includes many “ex-
headings” (nationally defined tariff lines).  The APEC list might therefore be more precise in 
identifying environmental goods, although the problem of  “multiple-use” products remains.  In the 
EVSL context, some goods (e.g. waste incinerators) had been excluded from the APEC lists at the 
request of  civil society.  One expert said that la rge hydraulic turbines should not be put on lists of 
environmental goods, because of adverse environmental implications.  It has been pointed out that 
many pollution abatement products on the OECD and APEC lists are “end-of-pipe” technologies. 
49. Some experts proposed that the APEC list could be used as a starting point, but by no means 
the end point, in identifying environmental goods for the purposes of trade negotiations.  Others 
thought that the APEC list was not a good starting point and that any list could be used.  It has been 
emphasized that, in principle, no products were a priori excluded from the scope of environmental 
goods and no proposals have been made to that effect.  Most WTO Members, however, have objected, 
on practical and systemic grounds, to the use of criteria based on non-product-related processes and 
production methods to define environmental goods for the purposes of the negotiations.   
50. Products proposed for listing as environmental goods because of performance criteria, such as 
energy efficiency at consumption, are another problematic category.  The main reason is that these 
products are subject to innovation and technological  change, and products that are environmentally 
superior today may not be so tomorrow.   
51. Criteria should be practical and simple, and ade quate account should be taken of  constraints 
on the capacity of  customs authorities to administer  products subject to special treatment.  Any lists  TN/TE/INF/6 
 Page 9 
 
 
 of environmental goods should be kept current, so as to regularly include new products and exclude 
products that no longer qualify as environmental goods.   
52. It may become necessary to make proposals fo r tariff reductions at th e national tariff line 
level (beyond the 6-digit level of the HS classifica tion), as was done in the Agreement on Information 
Technology.  Some experts indicated that the World Customs Organization could be asked to 
introduce new tariff lines to captu re environmental goods.  There may be a need to look into the 
question of how to deal with agricultural products in the context of the negotiations. 
53. A United States expert familiarized the participan ts with a proposal subm itted recently by the 
United States to the Negotiation Group on Market  Access for Non-Agricultural Products (NGMA), 
which contains elements concerning both prod uct coverage and modalities for negotiations.  
According to the US proposal, two lists of environmental goods could be developed.  A core list 
would comprise products on which there was consen sus that they constituted environmental goods.  A 
complementary  list could be developed for additional pr oducts that could have significance for 
environmental protection, pollution prevention or remediation, and sustainability.  Tariffs should be 
eliminated for all products on the core list as soon as possible but no later than 2010.  With regard to the complementary list, Members would be required to  eliminate tariffs for a certain (“x”) percentage 
of these tariff lines by 2010.  For developing countries, this percentage could be lower in order to 
reflect less than full reciprocity provisions. 
54. The UNCTAD secretariat circulated a Conference Room Paper (TD/B/COM.1/EM.21/CRP.1) 
examining recent patterns of international trade in  products on the OECD and APEC lists as well as 
certain products that, for illustrative purposes, co uld be considered environmentally preferable 
products  (EPPs) on the basis of product characteri stics.  However, the secretariat emphasized that 
trade statistics at the 6-digit level of the HS tend to significantly overestimate trade flows, as many 
“environmental goods” are “ex” items.  The fact that many products listed as “environmental goods” 
are in fact “multiple- use” products aggravates th is problem.  Some conclusions can nevertheless be 
drawn (based on trade statistics for the year 2000):   
• All developing countries for which trade data are available are net importers of environmental 
goods on the APEC list.  Only two developing countries (Guinea and Trinidad and Tobago) 
are net exporters of products on the OECD list as a result of exports of one or two chemical 
products (the chemical sector is excluded from the APEC list). 
 
• "Multiple-use" products represent a large share of developing countries’ trade in products on 
both lists, as is illustrated by the fact that the major export and import items of developing 
countries are “basket” items.   
 
• Trade data for all regions show that the products on either the APEC or the OECD list 
represent not more than 3 per cent of export s and not more than 6 per cent of imports of 
manufactured goods (i.e. products covered by the negotiations in the NGMA).  South −South 
trade may be relatively more important, in particular trade between developing countries in 
Asia.   
 
• Developing countries as a group are net exporters of 26 of the 182 environmental goods on 
the APEC and OECD lists.   
 
55. There is a need to identify a larger range of products of export interest to developing countries 
in order to work towards a more balanced outcome of the negotiations.  At the same time, several 
experts said that a range of “multiple-use” product s with predominantly industrial, as opposed to 
environmental, end-use should be excluded from any lists of environmental goods.  The issue of TN/TE/INF/6 
Page 10  
 
 “multiple-use products” is more important to developing countries that maintain relatively higher 
tariffs, as this could involve the loss of signific ant tariff revenues withou t necessarily generating 
environmental benefits.    
56. Several experts emphasized that liberalization in renewable energy products could result in 
clear environmental benefits as well as increased ex ports for certain developing countries.  Renewable 
energy products are included in the OECD and APEC  lists, but their coverage could be broadened by 
including additional products, and developing countries’  exports in related services could be promoted 
(see also next section).     
57. Experts from several developing countries pr oposed that certain categories of EPPs be 
included within the scope of the negotiations on environmental goods, while avoiding possible new 
non-tariff barriers and additional costs (e.g. for certification).  
58. In particular, proposals were made for the inclusion of non-timber forest products, products 
based on traditional knowledge (TK) and products made from natural fibres such as jute and coir.  
One expert proposed a list of environmental goods consisting of recycled waste, water products, 
air-pollution-abatement products, soil-conservation products and products derived from ecosystems.   
59. Examples were given of tariff and non-tariff measures affecting trade in EPPs.  Trade in 
TK-based products is affected by registration requirements, health requirements and “novel food” 
legislation.  In the case of jute  and coir, tariffs in developed coun tries are low for raw materials, but 
relatively high for manufactured and semi-manufactu red goods in some markets.  Concern has been 
expressed that certain packaging requirements could discriminate against jute as a packaging material.  
In the area of renewable energy products, a case  study on solar energy equipment shows that some 
developing countries have acquired international co mpetitiveness, but tied aid can be an obstacle to 
their exports. 
60. Several experts argued for expanding the scope of  negotiations beyond the lists of goods to 
include technology and financing and thereby promote an integrated approach to environmental 
problems. 
61. Most experts were of the view that certain categories of EPPs would be problematic in the 
context of the WTO negotiations concerning paragraph 31(iii).  Ex amples cited include organic 
agricultural products and products requiring an eco-label or another form of certification to be 
identified as EPPs.  However, this should not detr act from the importance of removing obstacles to, 
and promoting, developing countries’ exports of thos e products.  For example, in the area of organic 
agriculture, there is a need to address problems such  as standards, certificatio n and subsidies in some 
developed countries.  In this context, references we re made to the WSSD call for actions to “[S]upport 
voluntary WTO compatible market-based initiatives for the creation and expansion of domestic and 
international markets for environmentally friendly goods and services, including organic products, 
which maximize environmental and developmental benefits through, inter alia , capacity-building and 
technical assistance to developing countries”.   
62. References were made to the work on EPPs that UNCTAD has been carrying out for several 
years, although not in the context of the WTO negotiations on environmental goods.  It would be 
useful to review this work.  This could be helpful in identifying products and measures that could be 
covered in negotiations u nder paragraph 31(iii) and issues that co uld be addressed more effectively in 
other WTO bodies dealing with non-tariff barriers or through trade promotion measures. 
63. UNCTAD, in cooperation w ith other institutions, could be of assistance, drawing on its work 
on commodities, BIOTRADE and the International Task Force on Harmonization and Equivalence in  TN/TE/INF/6 
 Page 11 
 
 
 Organic Agriculture, created jointly with th e Food and Agriculture Organization of the 
United Nations (FAO) and the Intern ational Federation of  Organic Agriculture Movements (IFOAM). 
V. EGS AND TECHNOLOGY 
64. One of the key interests of developing countries in liberalization of EGS is enhanced access to 
and effective use of ESTs.  It is, however, important to take a holistic view of the transfer of ESTs, 
linking it to investment and access to other sources of funding, licensing of intellectual property rights 
(IPRs), availability of skilled staff and other services , such as engineering and construction, as well as 
support through development cooperation and MEAs.  Small and medium-sized enterprises, both in 
developing and in developed countries, play a key role in technological development, including 
cleaner technologies.  All these factors underline the im portance of policy coherence,  at both national 
and  international levels.   
65. Experts identified three areas for which transf er and effective use of ESTs would be of 
particular importance in the next few years:  (a ) enhancing energy and material efficiency (this 
includes saving devices and technologies and the use of renewable energy and materials, including 
biodegradable material);  (b) responding to stringent environmental requirements in export markets (in particular as regards the management of hazard ous metals and chemicals and related traceability 
requirements);  and (c) addressing escalating urban pollution, such as air- and water-borne pollution. 
66. Anticipating the entry into force of the Kyoto Protocol in 2003, some sectors in the 
environmental industry have increasingly identif ied significant potential for climate change 
technologies – that is, technologies that help reduce greenhouse gas emissions.  It is expected that the 
potential expansion path for climate change technol ogies will initially occur in developed economies.  
However, the Kyoto Protocol foresees mechanisms by which developing countries should be assisted, primarily through technology transfer and diffusi on as well as through the Clean Development 
Mechanism. 
67. Trade liberalization has to cover a broader range of renewable energy goods than current lists 
indicate, and this should also include devices,  products, systems and services related to the 
production, use and maintenance of renewable energy equipment 
68. Experts had divergent views on how to address cleaner production technologies in the context 
of the EGS negotiations.  Some referred to the difficulties in defining cleaner technologies and 
classifying them in the HS.  "Clean" is a concept of  "relative" environmental performance, subject to 
change in the course of time.  Also, many cleaner production technologies are sector-specific. 
69. In many cases there appears to be the possib ility of classifying entire technology systems 
under a single tariff heading.  However, more work is needed in order to find the appropriate tariff 
headings or to create new ones.  In this regard, a proposal was made for a WTO expert 
committee/group to review classification issues, product coverage and non-tariff barriers.   
70. According to some experts, the difference betw een end-of-pipe and clean technologies should 
not be exaggerated.  For instance, filters, often mentioned as a prime example of end-of-pipe technologies, are also used in clean processes.  The problem of "relative" environmental performance 
could be overcome by (a) setting up a proper review  mechanism for the list of environmental goods, 
and (b) including entire plants or technologies in the list.  Plants and systems are devoid of multiple-
use and “relativism in time” problems.  They are specifically designed and made for environmental 
purposes − for example, a recycling plant remains a re cycling plant even if the technology of 
recycling changes substantially.  Examples of entir e plants that could be covered are numerous:   
recycling plants, plants for waste management, sulphuric acid recovery plants, and plants for TN/TE/INF/6 
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 co-generation of heat and power.  The same approa ch could apply to entire technology systems, for 
example oil recovery systems. 
71. A technology-based approach to the liberalization of trade in EGS could be considered.  Such 
an approach would encompass (a) traditional environmental technologies, (b) integrated 
environmental technologies, (c) energy-saving devices and technologies, and (d) technologies based 
on renewable energy sources. 
72. Many environmental problems, particularly in developing countries, do not require state-of-
the-art and proprietary technology;   rather, they could be addressed through developing management 
skills, combined with appropriate technology.  Second - and third-best solutions are often not only an 
efficient but also an effective way of overcoming environmental and resource management problems.  
In this regard, endogenous technology solutions are sometimes seen as providing a better match with 
local environmental problems and th erefore merit more attention. 
VI. SYSTEMIC ISSUES 
73. The GATS is an agreement that is still very much in the making.  There are open questions, 
particularly in the area of rules.  For example,  a case has to be made, from a technical point of view, 
for emergency safeguards.  For the moment the WTO Members are negotiating under the mandate of 
Article X, but the issues of desirability an d feasibility have not yet been resolved.   
74. As regards subsidies, not only have the WTO Members not been able to develop disciplines, 
but also there is no transparency.  The exchange of information called for in Article XV has not 
produced the expected results.  Only four Memb ers have responded to the questionnaire that was 
distributed.  Several experts said that Members negotiate without knowing what subsidies exist and 
are naturally concerned a bout opening their markets because they will be absorbing distortions 
originating in domestic or export subsidies provided by other Members.  Discussions on government procurement are still ongoing, and some work has been done on domestic regulations, but more 
progress is required.  Furthermore, the importance of work on classification issues has been 
highlighted by the different proposals submitted during the current negotiations. 
75. A number of regional integration agreements are being drafted, with a high level of ambition 
and incorporating a negative-list approach to the liberalization of trade in services.  Various models 
are being constructed, sometimes incorporating agreements on mutu al recognition, for example in 
professional services, and chapters on investment, which are also based on a negative list.   
76. It is important to realize, however, that these regional agreements are essentially "stand-still" 
exercises.  In other words, Governments do not make  changes to their domestic regulations because of 
the negotiations, with the exception of countries that  have to change their regulatory regimes because 
of the negotiations on accession to the WTO, as a "price of entry". 
77. Environment is a horizontal issue par excellence .  Public services and private activities cut 
through the various areas of environmental activities, wh ich are partly public and partly private.  And 
like any other area where there is public interest to tackle, the environmental area cuts across almost 
every field of  WTO law, thus raising questions about the structure of the negotiations. 
78. One international expert suggeste d that an alternative way to ap proach the negotiations is to 
reduce the matter in its vast complexity and redefi ne the subject of the negotiations in terms of 
problem areas.  Such an approach would obviate the need to define EGS in a more theoretical manner.  
For example, if sanitation were to become such an area, the negotiations would have to consider 
goods and services relevant to this area.  Othe r possible areas are air pollution and the loss of  TN/TE/INF/6 
 Page 13 
 
 
 biodiversity, or any other area where developing coun tries may have a strong interest.  A "negotiating 
package" might include two or three such areas. 
79. Once a particular sector or sectors are chosen, a number of issues would have to be dealt with.  
First, reduction or elimination of tariffs on releva nt goods would have to be considered, as was the 
case during the Uruguay Round with pharmaceutical , medical and chemical equipment.  If (some) 
Members were found to operate apply excessive standards, there would have to be negotiations on 
standards.  With respect to IPRs,  Articles 66:2 a nd 67 of the Agreement on Trade-Related Aspects of 
Intellectual Property Rights (TRIPS) could be  implemented, with developed WTO Members 
providing incentives  for transfer of technology.  Pr omoting transfer of technology, in practical terms, 
might raise the question of whether there should be  a subsidy programme, which would then lead to 
negotiations under the Agreement on Subsidies and Countervailing Measures.  For instance, countries 
may support, specifically for the sector chosen, th e reintroduction of non-actionable subsidies, which 
is currently being discussed, including exemptio n for environmental services.  Balancing public 
services with private input would require looking into issues relating to government procurement and 
trade-related investment measures (TRIMs).  Such an approach may eventually lead to an agreement specific to this sector, or it may stay at the level of coordination between different negotiating bodies and agendas.  The CTE special session would have a unique role to play in terms of communicating 
these various agendas to other negotiating bodies. 
80. Liberalization efforts in the WTO should be c onsidered in connection with possibilities of 
financing such efforts.  Besides, there are constr aints on the supply side, to which the WTO is ill 
equipped to respond.  No institutional linkages have  been established between the negotiations and all 
the different forums that deal with development fi nance and assistance.  Rather than working along 
the lines of the past, there is a need to find new modalities, and to channel the problems institutionally 
to ensure that liberalization efforts in the WTO ar e commercially, financially and technically viable. 
81. Several experts highlighted the importance of MEAs for fostering EGS markets.  MEAs can 
harmonize EGS markets and related policies.  They ca n contribute to better policy coherence, at both 
national and international levels, and through packages of supportive measures can facilitate access to, and transfer and effective use of, ESTs.  The Montreal Protocol was referred to as one of the most 
successful accords in this regard. 
82. Any progress on EGS will depend on progress on other negotiating agendas.  Meetings such 
as this Expert Meeting may help bring to the surf ace the needs of various countries, better define 
public policies and negotiating objectives, and help the negotiations along.   
VII. STRENGTHENING CAPACITIES IN DEVELOPING COUNTRIES 
83. Many experts emphasized the need for capa city building and expressed appreciation for 
UNCTAD’s efforts to assist developing countries in issues related to EGS, including through the 
promotion of policy dialogues (involving trade negotiators, policy makers in environment, trade and other ministries, regulatory authorities and other stak eholders) and studies.  Several experts presented 
their national experiences on the basis of activities carried out under the project  “Building Capacity 
for Improved Policy Making and Negotiations on  Key Trade and Environment Issues”, including 
country studies, a regional meeting held in Cuba (M arch 2003) and national workshops in Nicaragua 
(June 2003) and Panama (June 2003).  Similarly, the results of a seminar on liberalization in EGS held 
in India (May 2003) under the project  “Strategie s and Preparedness for Trade and Globalization in 
India”  (including a range of papers) were made available to the Expert Meeting.  Both projects are 
funded by the United Kingdom’s Department for International Development. 
84. The UNCTAD secretariat has also addressed issues relating to EGS in a regional workshop 
(under the UNEP −UNCTAD Capacity Building Task Fo rce on Trade, Environment and TN/TE/INF/6 
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 Development, CBTF) in Singapore (May 2002) and at  WTO regional seminars in Latvia (September 
2002) and Bolivia (February 2003). 
VIII.  RECOMMENDATIONS  
85. Discussions among experts led to a number of recommendations, set out below, to be pursued 
at appropriate levels. 
National level 
 86. Several recommendations made at the Meeting re ferred to possible ac tions at the national 
level:   
• Development of a list of environmental goods that reflects a country’s sustainable 
development and trade interests; 
 
• Implementation of policies and measures that translate environmental, human health and 
resource management needs into demand for EGS; 
 
• Coordination among all relevant policy contexts to ensure an integrated approach to the 
development of the various EGS sectors and trade liberalization; 
 
• Promotion of policy dialogues involving trad e negotiators, policy makers, regulators, 
providers of environmental services and other stakeholders; 
 
• Sequencing of regulatory consolidation and liberalization. 
 
International community 
 
87. Several issues raised at the Expert Meetin g would require action by the international 
community:   
• There needs to be more work on developing co nsensus on the classification of environmental 
services. 
 
• Greater importance should be attached to deve loping practical approaches to compiling a list 
of environmental goods and related crit eria for the purpos es of negotiations. 
 
• It is important to choose the right forums for advancing the various segments of the EGS 
agenda. 
 
• Greater policy coherence is requ ired between provisions on EGS in bilateral and regional 
trade agreements and the multilateral trading system, as well as with policies of international 
financial institutions and development assistance bodies on EGS. 
 
• Greater coherence will also be required between the various areas of ongoing WTO 
negotiations and discussions, notably the areas of non-agricultural and agricultural products, 
services, technical barriers to trade, subsid ies and countervailing measures, TRIPS, TRIMs 
and government procurement. 
 
• There is a need to promote coherence with instruments of relevant MEAs. 
  TN/TE/INF/6 
 Page 15 
 
 
 • More in-depth discussion is required on the rela tionship between transfer of ESTs and trade 
liberalization of EGS. 
 
UNCTAD 
 
88. There are a number of ways in which UNCTAD could assist developing countries and 
countries in transition in the area of EGS.  It could: 
• Continue to provide assistance to developing countries in organizing national policy dialogues 
and undertaking analytical and empirical studies, including the development of 
methodologies, with a view to clarifying issu es related to the liberalization of trade in 
environmental services;   
 
• Assist, on request, developing countries in co mpiling lists of environmental goods that reflect 
their trade, environmental and developmental priorities; 
 
• Submit a report to the CTE special session on key issues of interest to developing countries in 
the context of paragraph 31 (iii) of the Doha Ministerial Declaration: 
 
• Contribute to the clarification of issues related to the transfer of  ESTs and trade in EGS; 
 
• Continue to assist interested developing co untries in issues related to EGS and/or the 
promotion of exports of EPPs through appropriate capacity-bu ilding activities such as the 
CBTF, the project “Building Capacity for Im proved Policy Making and Negotiations on Key 
Trade and Environment Issues” and the BIOTRADE Initiative. 
 TN/TE/INF/6 
Page 16  
 
 CHAPTER II:   ORGANIZATIONAL MATTERS 
 
 
A. C
ONVENING OF THE EXPERT MEETING  
89. The Expert Meeting on Definitions and Dimens ions of Environmental Goods and Services in 
Trade and Development was held at the Palais des Nations, Geneva, from 9 to 11 July 2003. 
 B. E
LECTION OF OFFICERS  
(Agenda item 1) 
 
90. At its opening meeting, the Expert Meeting elected the following officers to serve on its 
bureau: 
 
Chairperson:     Mr. Dacio Castillo (Honduras) 
Vice-Chairperson-cum-Rapporteur :  Mr. Richard Ballhorn (Canada)  
C. A
DOPTION OF THE AGENDA AND ORGANIZATION OF WORK  
(Agenda item 2) 
 
91. At the same meeting, the Expert Meeting adopted the provisional agenda circulated in 
document TD/B/COM.1/EM.21/1.  The agenda  for the Meeting was thus as follows: 
 
 1. Election of officers 
2. Adoption of the agenda and organization of work 
3. Definitions and dimensions of environmental goods and services in trade and 
development 
4. Adoption of the report of the Meeting  
D. D
OCUMENTATION  
92. For its consideration of the substantive agenda  item, the Expert Meeting had before it a note 
by the UNCTAD secretaria t entitled “Environmental goods and serv ices in trade and development” 
(TD/B/COM.1/EM.21/2). 
 
E. ADOPTION OF THE REPORT OF THE MEETING  
(Agenda item 4) 
 
93. At its closing meeting, the Expert Meeting authorized the Rapporteur to prepare the final 
report of the Meeting under the authority of the Chairperson. 
 
  TN/TE/INF/6 
 Page 17 
 
 
 ANNEX 
 
ATTENDANCE ∗ 
 
1. Experts from the following States me mbers of UNCTAD attended the Meeting: 
Angola Kenya 
Bangladesh Madagascar  
Barbados Malaysia 
Benin Mauritania Botswana Monaco Brazil Nepal 
Burkina Faso Netherlands 
Canada Nicaragua 
Chile Nigeria 
China Paraguay 
Colombia Philippines 
Costa Rica Republic of Korea 
Cuba Russian Federation 
Democratic Republic of the Congo Saudi Arabia 
Denmark Senegal 
Dominican Republic Serbia and Montenegro 
Ecuador South Africa Egypt Spain 
Ethiopia Sweden 
Finland Switzerland 
France Syrian Arab Republic 
Gabon Thailand 
Germany Trinidad and Tobago 
Guinea United States of America 
Honduras Venezuela India  Indonesia  
Iran (Islamic Republic of)  
 
2. The following observer country was represented at the Meeting: 
 The Holy See 
 
3. The following intergovernmental organizati ons were represented at the Meeting: 
 African, Caribbean and Pacific Group of States  
 European Commission 
 Organisation for Economic Co-operation and Development  South Centre  
2. The following specialized agencies and related or ganization were represented at the Meeting: 
 
 International Labour Organization 
 United Nations Industrial Development Organization  World Trade Organization  
                                                     
 
∗ For the list of participants, see TD/B/COM.1/EM.21/INF.1. TN/TE/INF/6 
Page 18  
 
 4. The following non-governmental organizations were represented at the Meeting: 
 General Category 
 
 Center for International Environmental law 
 International Centre for Trade and Sustainable Development 
  
5. The following special invitees attended the Meeting: 
 S.E. Mme Yolande Bike, Ambassadeur, Mission permanente du Gabon, Genève 
 Mr. David Boyz, PSIRU, Geneva, Switzerland 
 Ms. Chantal Line Carpentier, Head, Environment, Economy and Trade Program,  
 Commission for Environmental Cooperation, Montreal, Canada 
 Mr. Thomas Cottier, Director, World Trade Institute, Berne 
 Mr. Charles-Luis De Maud-Huy, Ve olia Environment, Paris, France 
 Ms. Michele Ferenz, GFTED Project Director, Consensus Building Institute Inc. 
 Cambridge, MA, United States  Mr. David Hall, Director PSIRU, London  Mr. Nicolae Heredea, Director, NHN Ecoinvest, Bucharest, Romania 
 Mme Valerie Pleinemaison, Veolia  Environment, Brussels, Belgium 
 M. Pascal Roger, Groupe Suez, Paris, France 
 Mr. Sunandan Roy Chowdhury, Research Director, Environmental Policy Unit, 
 Consumer Research Action & Info rmation Centre, Calcutta, India  
 Mme Laurence Tubiana, Directrice, Institut de développement durable et des relations  
 internationales, Paris, France 
 M. Pierre Victoria, Veolia Environment, Brussels, Belgium 
 
6. The following resource persons attended the Meeting: 
 M. Dominique Drouet, Directeur, Recherche Développement International, Paris, France 
 Mr. Grant Ferrier, President, Environmen tal Business International Inc., Editor,  
 Environmental Business Journal , San Diego, California, United States of America 
  Mr. Felipe Hees, Ministry of Foreign Affairs, Brasilia, Brazil 
  M. Markus Krajewski, School of Law, King's College, London, United Kingdom 
  Sr. Enrique Lendo, Mexico D.F., Mexico 
 Mr. Swarnim Wagle, UNDP Asia Trade Initiative, Ho Chi Minh City, Viet Nam  
 
__________