WORLD TRADE  
ORGANIZATION  TN/TE/W/54 
4 July 2005 
 (05-2902) 
Committee on Trade and Environment 
Special Session Original:   English 
 
 
 
STRUCTURAL DIMENSIONS OF THE EN VIRONMENTAL PROJECT APPROACH 
 
Submission by India  
 
Paragraph 31 (iii)  
   The following communication, dated 4 July 2005,  is being circulated at the request of the 
Delegation of India
. 
 
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I. BACKGROUND  
1. This submission is a follow up to our earlier submission1 in which we had discussed an 
alternative approach for Paragraph 31(iii) negotiatio ns of the Doha Ministerial Declaration (DMD).  
This submission deals with four principal aspects of the “Environmental Project Approach” (EPA) – 
1) the EPA and environment and sustainable deve lopment, 2) the EPA and multi-lateral trading 
system, 3) the EPA and transfer of technology, and 4) the functioning of the Designated National 
Authority (DNA) under EPA.  All of these clarify the feasibility and the potential for the operational 
success of this approach.  
II. THE EPA AND ENVIRONMENT AND SUSTAINABLE DEVELOPMENT 
2. It is significant that the original task of the CTE is to address trade and environment for 
sustainable development, and to make recomme ndations on whether any modification in the 
provisions of the multilateral trading system is required.  It must also look at the environmental benefits of removing trade re strictions and distortions.  The mandate of Paragraph 31(iii) is 
essentially environmental-benefit oriented, and market  access is a means to that objective;  not 
the objective itself.  
3. Paragraph 31(iii) mandates the elimination of  tariff and non-tariff barriers to trade in 
environmental goods and services.  The World Su mmit on Sustainable Development supports the 
“voluntary WTO compatible market-based initiatives for the creation and expansion of domestic and 
international markets for environmentally frien dly goods and services, including organic products, 
which maximise environmental and developmental be nefits through inter alia, capacity building and 
technical assistance to developing countries”.  Both the DMD and the Johannesburg Plan of 
Implementation (JPOI) of the World Summit on Sustainable Development seek to promote sustainable development through trade, and in that sense there is an essential convergence of 
objectives;  their approaches are, however, different .  While the DMD focuses on removal of market 
access barriers, the JPOI largely focuses on the creation of market-based initiatives for 
                                                     
 
1 TN/TE/W/51. TN/TE/W/54 
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 environmentally friendly goods and services through cap acity building and technical assistance to the 
developing countries.
2  These two mandates are not exclusive of  each other.  Not only do they share 
the same objective but the implementation of each, to a certain extent, is contingent upon the other.  For instance, tariff/non-tariff barriers could redu ce the effectiveness of market-based initiatives in 
expanding the market for environmental goods and serv ices, resulting in a failure of Paragraph 31(iii) 
negotiations to produce credible results, if they are not supported by policies “ aimed at creating 
additional demand and increasing the capacities of developing countries supply capacities ”.
3  There 
is, therefore, an urgent need to synergise the JPOI mandate with that of the DMD in order to 
effectively achieve the goal of sustainable development.  In this sense the EPA substantially 
deepens and enriches the mandate of DMD to not only include market access but also to provide 
scope for developing countries to develop ca pacities and achieve national priorities.  
III THE EPA AND THE MULTI LATERAL TRADING SYSTEM 
4. The multilateral trading system under the WTO is  based on the principles of transparency, 
predictability and non-discrimination.  It is a rul es-based organisation that is supported by a strong 
dispute settlement mechanism.  The EPA also en visages a transparent and rules-based mode of 
functioning that is aligned with that of the functioning of the WTO.  There are several reasons 
supportive of this contention.  
5. First, it is the CTESS that would formulate the criteria to be applied by the Designated 
National Authority (DNA) in determining if an E nvironmental Project qualifies for tariff concessions 
on environmental goods and services.  The DNA’s role would be that of examining applications in 
light of those criteria and other declared special and differential criteria such as transfer of technology, 
environmental goals mandated by the MEAs that th e Member is a party to, and other environmental 
concerns that may be unique to a particular country.  It is thus akin to the approach put forward by a 
Member country which calls for developing broa d guiding principles as criteria for inclusion of 
environmental goods (and in this case, also services).  
6. Second, the commitments to be made by Members on tariff reductions on goods or 
concessions in services to be given for approved en vironment projects would be negotiated with due 
regard to the principles of special and differen tial treatment, and less than full reciprocity. 
7. Third, the fact that the criteria for project s are being discussed and determined based on 
environmental and sustainable development concer ns, independently of NAMA considerations, is 
itself a guarantee that the EPA has transparency an d predictability.  An exporter would have the 
assurance that if the goods or services are part of a project that falls under the agreed criteria, his/her 
application would be given due regard.  This t oo would ensure predictability and transparency. 
8. Fourth, the concessions granted in terms of project specific tariff reductions in environmental 
goods and services would subsist for the time period of the project.  The concessions granted are, 
therefore, entirely project driven.  On the issu e of dual use, it cannot be assumed that the assets 
created during the life of the project would cease to have relevance after the project ends.  In all 
probability, these would continue to be used.  Ev en in cases where the goods cease to have relevance 
once the project is complete, it is more than likely that the bulk of the productive life has been utilised 
for furthering the environmental objective.  Thus dual use, if any, would be secondary and minor.  
                                                      
2 Concept Note on “Environmentally preferable goods and services:  Opportunities and 
Challenges for Caribbean countries” UNEP-UNCT AD Capacity Building Task Force on Trade 
Environment and Development;  November 2003. 
3 Supra note 3   TN/TE/W/54 
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 9. Finally, the CTESS will play a crucial role in  determining the definitional boundaries of the 
word “project” in terms of the size and nature of the venture requiring the environmental goods and 
services as inputs in the production process.  Th e “project” could rang e from large commercial 
ventures to individual purchases.  The “project” need not be differentiated in terms of private, 
governmental, non-governmental or non-profit ventur es so long as it meets the criteria.  This would 
ensure transparency in the system.  In this context we would also like to mention that the EPA could 
be accommodated in Chapter 98 of the HS Code Book of the WCO4.  
IV THE EPA AND TRANSFER OF TECHNOLOGY 
10. The inclusion of the principle of special and di fferential treatment in the application of the 
criteria agreed by the CTESS in the developing co untries would further the objectives of sustainable 
development5, transfer of technology6, national environmental obliga tions mandated under the MEAs 
and promotion of country-specific national indigenous  environmental priorities would be considered.  
11. Agenda 21, while addressing transfer of technol ogy issues in the context of Environmentally 
Sound Technologies (ESTs), puts forward a holistic definition that rejects ESTs as individual technologies and instead interprets it to be total systems which include know-how procedures, goods 
and services, equipments, and organizational and mana gerial procedures.  It also states that ESTs 
should be compatible with nationa lly determined socio-economic, envi ronmental priorities, obligates 
developed countries to facilitate access and tran sfer of technologies.  Analogous to this is 
Paragraph 37 of the DMD that enjoins WTO Memb er countries to examine the relationship between 
“trade and transfer of technology, and of any po ssible recommendations on steps that might be taken 
within the mandate of the WTO to increase fl ows of technology to developing countries”. 
12. It has to be realised that th e framework for such transfer of  technology mechanism has to be 
co-operative, based on the principles of it being volunta ry and mutually beneficial.  The net benefit of 
co-operation via coalition would be more than the su m of stand alone costs of Members, due to cost-
complementarities.  The CTE provides an appr opriate forum for building such coalition and 
co-operation, and the EPA is an appropriate vehicle for this. 
13. The EPA provides an opportunity for the validation and operationalization of the various 
environmental and development mandates in harmon y and conjunction with each other and would 
provide synergy in the implementation.  By allowi ng policy space to individual Member countries so 
as to internalise environmental priorities in trad e policies, such transfer of ESTs would increase 
compliance with MEAs, enhance national capacity building in EGS and improve compliance with 
TBT and SPS requirements and thereby provide more market access.     
V FUNCTIONING OF THE DNA 
14. The DNA is to be the nodal authority and al so the national focal point for overseeing all 
approvals to be granted for tari ff reductions on environmental goods a nd services related to a specific 
project that is to be implemente d within the country.  Its primary role would be to function as an 
authority that would appraise the project propo sals for granting tariff concessions on goods and 
services.  It would issue a notification to the custom authorities in this regard.  
                                                     
 
4  World Customs Organization. 
5  Preface to the Agreement Establis hing The World Trade Organization. 
6  Paragraph 37, Trade and Transfer of Technology:  “possible recommendations on steps that 
might be taken within the mandate of the WTO to increase flows of technology to developing 
countries”. TN/TE/W/54 
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 15. The composition and structure of the DNA woul d be determined by individual Member 
countries.  The DNA could invite the participati on of stakeholders across the board from the 
government, non-governmental organisations, etc.  It could, therefore, be in the nature of a public-
private partnership.  
16. We could draw a useful analogy in this cont ext from the structure and functioning of the 
DNA that has been mandated under the Clean De velopment Mechanism (CDM) of the Kyoto 
Protocol.  The DNA under the Kyoto Protocol perform s a similar task of project clearance of CDM 
projects on the basis of certain given criteria.  It would be useful to draw insights from the experience of developing countries that have set up a DNA under the CDM.  Thus for several developing countries the past experience of the setting up of the DNA under the CDM would greatly contribute to 
their ease and expertise in setting up the DNA under the “e nvironmental project approach”.  In fact in 
many cases, if considered appropriate, the Members can  have one authority for both the purposes, or it 
can be different, based on how Members choose to operationalize it.  This approach facilitates the 
engagement of most developing countries in c ontributing proactively and achieving their national 
priorities in a common but differentiated manner.  
17. The DNA would streamline the entire process of  project approval for environmental goods 
and services by providing for a single window clearance.  This would also contribute in vastly improving trade facilitation by putting it into a f ast track and would thus support the “win-win” 
strategy of negotiations on e nvironmental goods and services. 
VI CONCLUSION 
18. The “environment project approach”, therefore,  essentially envisages a broader and deeper 
role for the national governments of the Member states in defining, selecting and finally approving 
environmental goods and services for tariff reduction and concessions.  It entails setting up of the 
DNA by each country at the national level.  
19. In this context one also needs to adequately  address the concern shown by Members about the 
progress of the negotiations and the forthcoming H ong Kong Ministerial meeting.  It needs to be 
mentioned that the “list approach” has so far produced  results that are below expectations of most of 
the developing countries, and has failed to garner ef fective participation from such countries.  This is 
not surprising, since many of the developing c ountries have clearly expressed their inability to 
contribute effectively to the debate and have a perception that the “list approach” only succeeds in 
expanding market access for developed country product s without concomitant benefits to developing 
countries, or even effectively addressing the propo sed environmental objectives of Paragraph 31(iii).  
20. The EPA is, therefore, India’s attempt to intr oduce new thinking and engage the attention and 
participation of all Member countries so as to make  the negotiations truly multilateral in functioning, 
and substantive in content.  The objective of the negotiation should not be reduced to a mere exercise 
of chasing deadlines.  It is crucial that the negotiations pro duce a result that is both substantive 
and holds benefits for all the Member countries.  The approach is also simple in its content and 
easy to implement.  
21. We would like to reiterate that the “Project Approach” cannot be complementary to the “List 
Approach”.  It is a stand-alone approach and we  would like to invite Member countries to think 
creatively, and deliberate on both the structural a nd substantive dimensions of the EPA.  We would 
wish to contribute to further engagement on the approach. 
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