WORLD TRADE  
ORGANIZATION  TN/MA/W/18/Add.11 
5 December 2005 
 (05-5769) 
Negotiating Group on Market Access Original:   English 
  
 
MARKET ACCESS FOR NON-AGRICULTURAL PRODUCTS 
 
Negotiating NTBs Related to Re manufacturing and refurbishing
  
 
Communication from the United States 
 
Addendum  
 
 
 The following communication, dated 1 December 2005 is being circulated at the request of 
the Delegation of the United States. 
_______________ 
 
 The United States considers addressing non-tariff barr iers (NTBs) an integral part of the Doha 
mandate on non-agricultural market access, and equa lly as important as addressing tariff barriers.  The 
United States first  indicated its interest in nego tiating NTBs affecting rema nufactured and refurbished 
goods in its revised indicative list, tabled in N ovember 2004 (TN/MA/W46/Add.8/Rev.1).   In June 
and October 2005 at the World Trade Organization (WTO), the United States hosted informal discussions on remanufacturing that were attende d by many WTO Members and various industry 
representatives.  The United States now is pleased to contribute this proposal on a horizontal approach 
on NTBs affecting remanufactured goods, and looks fo rward to continuing discussions in the near 
future.   
I. INTRODUCTION  
1.1 Remanufacturing is the generic term that d escribes the process in which a recovered good, or 
core, is transformed through cleaning, testing, and other operations into a product that is tested and 
certified to meet technical and/or safety specificati ons and has a warranty similar to that of a new 
product.  Different industries sometimes apply othe r terms, such as refurbishing, reconditioning, or 
rebuilding, to describe essentially the same process
1. 
  
1.2 Remanufacturing is an industrial operation that uses existing products, recovered from 
commercial use, as inputs.  This presents opportun ities for material and energy savings in the 
production process.  Many parts of the rec overed goods are still perfectly functional and 
technologically current, requiring only worn or ou tdated components to be repaired, replaced or 
updated.  By utilizing existing pro ducts, or "cores", as raw material s, remanufacturing can also help 
reduce generation of solid waste.  
 
1.3 A broad range of industries and companies remanufacture products, including companies from the earthmoving, automotive parts, electroni cs, medical devices and information technology 
industries.  There are over $100 billion in annual global sales of remanufactured goods, and production facilities currently exist in Europe, Latin America, Asia, and Africa, in addition to the 
                                                     
 
1 For drafting purposes, this document refers to remanufacturing throughout the remainder of the paper, 
unless otherwise noted. 
 TN/MA/W/18/Add.11 
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United States.  Trade in these goods contributes significantly to the economies of both developed and developing country Members.  1.4 Unfortunately, some countries limit trade in remanufactured products.  Such barriers include 
outright import bans, higher tariffs and fees, or overly stringent regulation, certification, and 
inspection requirements. Many of these barriers likely occur because countries mistakenly associate 
remanufactured goods with used goods and waste.  Remanufactured products are generally of a high 
quality with a similar life expectancy as new goods.   Remanufacturers typically stand behind such 
products with a warranty that is similar to the warranty for new products.  Consequently, 
remanufactured merchandise should not be regarded as used goods or waste, but instead receive trade 
treatment similar to new products.  
 1.5 In raising this issue, the United States does not call into question countries’ fundamental right 
to regulate in product areas that include rema nufactured goods.  Some Members impose specific 
requirements on remanufacturers of certain goods, fo r example requiring that  a particular product 
undergo specified processing or certification in order to be sold as a remanufactured product.   WTO 
Members should remain free to en act legitimate, non-discriminatory laws, regulations, or voluntary, 
market-driven programs to protect human health, th e environment, and safety, or prevent deceptive or 
fraudulent practices.   1.6 Both developed and developing countries may enjoy real economic and environmental 
benefits from addressing NTBs related to remanufacturing.  As WTO Members examine this issue 
more closely, we believe they will agree that re manufactured goods are neither waste, nor are they 
hazardous, and can present significant benefits to society.  
II. REMANUFACTURED GOODS ARE NOT USED GOODS SOLD "AS IS" 
2.1 Remanufacturing is a legitimate commercial pr actice that recovers products or "cores" from 
commercial usage and transforms these cores into like-new products  to be reintroduced into the 
stream of commerce.  The level of transformation varies by industry and product, but the result is a product that is tested and certified to meet the orig inal or current technical and/or safety specifications 
and has  warranties similar to those of new products .  This is clearly different from a used, "as is" 
product that conveys no warranty or product perfo rmance or customer satisfaction guarantee.   
 
2.2 Remanufacturing turns a product at the end of its life or lease cycle, called a "core," into a like-new good.  To ensure the quality of a remanufactur ed engine for construction equipment or of an 
auto part, for example, the recovered core (old engine or component) is disassembled, cleaned, and 
inspected.  Worn parts are reconditioned or replaced be fore the core is reassembled.  Similarly, in the 
information technology and medical device industri es, the products to be refurbished are often 
equipment recovered from customers at the end of a lease period.  These items are completely inspected, functionally tested, and sometimes disassembl ed to subassembly level.  Defective parts are 
repaired or replaced.  Software may be updated. Remanufactured and refurbished products, either as 
entire units, components, or parts of assemblies, are generally sold with warranties, customer 
satisfaction guarantees and/or maintenance contracts similar to those of new products.   
 
2.3 In contrast, there are also commercial ma rkets for used products that do not necessarily 
undergo any significant processing before being sold and are generally marketed  "as is" without a 
warranty.  This initiative does not cover trade in such used products.  Remanufacturing retains the 
value inherent in the core and often adds furthe r value to it. Most importantly, the remanufactured 
good meets the same technical and functional specifi cations of the original or current product, 
ensuring compliance with essential quality a nd safety requirements. For these reasons, 
remanufactured goods should not be treated in the same way as second-hand or used products when it 
comes to conditions of market access.    TN/MA/W/18/Add.11 
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III. WHY ADDRESS REMANUFACTURING IN WTO NEGOTIATIONS? 
3.1 The United States believes both developi ng and developed countries will profit from 
liberalizing barriers to trade in these products b ecause of the economic and environmental benefits 
associated with them.  Remanufacturing prevents cores from entering the waste stream, avoiding the 
environmental impact of an inert core lying in a landfill.  Remanufacturing typically takes less energy 
than what is required to create a brand new product.   Because the process uses existing products as 
inputs, remanufacturing typically consumes fewer ra w materials, such as iron, copper, steel, or 
petroleum, than required in the  production of similar products from virgin materials.  In the end, the 
consumer often pays a lower price for a remanuf actured product, as opposed to a new product.  
Remanufacturing, whether by original equipment manufacturers (OEMs) or by independent 
remanufacturers, results in substantial benefits fo r both types of producers.  Producers of new goods 
can benefit by shifting resources to new, more va lue-added product lines, while remanufacturers meet 
after sales services demand on other product lines.  Traditional manufacturers can improve on existing 
products when remanufacturers identify design or en gineering flaws in the cores.  Remanufacturing 
may lessen the need to maintain large inventories of outdated replacement parts. When a product line 
is discontinued, remanufacturing can fill the void.  In many industries, remanufacturing is an essential 
part of the overall business model that enables pr ovision of a range of warranted products at 
competitive prices.     A. E
CONOMIC IMPACT OF REMANUFACTURING  
3.2 For consumers, remanufacturing represents an opportunity to purchase high quality goods at 
lower prices.  Since the raw material in remanufacturing is  an already existing core, a remanufacturer 
often has significantly lower input costs than the orig inal manufacturer and often is able to offer more 
competitive prices to consumers. Remanufactured products are typically priced at between 45 to 80 percent of the price of equivalent new products.  
 
3.3 Sectors engaging in remanufacturing cut across 43 distinct chapters in the Harmonized 
System code.   Despite their economic significance, rema nufacturing operations have escaped public 
notice, due to the fact that they exist in diver se sectors and product areas, and are comprised of a large 
number of mostly small firms. Growth rates in remanufacturing operations are between 20 to 30 percent per year, as more companies realize the economic potential and enter the market.    
3.4 Many aspects of remanufacturing operations  offer opportunities for employment growth.  
Remanufacturing is often  labour intensive due to the disassembly , reconditioning, and reassembly 
processes. Academics focusing on the subject assert th at, on the whole, remanufacturers employ more 
skilled employees per good produced than traditional ma nufacturing. Regions with large work forces 
and a consumer base able to generate sufficient suppl ies of cores (such as auto parts) are optimal areas 
for remanufacturing centres.  Remanufacturing requi res a broad range of employees from entry-level 
to more highly skilled workers.   3.5 To take the United States as an example, a pproximately 73,000 remanufacturing firms are in 
operation, most of which are small businesses, but wh ich also include major multinational firms.  For 
example, a major U.S. independent auto part s remanufacturer started out as (and remains) a 
family-owned business, but has grown into the larg est private sector employer in Philadelphia, a 
major U.S. city, and is now expanding productio n into overseas markets.  U.S. remanufacturing 
operations directly employ an estimated 480,000 pe ople. The automotive parts sector accounts for the 
largest part of this figure. To compare, this is  on par with employment by U.S. manufacturers of 
household consumer durables, and twice as large as the employment in the U.S. steel or the U.S. 
pharmaceutical industries.  The total direct employment estimate does not include employees in other 
firms contributing to remanufacturing: suppliers of co res, replacement parts, operating supplies, tools, 
and machinery; the distributors and retailers of the products; and the people who install and service TN/MA/W/18/Add.11 
Page 4  
 
these products. It is estimated that employment in su ch related areas is two to three times the direct 
employment in remanufacturing.  B. E
NVIRONMENTAL BENEFITS  
3.6 While impacts may vary by industry and by product, remanufacturing can produce important 
environmental benefits through energy and material  savings, and the minimization of solid waste. A 
typical remanufacturer uses 85 to 95 percent less energy and materials per product than a new equipment manufacturer. Remanufacturing can avoid environmental problems before they occur by 
reducing potentially harmful waste.  Extending the lives of cores and removing them from the waste 
stream allows manufacturers to allocate resour ces toward the developm ent of advanced, new 
products.  Consumers and businesses can choose be tween purchasing a normally less expensive, 
remanufactured product on the one hand, or a simila r, typically more expensive product manufactured 
from virgin materials on the other.  The remanufac tured product may be technologically identical to 
the competing product made from virgin materials (e.g., a water pump whose design has not fundamentally changed).  Alternatively, the re manufactured product may fill a market niche for 
high-quality, fully functional and more affordable  product applications.  For example, a current 
generation office machine may serve a segment of th e market, even as market trends may be driving 
more technologically advanced office machines, pe rhaps designed to save energy or achieve other 
environmental benefits in their operation.  The two processes - remanufacturing and new product 
development - can complement each other and lead to less impact on the environment on the whole.  Energy savings in the former case arise during th e production stage, whereas energy savings in the 
latter may arise during the operation of the product. 
 
1. Remanufacturing consumes less energy th an traditional manufacturing during 
production.   
3.7 The energy needed to manufacture one new autom obile starter is eleven times greater than that 
needed to remanufacture an old starter.  For a ne w alternator, the amount is seven times greater than 
that for its remanufactured counterpart.  In percenta ge terms, a remanufactured starter is produced at 
9 percent of the energy it takes to manufacture a new starter, while for alternators it is 14 percent.  
Similarly, according to a major U.S. earthmoving equipment company, if it took 100 units of energy on average to produce a new component of an earth moving machine made of virgin materials, only 
15 units of energy would be needed to create a remanufactured component of identical quality. 
 
3.8 On a global scale, the estimated amount of energy saved during production processes through remanufacturing is impressive, at 120 trillion BTUs  (British Thermal Units) a year.  This equals: 
 • 16 million barrels of crude  oil or 350 oil tankers; 
• the lifetime fuel consumption of 75,000 car owners; or  
• the electricity generated annually by ei ght average sized nuclear power plants. 
 
2. Remanufacturing consumes fewer materials during production.  
3.9 A new automobile starter is produced using ni ne times the amount of raw materials by weight 
compared to those necessary to produce   a remanufactured starter.  A new alternator requires eight 
times the material needed to produce a remanufactur ed alternator.  Remanufacturing across industries 
(earthmoving, auto parts, medical device, electroni cs, IT, etc.) saves a million tons of raw materials 
per year, which is equivalent to a railway tr ain with 230,000 cars, occupying a 2650 kilometres 
(1650 mile) long track.    TN/MA/W/18/Add.11 
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3. Remanufacturing has potential for growth. 
3.10 Experts assess that there is considerable sc ope for growth in remanufacturing. In the United 
States,  the value of shipments of manufacturers of new products in areas in which remanufacturers operated was 26 times greater in 2003 than the value of shipments of remanufactured goods. More 
remanufacturing would logically lead to other be nefits. For example, the Original Equipment 
Manufacturer Product-Services Institute (OPI) estimat es that if capital goods OEMs and automakers 
delivered 20 and 10 percent of their product output, r espectively, in a remanufactured rather than new 
condition, remanufacturing activity in the United St ates would increase by 200 percent. That would 
equate to an estimated 5 to 10 percent drop in waste production and energy consumption throughout 
the entire U.S. manufacturing supply chain. 
 
4. Remanufacturing produces less pollution in  production and reduces waste over the 
product life-cycle.  
3.11 Remanufacturing typically consumes less ener gy than traditional manufacturing, and also 
produces less pollution in production.  Remanufacturi ng avoids the emission of 28 million tons of 
carbon dioxide every year.  Remanufacturing aims to add several life-cycles to a product beyond its 
first life, and as it obtains greater market share and expands into new sectors and product areas, fewer 
end-of-life products enter the waste stream at the en d of their first life-cycle.  Those that do can be 
recovered, remanufactured and can continue prov iding value to consumers across the globe.   
 3.12 In addition to conservation and efficient u se of energy, water and other natural resources, 
remanufacturing also contributes to minimization of solid waste. By allowing the longer  productive 
use of materials that might otherwise become waste, remanufacturing reduces the volume of material entering the waste stream and landfills.  Remanufact uring helps manage wastes by creating economic 
demand for portions of an end-of-life or redundant  manufactured product that can be remanufactured 
in an environmentally sound manner.  The impact is  significant.  For example, a leading construction 
equipment manufacturing firm recovers two million core parts per year in its remanufacturing 
operations, representing 100 million pounds (45 milli on kilograms) of materials saved from scrap 
heaps and landfills globally. 
 
 
C. THE  3RS  AND  INDUSTRY  INVOLVEMENT 
3.13 At their annual summit meeting held in June  2004 on Sea Island, Georgia, the leaders of the 
Group of Eight (G8) industrial countries (the United States, Germany, France, Japan, Italy, Canada, 
United Kingdom, and Russia) committed to launching in 2005 a plan that will encourage the more 
efficient use of resources and materials.  The "Re duce, Reuse, and Recycle Initiative" (3Rs Initiative) 
was formally launched at a Ministerial Conference in April 2005 in Tokyo, which considered the 
recommendations of an industry conference held th e day before.  The Initia tive intends to reduce 
waste, encourage recycling, reduce barriers to trade in goods and materials for recycled and 
remanufactured products, and to promote science and t echnology for these efforts.  The Initiative is 
expected to have a positive environmental and ec onomic impact, resulting in savings of natural 
resources and energy and in lower costs to cons umers.  The trade objective of the 3Rs Initiative 
includes the intention of jointly agreeing on a plan  under the Doha Developmen t Agenda to eliminate 
non-tariff barriers to trade in remanufactured products and cores.   3.14 Separately from the 3Rs Initiative, rema nufacturing firms have already shown a strong 
interest in having their barriers to trade reduced or  eliminated as part of the Doha Round.  On the 
margins of the NAMA meeting in June 2005, representatives from the earthmoving, medical 
equipment and automotive parts s ectors held an informal disc ussion to raise awareness among 
government officials of remanufacturing and of the associated trade barriers.  Nineteen WTO Member governments and accession countries, including twelve deve loping countries, attended this discussion.    
 TN/MA/W/18/Add.11 
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3.15 Additional sessions were held during the October NAMA meetings involving government 
officials from 26 WTO Members and acceding c ountries, along with industry representatives. 
 D. B
ENEFITS TO DEVELOPING COUNTRIES  
3.16 Liberalization of trade in remanufactured products can offer many additional benefits to 
developing countries that may not be readily appare nt.  Such benefits include opportunities to use 
capital goods that incorporate advanced technology at  reduced prices and the potential for local firms 
to engage in remanufacturing.    3.17 The elimination of barriers to trade in remanufactured goods can expand customer choice and 
increase access to products at lower costs.  Pu rchasing like-new, remanufactured goods at reduced 
prices allows end-users to accomplish the same objective and reallocate resources more productively 
with the savings.  Examples of remanufactured goods in the healthcare sector that may provide 
significant benefits for society in developing co untries include X-ray machines, ultrasound devices, 
and MRI scanners.   
 
3.18 Greater trade in remanufactured products can  also create opportunities for investment.  One 
major auto parts remanufacturer describes its business model as first creating a market for remanufactured products through export. Once a mark et has been established, the company looks to 
invest locally, in order to be closer to its pr oduction inputs – the recovere d cores.  Establishing a 
domestic remanufacturing industry would pave th e way for technology and knowledge transfer, 
increased employment, and export opportuniti es.  Remanufacturing through disassembly and 
reassembly helps employees acquire a high level of  knowledge about specific products and production 
skills.  In turn, employees can then apply that knowledge and those skills in other areas of the 
economy, as well as advance into higher skilled positi ons.  For example, in the case of a major U.S. 
auto parts remanufacturer, thirty years of remanufacturing experience allowed it to establish a new 
specialty auto parts manufacturing unit alongside its core remanufacturing business. Remanufacturing 
in this regard has a multiplying effect that could attract foreign direct investment to remanufacturing 
centres.   Operations supporting remanufacturing, such as  servicing and transportation, may develop 
over time as remanufacturing operations are established and grow . 
 
IV. WHAT SOLUTIONS ARE WE SEEKING?   
4.1 The United States seeks non-discriminatory treatment and open market access as between  
remanufactured goods and cores on the one hand, and new goods on the other.  We believe the best 
way to pursue this is through a horizontal approach , given the diversity of remanufacturing operations 
and the spread of product areas across tariff codes.   This would not limit the ability of countries to 
maintain appropriate regulatory oversight to protect human health and the environment. 
 
__________