WORLD TRADE  
ORGANIZATION  TN/TE/W/51 
3 June 2005 
 
 (05-2279) 
Committee on Trade and Environment 
Special Session Original:   English 
 
 
 
AN ALTERNATIVE APPROACH FOR NEGOTIATIONS UNDER PARAGRAPH 31(III) 
 
Submission by India  
 
 
 The following communication, dated 2 June 2005, is being circulated at the request of the 
Delegation of India . 
 
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I. BACKGROUND  
1. The Doha Ministerial Declaration (DMD) mandates Member countries to negotiate on the 
reduction or, as appropriate, elimination of tariff and non-tariff barriers to environmental goods and 
services with a view to enhancing the mutual  supportiveness of trade and environment .  The intent 
inherent in this is to bring ec onomic benefits (promote dynamic efficiency in production and greater 
access to consumption goods at lower prices), deve lopmental benefits (addressing basic human needs 
in terms of the Millennium Development Goals) a nd environmental benefits (promote sustainable 
modes of production and consumption), and achie ve gains from trade with improvement in 
environmental quality so that it leads to "win-win" situations. 
2. Following the Ministerial Mandate, identification of  environmental goods has been at the core 
of the negotiation process so far.  A number of Member countries and groups have made their 
submissions.  New Zealand has called for a pragma tic approach to the negotiations in which the 
Members could "define (environmental goods) by doing" .  It suggested that certain reference points 
would guide the identification of environmental products.1  It also expressed a preference for adoption 
of a "single consensus list" of environmental goods bu t stated that a dual-list approach could also be 
considered in the event that ag reement on one list could not be obtained.  New Zealand also 
introduced the concept of a "living list" which would allow an agreed list to be updated for 
technological progress.  The EC also urged a "pra gmatic" and "innovative" approach.  The EC’s 
suggestion is to develop guiding principles for iden tification of environmental goods, so as to include 
goods used in pollution control and resource manage ment and goods that have a high environmental 
performance or low environmental impact.2  It suggested that negotiations should define categories 
general enough to cover all relate d technology for given purposes.  The South Korean submission has 
presented an initial list of environmental goods which has been created on the basis of criteria viewed 
by South Korea as "practical" and which coul d be "broadly accepted and applied by WTO 
Members".3  Some countries have also argued that the environmental goods can include goods 
produced in an environmentally friendly manner.  The United States (US) attempted to address the 
environmental goods negotiations in a "creative" and "flexible" manner.  It proposed the use of two 
                                                      
1New Zealand's submission TN/TE/W/46 on 10 February 2005. 
2EC's submission TN/TE/W/47 on 17 February 2005. 
3Korea's submission TN/TE/W/48 in the CTESS on 18 February 2005. TN/TE/W/51 
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 lists - Core and Complementary.  The Core List would deal with two categories:  Environmental 
Remediation and Pollution Prevention and Clean Technologies.
4  This list, as suggested by the US, 
would be arrived at by consensus and definite  concessions would have to be committed.  The 
Complementary List would contain products on which consensus could not be arrived at. 
II. PROBLEMS WITH THE "LIST APPROACH"  
3. The discussions in the CTESS over the last three years have been on potential criteria, 
definitions and classification of environmental goods;  but the ambiguity continues.  Suggested definitions have varied between "limited primar ily to pollution prevention activities" to "extend 
beyond simply end-use criteria".  Though there h as been constructive engagement on the subject, 
there is need to move forward.  The Chairper son of the CTESS has also reported to the Trade 
Negotiations Committee that Paragraph 31(iii) of  the DMD would emerge as the most likely 
candidate for tangible progress for the Hong Kong Ministerial Conference.
5  But proposals for the 
composition of the final list show wide divergence of opinion.  This is a cause for concern.  In fact 
there is a growing feeling that the direction of ne gotiations so far have focused on goods which are 
likely to give highly industrialized countries a comparative advantage. 
4. Many of the items suggested for inclusion in  the Lists have dual use.  Though these items 
may be utilized for an environmental purpose, othe r industrial applications of such goods are also 
significant.  Examples include electricity meters, liq uid flow meters, heat ex changers, conveyers and 
centrifugal drums.  The list of environmental goods contains equipments, which cannot even be 
considered to be predominantly  used for environmental purposes, for example suggestions for 
inclusion of consumer appliances, such as microwav e ovens, energy efficient refrigerators, etc.  If 
preferential tariff treatment, including zero tariffs, is to be given to dua l use and consumer goods, 
there would be significant ramifications for industrial sectors, particularly in developing and least-developed countries where industry is largel y dominated by small and medium enterprises 
(SMEs). 
5. Further, most SMEs lack in resources to inv est in research.  As most environment-related 
technologies of the developed world are under intell ectual property protection, technology transfers 
either do not take place or come with export r estrictions and other conditionalities.  Also, these 
technologies have been developed keeping in vi ew the factor endowments and environmental 
standards of developed countries, and so are not  always appropriate to developing countries. 
6. Some developing countries have been promoti ng growth of indigenous pollution prevention 
and pollution control enterprises so as to provide low-cost solutions to environmental problems based 
on standards appropriate to the countries, also taking into account the carrying capacities of the 
receiving environment and affordability of the SMEs .  Development of these enterprises is vital for 
finding location-specific solutions consistent with the stage of development and also for capacity 
building.  The likely impact of unrestricted c oncessional duty import of environmental goods and 
services (EGS) would be highly adverse to the development of these enterprises. 
7. Further, merely permitting the flow of a number of goods into a country does not seem to 
achieve any particular environmental objective.  It is  too diffused an approach.  If environmental ends 
are to be successfully met, then the a pproach would have to be more focused. 
                                                     
 
4US' submissions TN/MA/W/18/Add.5 and TN/TE/W/38. 
5Report by the Chairperson of the CTESS to the Trade Negotiations Committee, TN/TE/11, 
dated 14 March 2005.  TN/TE/W/51 
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 8. Rather than addressing the environmental c oncerns of developing and least-developed 
countries, the "List Approach" would expose them to  the adverse effects of increased market access 
and competition without any compensatory bene fits, as the duty concessions are open-ended and 
permanent. 
9. Even if the goods included in the list are not dual-use ones, SMEs, which produce a large part 
of the environmental goods in most of the develo ping countries, could lose their markets, and be 
rendered unviable.  The long term effects of su ch an eventuality not just on the economies of 
developing countries, but also on the sustainabil ity of their indigenous pollution control and 
environmental upgradation programmes would be adverse. 
10. One of the objectives of the WTO is conducting trade with a view to achieving sustainable 
development by allowing for the optimal use of th e world's resources;  and the key objective of the 
Doha Mandate is to ensure the development di mension of the WTO through the results of the 
Work Programme.  Ways and means to address qu estions relating to environmental imperatives, 
poverty alleviation, and creation of additional weal th in developing and least developed countries 
seem to be adversely impacted by the "List Approach". 
11. Also, the negotiations so far have primarily been on environmental goods, and the issue of 
environmental services has not been addressed in a significant manner.  The mandate includes environmental goods as well as environmental services.   It needs to be emphasized that there are 
many environmental activities that entail the deliv ery of services in conjunction with use of goods.  
The separation of services and goods in a particular environmental activity is difficult, as these are very often integrated.  The "List Approach" treats th ese in a mutually exclusive manner, which is not 
appropriate. 
III. "ENVIRONMENTAL PROJECT" APPROACH  
12. In view of the issues involved in the "List A pproach" for environmental goods, an alternative 
approach is proposed, i.e. the "Environmental Pr oject Approach".  This approach would address 
diversity in environmental standards with comm on but differentiated responsibilities and would bring 
in trade liberalization to meet the environm ental as well as development goals of both the 
Doha Development Agenda and Agenda 21.  Under this approach, a project, which meets certain 
criteria, shall be considered by a Designated Na tional Authority (DNA).  If approved, the goods and 
services included in the project would qualify for sp ecified concessions for the duration of the project. 
13. The projects would be decided by the DNA and could include those aimed at meeting national 
environmental objectives as well as objectives of  any bilateral or multilateral environmental 
agreement.  They would include, inter alia , equipment, parts and components, consumables, services, 
investment, financial aid and transfer of tec hnology.  The commitments that Members agree to 
undertake may include (a) reduction or elimination of  tariffs on import of all project related goods;  
(b) reduction, elimination or appropriate treatment  of standards, licensing restrictions, non-tariff 
barriers and other related issues;  (c) specific co mmitments required in all modes of service delivery. 
14. The broad criteria for "environmental projects"  could be agreed upon in the CTESS with due 
consideration to the policy space of national govern ments.  The projects may, among others, include: 
Air Pollution Control;  Water and Waste Managemen t;  Solid Waste Management;  Remediation and 
Clean-up;  Noise and Vibration Abatement;  Envi ronmental Monitoring and Analysis;  Process 
Optimization;  Energy Saving Management;  Re newable Energy Facilities;  and Environmentally 
Preferable Products. TN/TE/W/51 
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 IV. ADVANTAGES OF THE "PROJECT APPROACH" 
15. The "Project Approach" would address the ma ndated requirements in a cohesive, focused, 
directed and integrated manner.  The commitment of each Member government will be commensurate 
with clearly identified environmental benefits to be achieved, since the approach is based on a 
conscious national assessment of both developmenta l and environmental concerns specific to each 
Member country by the Member country itself w ithin the broad parameters agreed upon in the 
CTESS.  It is a need-based and objective-oriented approach. 
16. Since each project would be contemporary, it will address the changing needs of Members 
and there would be an incentive to employ the latest  technology and products.  This, in a way, will be 
a "living list", as suggested by one Member.  This  approach is dynamic as it would take into account 
the evolving nature of environmental technology an d equipment and reduce or eliminate tariffs on a 
contemporary list of goods and services;  the lis t would not be a static  one requiring periodic 
renegotiations for its expansion, as would be the case in the "List Approach".  The "Project Approach" 
meets the suggestion of another Member for a "p ragmatic and innovative approach", as it seeks to 
directly address the concerns for achieving the enviro nmental goals.  It is "practical", as suggested by 
yet another Member.  Also, since there is suffici ent policy space for the national governments to 
achieve the environmental objectives, the approach  provides ample "flexibility" to the national 
governments. 
17. Since the tariff concessions would be available fo r goods used in the project for a finite period 
of time (even if extended), the concerns expressed re garding dual use are mitigated.  This also has a 
significant bearing on the national revenue, particul arly from a developing country perspective.  
Although there will be revenue loss to the Member c ountry due to concessions offered, such loss will 
be out of a conscious decision, looking at th e environmental objectives of the country.  The 
concessions given for the goods and services for the pr oject would not result in any undue leakage of 
national revenues, because the revenue authorities c ould effectively address any diversion due to the 
specific "project" nature of such concessions. 
18. Under the "Project Approach", positive measures like capacity building, technology transfer 
and technical assistance would be strengthened as na tional authorities would factor them into their 
decision of designating environmental projects.  Since environmental projects could also be a part of infrastructural investment, they would not only result in benefits of capacity building, but also enhance market access opportunities. 
19. The "Project Approach" would neither immediat ely affect the market access schedules of 
Members nor would continuous negotiations and amendments be needed to accommodate newer 
environmental goods and services. 
20. There is a clear conceptual difference in the tariff reductions and elimination of non-tariff 
barriers desirable for the mutual supportiveness of tr ade and environment, and those to be achieved 
towards greater market access in general.  Th e "Project Approach" exemplifies the former. 
21. This is a concept paper and it is recognized th at various aspects of the "Project Approach" 
will need a greater level of clarity than presently o ffered.  We look forward to discussing the issues to 
further develop this concept. 
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