Trade sustainability impact assessment on the environmental goods agreement : executive summary.
Date: 2016-08-11
Institutions: Directorate-General for Trade and Economic Security
Subjects: air quality, biodegradability, durable goods, energy efficiency, environmental economics, environmental monitoring, environmental policy, international agreement, international trade, management of resources, noise pollution, renewable energy, sustainable development, trade agreement, waste management, wastewater

Trade Sustainability Impact 
Assessment on the 
Environmental Goods 
Agreement 

Executive Summary 

Prepared by DEVELOPMENT Solutions 
[March – 2016] 

The views expressed in the report are those of the consultant,  
and do not present an official view of the European Commission. 

 
 
 
 
 
 
      
 
 
Environmental Goods Agreement Trade Sustainability Impact Assessment 
Executive Summary 

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EUROPEAN COMMISSION 
Directorate-General for Trade 
Directorate D — Sustainable Development; Economic Partnership Agreements, Africa-Caribbean and Pacific, 
Agri-food and fisheries 
Unit D1 — Trade and Sustainable development, Generalized System of Preferences 

Contact: Trade Green Goods Survey 

E-mail:  TRADE-GREEN-GOODS-SURVEY@ec.europa.eu

European Commission 
B-1049 Brussels

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This document has been prepared for the European Commission however it reflects the views only of the 
authors, and the Commission cannot be held responsible for any use which may be made of the information 
contained therein. 

More information on the European Union is available on the Internet (http://www.europa.eu). 

ISBN 978-92-79-59139-6 
doi: 10.2781/950590

© European Union, 2016 
Reproduction is authorised provided the source is acknowledged. 

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Environmental Goods Agreement Trade Sustainability Impact Assessment 
Executive Summary 

EXECUTIVE SUMMARY 

On 24 January 2014 at the World Economic Forum in Davos, the EU, together with 13 
other  WTO  members  pledged  to  launch  negotiations  to  liberalise  global  trade  in 
environmental goods (EGs). The negotiations are employing the Asia-Pacific Economic 
Cooperation  (APEC)  list  of  environmental  goods  as  a  starting  point  with  the  intent  of 
expanding it to liberalise a “broad range of additional products”.1 The relevance of the 
agreement  in  terms  of  the  size  and  scope  of  potential  multiple  positive  impacts  is 
significant: states currently engaging in the plurilateral negotiations (the G-17)2 account 
for approximately 90 per cent of global trade in the environmental goods sector. It is 
expected that the EGA could make an important contribution to a broader environmental 
trade agreement which will eventually enable more efficient climate change mitigation 
through technologies, increase energy access and secure lower cost and dissemination 
of environmental technologies through globalised supply chains.  

The  Directorate  General  for  Trade  (DG  Trade)  of  the  European  Commission  (EC)  has 
mandated  this  Trade  Sustainability  Impact  Assessment  (Trade  SIA)  on  the 
Environmental Goods Agreement (EGA) to be carried out by DEVELOPMENT Solutions 
Europe Limited (DS). The project consists of two complementary components of equal 
importance:  first,  an  assessment  of  how  the  elimination  of  tariffs  in  EGs  as  well  as 
potential liberalisation of related services under the proposed agreement will impact a 
range of environmental, economic and social factors, conducted through desk research, 
and  qualitative  and  quantitative  analysis.  Second,  a  thorough  consultation  process, 
involving  a  diverse  range  of  relevant  stakeholders,  aimed  to  generate  genuine  and 
reflective feedback and provide further opportunities for information  gathering on the 
potential impacts of the agreement.  

It  is  recognised  in  the  Marrakesh  Agreement  which  established  the  WTO,  that 
international trade must play a key role in the facilitation of sustainable development 
worldwide. The WTOs negotiating mandate to enact ‘the reduction or, as appropriate, 
elimination of tariff and non-tariff barriers to environmental goods and services’ was laid 
down in paragraph 31 of the Doha Development Agenda (DDA). While negotiations have 
been ongoing in the WTO Committee on Trade and Environment Special Session (CTE-
SS) as well as in the non-agricultural market access (NAMA) negotiations, key obstacles 
have  prevented  significant  progress  at  the  multilateral  level.  These  are  identified  in 
Section 2.1 of this report.  

The  EGA  is  a  plurilateral  initiative  within  the  WTO,  however  it  will  be  applied  by 
negotiating parties on a most favoured nation (MFN) basis to all WTO members, once 
critical mass is achieved – in other words WTO members who are not EGA members will 
be able to benefit from the tariff reductions applied by EGA members. Building on the 
voluntary commitment of the APEC economies to reduce their applied tariffs to 5 per 
cent  or  less  by  the  end  of  2015,  the  G-17  has  been  able  to  make  strides  towards  a 
negotiated  resolution.  If  concluded  the  EGA  will  set  bound  tariffs  on  a  broader  list  of 
environmental goods at zero, therefore it is a considerably more ambitious agreement 
than the one concluded by APEC. Significant progress was achieved during 2015, and 
the  goal  of  negotiating  parties  is  set  to  conclude  a  political  agreement  in  2016.  This 

1 Joint Statement Regarding Trade in Environmental Goods (24 January 2015) accessed on 
22/10/2015, available at: 
http://trade.ec.europa.eu/doclib/docs/2014/january/tradoc_152095.pdf  
2 The fourteen original WTO members who launched the EGA as a plurilateral agreement were the 
European Union, Australia, Canada, China, Chinese Taipei, Costa Rica, Hong Kong (China), Japan, 
New  Zealand,  Norway,  Singapore,  South  Korea,  Switzerland,  and  the  US.  Israel  joined  the 
negotiations formally in January 2015 and Turkey and Iceland joined in March 2015. 

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Environmental Goods Agreement Trade Sustainability Impact Assessment 
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should support the implementation of the Paris Agreement achieved under the United 
Nations Climate Change Convention (UNFCCC) in December 2015.  

There  is  no  internationally  agreed  methodology  for  defining  EGs;  negotiations  in  the 
EGA  have  followed  the  WTO  and  APEC  negotiations  in  adopting  a  “list  approach”, 
discussed further in section 2.1 of this report. One of the main objectives of the ongoing 
negotiations is to agree on the list of environmental goods to be covered by the EGA.  
Each participating WTO member has submitted its proposals for goods to be liberalised 
under the agreement. As of February 2016, 340 types of goods were under discussion, 
though  this  number  should  be  reduced  as  participating  parties  now  move  past  the 
proposal stage to seek consensus on a final list of goods to be liberalised.  

As  the  negotiated  list  has  yet  to  be  released,  for  this  analysis  we  have  relied  on  the 
APEC  list  (attached in  Annex  I)  of  54  HS  subheadings,  which  is  the declared  starting 
point of these negotiations, and a list of 153 HS subheadings submitted to the WTO in 
2009 by a group of countries called the “Friends of Environmental Goods”3 (Annex II) 
(the “Friends List”). The Friends List was submitted by 9 of the 17 negotiating parties 
to the EGA, therefore in the absence of the negotiated list, the project team consider a 
combination  of  these  two  lists  to  be  a  reasonable  approximation  of  goods  under 
discussion  in  the  EGA.  In  our  sectoral  analysis  however  we  have  also  discussed  the 
inclusion  of  goods  beyond  these  lists,  especially  those  products  on  which  we  have 
received feedback from civil society.  

Products  being  proposed  and  discussed  in  the  ongoing  EGA  negotiations  are  being 
classified under ten sectoral headings which describe their environmental end use, as 
listed below. The scope and market conditions in each of these sectors are defined and 
discussed in some depth in section 7 of this report:  

Air pollution control (APC) 
 
Cleaner and renewable energy (CRE) 
 
Energy efficiency (EE) 
 
Environmental monitoring analysis and assessment (EMAA) 
 
Environmental remediation and clean-up (ERC) 
 
Environmentally preferable products (EPP) 
 
Noise and vibration abatement (NVA) 
 
Resource efficiency (RE) 
 
Solid and hazardous waste management (SHWM)  
 
  Wastewater management and water treatment (WMWT) 

Applied tariff barriers in the G-17 on product categories under discussion are already 
relatively  low  (the  simple  average  tariff  applied  by  the  G-17  on  the  APEC  list  of 
environmental  goods  is  3.21  per  cent4).  As  discussed  further  in  section  4,  this  may 
reduce the potential impact of this agreement; however, some products on which higher 
tariffs  are  applied  increase  the  prices  of  environmental  projects  in  some  of  these 
countries and thus may distort the market.  

The cleaner and renewable energy sector (CRE) and the energy efficiency sector (EE) 
are particularly high priority sectors in these negotiations, as they have the potential to 
significantly  contribute  to  country  commitments  under  the  Paris  Agreement.  For 
example, the energy efficiency sector alone can have a significant impact: 40 per cent 

3  The  “Friends  of  Environmental  Goods”  countries  were:  the  European  Union,  Canada,  Japan, 
Korea, New Zealand, Norway, Chinese Taipei, Switzerland and the United States. 
4  Integrated  Database  (IDB)  notifications,  WTO  Tariff  Analysis  Online  Facility;  information 
compiled by Rene Vossenaar, November 2015 

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Environmental Goods Agreement Trade Sustainability Impact Assessment 
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of emission reductions are expected to come from improved energy efficiency,5 and the 
EU has announced ambitious plans to reduce energy usage by  35 per cent by 2030.6 
Potential impacts could significantly increase if the agreement were to be adopted by 
several other WTO members, and ultimately multilateralised.  

This SIA study draws attention to the potential for greater trade gains it the EGA were 
to  go  beyond  industrial  tariffs  to  also  cover  non-tariff  barriers  (NTBs)  and  trade  in 
services  in  the  environmental  sector.  NTBs  are  often  more  critical  barriers  to 
international trade than tariffs. Services are increasingly essential as both inputs and as 
outputs of manufacturing, the EGA could complement the ongoing plurilateral Trade in 
Services Agreement (TiSA), by focusing on the liberalisation of services that are linked 
to the export of environmental goods (e.g. repair or maintenance). 

Given the pace of technological development EGA members seem to agree that the EGA 
needs to be a “living agreement” with a mechanism to expand its product scope.  

As  applied  tariffs  in  many  G-17  countries  are  relatively  low,  at  the  macro  level  the 
potential effects of the EGA between currently negotiating G-17 countries seems small; 
however, the liberalisation of trade in environmental goods can have significant positive 
effects at the micro level in certain countries for certain products. In examining these 
impacts the project team has conducted a series of case studies. For each of the ten EG 
product sectors as defined above, case studies have been developed, and through case 
study analysis we outline the environmental impacts, socio-economic impacts and trade 
barriers facing products in the sector.  

Case  studies  are  drawn  both  from  countries  currently  negotiating  the  EGA  and  from 
some countries which are not. Case studies in the latter countries serve to demonstrate 
the potential impacts of joining the EGA for potential negotiation partners, particularly 
those in developing countries. The thirty case studies are presented in chapter 8 of this 
report.  

The project team disseminated a stakeholder questionnaire which received a total of 96 
responses from concerned parties in government, civil society, industry and academia. 
The  respondents  to  this  questionnaire  came  from  diverse  backgrounds:  stakeholders 
from both developed and developing countries were well-represented, and additionally 
the respondents worked in nearly every major environmental goods and services sector. 
Additional feedback on draft versions of the report was received by e-mail with further 
feedback  solicited  via  telephone  interviews  and  face  to  face  interviews.  Two  regional 
workshops  were  held  as  part  of  the  SIA  consultation  process,  one  in  Kuala  Lumpur, 
Malaysia focussing on South-East Asia on September 10th 2015 and another in Mexico 
City, Mexico for the Latin America region on 25th September 2015, to collect additional 
feedback and perspectives and to inform about both this SIA and the EGA. 

Feedback from NGOs and civil society suggested a good level of support for the swift 
conclusion  of  a  comprehensive  EGA  including  all  goods  that  are  environmentally 
beneficial. Some concerns were also expressed including the lack of a clear definition of 
“environmental  goods”,  and  how  that  could  affect  the  EGA’s  implementation  and 
aspirations  for  the  EGA  to  become  a  “living  agreement”.  A  more  comprehensive 
overview of stakeholder feedback is presented in section 3.7 of this report. A report on 
questionnaire responses is presented in Annex III and reports on feedback received in 
each of the two regional workshops is presented in Annexes IV and V. Annexes VI and 

5 International Energy Agency, Energy Efficiency Market Report 2014, Paris, consulted on 03 
August 2015; https://www.iea.org/Textbase/npsum/EEMR2014SUM.pdf  
6  Arthur Neslen. EU  mulls cutting energy use  by  35%. The Guardian,  23/6/2014. Available  at: 
http://www.theguardian.com/environment/2014/jun/23/eu-mulls-cutting-energy-use-by-35-
emissions  

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VII present meeting minutes from two civil society dialogues held in Brussels regarding 
this SIA, in March 2015 and February 2016. Perspectives contributed by stakeholders 
have also been integrated in relevant sections throughout this report.  

The overarching assessment of the project team  is that despite the already low tariff 
barriers,  liberalisation  of  environmental  goods  under  the  above  mentioned  product 
sectors will have significant positive environmental and socio-economic impacts, and be 
a good inspiration for a broader environmental trade agreement covering more trade 
areas and participants in the future. Impacts from a pure tariff agreement on relevant 
environmental,  economic  and  social  indicators  have  been  analysed,  indicating  these 
impacts. Our assessment is summarised below.  

  Assessments  of  the  potential  economic  impacts  show  that  the  EGA  will  have  a 
positive  impact  in  volumes  of  global  trade  flows  of  EGs  and  also  on  the  price  of 
energy, thus making clean technologies more cost competitive.7  
o  Econometric  modelling  conducted  by  DG  Trade  projects  up  to  a  EUR  21  billion 
increase in the value of trade as a result of the successful conclusion of the EGA. 
It is concluded that small and medium sized enterprises (SMEs), would derive the 
greatest benefit from reductions on non-tariff barriers to trade in EGs.  

o  Our analysis shows that there would be significant benefits for developing nations 
in  joining  this  agreement.  By  reducing  their  tariff  and  non-tariff  barriers, 
developing  nations  could  attract  imports  and  inward  investment,  which  would 
result  in  improved  access  to  environmental  technologies,  and  improve 
environmental protection. This would also contribute to local job creation.    

  Potential environmental impacts cover a range of critical environmental issues.  

o  The EGA could play a significant role in facilitating the implementation of national 
environmental policies and of multilateral environmental agreements (MEAs) such 
as the Paris Agreement concluded in December 2015 under the UNFCCC. The EU 
has pledged to achieve at least a 40 per cent domestic reduction in greenhouse 
gas emissions by 2030 compared to 1990. Achievement of this target will depend 
upon increased adoption of renewable energy and energy efficient technologies, 
which may be liberalised under the EGA.  

o  The  project  team  have  explored  potential  impacts  on  climate  change,  green 
urbanisation, and ocean governance. In each of these areas, reducing costs and 
increasing the efficiency of the market for relevant products has the potential to 
positively impact environmental goals. 

o  C02  modelling  conducted  by  the  project  team  projects  a  potential  reduction  of 
C02  emissions  of  almost  10  million  tonnes  of  C02  by  2030  on  the  baseline 
scenario, and a reduction of C02 intensity of GDP by 0.02 per cent by 2030 on 
the baseline scenario. 

  The EGA has the potential to help facilitate many if not all of the recently launched 

Sustainable Development Goals (SDGs) set out in the 2030 Agenda. 
o  A  significant  focus  of  the  negotiations  is  on  renewable  energy  products,  which 
could  encourage  technologies  to  facilitate  goal  7:  ‘By  2030,  ensure  access  to 
affordable, reliable and modern energy’. The case study on the Lake Turkana Wind 

7  Jia,  Veena  (2013)  Removing  Trade  Barriers  on  Selected  Renewable  Energy  Products  in  the 
Context  of  Energy  Sector  Reforms:    Modelling  the  Environmental  and  Economic  Impacts  in  a 
General 
at: 
available 
accessed 
http://www.ictsd.org/downloads/2013/12/removing-trade-barriers-on-selected-renewable-
energy-products-in-the-context-of-energy-sector-reforms.pdf  

25/10/2015, 

Framework, 

Equilibrium 

on 

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Farm in Kenya, in section 8 of this report is one example of the kind of renewable 
energy projects worldwide that are bringing electricity to rural areas.  

o  The  world  is  facing  an  increasingly  severe  global  water  deficit  compared  to 
demand, SDG 6 is to ‘ensure access to water and sanitation for all’. The EGA, by 
reducing trade barriers to solutions to the current, worsening problem of water 
scarcity could have a significant positive impact in this area. The case study on 
the Minjur Seawater Desalination Plant in Chennai, India in section 8 in one such 
example, where local and international technology and service providers worked 
together  on  a  project  to  combat  urban  water  shortages.  The  EGA’s  capacity  to 
support the implementation of multiple SDGs is discussed further in section 5.1.1 
of this report.  

  Human  rights  impacts  are  addressed  in  section  6.1.  Conclusions  include  that 
renewable  energy  projects  which  increase  access  to  electricity  in  rural  areas  can 
have  positive  effects  on  people’s  right  to  work,  leisure,  education  and  access  to 
information.  
o  Small solar lights, or renewable energy projects that bring electricity to rural areas 
can allow people to work later, to enjoy leisure activities and to read and write 
during the night, among other benefits.  

o  Negative  human  rights  impacts  are  identified  as  being  associated  with  large 
infrastructure projects  and hydroelectric power projects. Analysis suggests that 
while  these  impacts  can  be  acute  at  the  local  level,  the  EGA  is  unlikely  to 
contribute to these issues and that the causes of these human rights issues are 
not tied to the liberalisation of trade in EGs.  

o  Direct human rights impacts are therefore estimated to be positive but only for a 
narrow range of issues, and would be confined to the local level directly impacted 
by relevant environmental projects. 

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OPPORTUNITIES AND CHALLENGES FOR COUNTRIES IN JOINING THE 
EGA NEGOTIATIONS 

Opportunities 

Negotiating parties to the EGA intend that the agreement should grow beyond the current 
G-17  countries,  and  perhaps  be  adopted  on  a  multilateral  basis.  All  WTO  members  will 
benefit from the EGA, as it has been agreed that the EGA will be applied by signatories on 
an MFN basis: WTO members will gain access to the markets of EGA signatories without 
having to liberalise their own market. However, the other WTO Members can only enjoy 
full benefits of the EGA if they join the agreement.  

The  project  identified  the  benefits  of  joining  the  commitment  for  other  WTO  member 
countries, summarised below: 

Direct opportunities from tariff liberalisation: 

  Liberalisation of trade, and the resulting growth in trade of EGs will contribute 
to  improved  economic  opportunities  by  attracting  imports  and  boosting 
exports 

Through the removal of tariffs, and working also toward the removal of non-tariff barriers 
to  environmental  goods,  countries  can  improve  market  conditions  for  their  domestic 
producers of  environmental goods and services. The project team’s  case study analysis 
demonstrates  how  importing  environmental  technologies  can  facilitate  environmental 
projects that use a range of complimentary products and services, creating local value and 
employment  opportunities.  A  more  competitive  local  market  will  stimulate  domestic 
growth  of  complementary  technologies  and  will  thus  boost  exports  of  related 
environmental goods and services.  

It has been argued that developed countries will benefit the most from this agreement, as 
developed countries are major exporters of manufactured environmental goods. Whilst the 
trade in EGs between developed countries is robust, it is in developing countries that there 
are the largest prospects for market growth, therefore impacts of an agreement potentially 
have  greater  significance  for  developing  countries.  South  –  South  trade  in  renewable 
energy products is today the most dynamic segment of the international trading system, 
out-pacing average growth rates in global trade. Developing countries have moved from 
net importers to net exporters.8 

Trends  indicate  that  the  EGs  market  is  already  substantial  in  developing  countries  and 
growth  rates  are  particularly  high.  The  fastest  growth  rates  are  found  in  developing 
countries in Asia, the Middle East and in Africa, which exhibited growth rates between 9-
10  per  cent  during  2011.9  Trade  liberalisation  will  help  to  facilitate  the  growth  of  these 
dynamic  sectors  of  developing  country  economies  by  giving  access  to  the  latest 
technologies at a lower cost than if trade barriers were in place and by giving security of 
access to foreign markets. 

Given  the  fast-paced  growth  in  international  demand  for  environmental  goods  and 
technologies  and  the  local  growth  of  greener  industries  in  developing  countries,  it  is 
expected  that  the  role  of  developing  countries  (as  both  exporters  and  importers  of 

8 UNEP (2014) South-South Trade in Renewable Energy, accessed on 29/11/2015, available at: 
http://www.unep.org/publications/  
9 ITC (2014) Trade in Environmental Goods and Services: Opportunities and Challenges, Geneva, 
accessed on 29/11/2015, available at: 
http://www.intracen.org/uploadedFiles/intracenorg/Content/Publications/AssetPDF/EGS%20Ecosys
tems%20Brief%20040914%20-%20low%20res.pdf  

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environmental goods) will continue to grow. The growth in export value has been notable 
since 2001. Malaysian and Thai exports, for example, increased from below EUR 2 billion 
in  value  in  both  markets  during  2001  to  just  over  EUR  6.4  billion  and  EUR  5.5  billion, 
respectively, in 2012.10  

Developing countries have a strong export potential in non-infrastructure environmental 
goods and services, such as in consulting services which require less capital and are often 
supplied by SMEs. This particular services market segment had an estimated global value 
of EUR 50.2 billion in 2011.11  In particular, those countries with a well-educated work-
force and a strong higher education sector, particularly in sciences and engineering, can 
develop a capacity for export in this sector.  

  The lowering of trade barriers can lead to countries having the opportunity 

to enter and move up global value chains (GVCs). 

International production, trade and investments are increasingly organised within  GVCs, 
where  the  different  stages  of  the  production  process  are  located  across  different 
countries. The  past  decades  have  witnessed  a  strong  trend  towards  the  international 
dispersion of value chain activities. This includes the manufacturing of components in the 
most cost effective markets, but also the international provision of service elements such 
as maintenance and distribution. 

Many end use environmental products require a large number of components sourced from 
different  markets  of  origin.  Lowering  the  overall  costs  for  these  various  manufactured 
components can stimulate the growth of trade at the global level and improve exports. In 
his speech at an EC stakeholder outreach event on the EGA in Brussels on June 1st, 2015, 
Amb.  Istvan  Alfaro  Solano,  Ambassador  of  Costa  Rica  to  the  EU  emphasised  the 
opportunities for developing countries in joining GVCs, by comparing the potential impacts 
of the EGA and the real impacts of the information technology agreement (ITA) in Costa 
Rica:  

“We recognize that the ITA has significantly contributed to the establishment of 
an  export  platform  of  products  manufactured  in  Costa  Rica  by  international 
companies that have found, in the country, the necessary conditions to produce 
efficiently and incorporate themselves into global value chains. For this reason, 
we  strongly  believe  that  a  similar  experience  could  be  replicated  with 
environmental goods.”12 

There are  significant export  opportunities  for developing countries in a large number  of 
lower tech environmental goods, such as parts and components.13 For example, countries 
such  as  Bangladesh,  Kenya,  Barbados.  Ethiopia,  Guatemala,  Pakistan,  Mozambique, 

10 ITC (2014) Trade in Environmental Goods and Services: Opportunities and Challenges, Geneva, 
accessed on 29/11/2015, available at: 
http://www.intracen.org/uploadedFiles/intracenorg/Content/Publications/AssetPDF/EGS%20Ecosys
tems%20Brief%20040914%20-%20low%20res.pdf 
11 Ibid. 
12 Amb. Istvan Alfaro Solano, Ambassador of Costa Rica to the EU (June 1st 2015) 
Presentation EGA – Brussels, accessed on 20/02/2016, available at: 
http://trade.ec.europa.eu/doclib/docs/2015/june/tradoc_153523.ENG.pdf  
13 Hamwey, Robert M. (2005). Environmental Goods: Where Do the Dynamic Trade. Opportunities 
for Developing Countries Lie? Cen2Eco Working Paper. Geneva: Centre for Economic and 
Ecoloigcal Studies, accessed on 29/11/2015, available at: 
http://www.ictsd.org/sites/default/files/event/2008/08/hamway.pdf  

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Mauritius, Trinidad and Tobago, Zambia, Ghana and Senegal to name a few are exporters 
of products such as ball-bearings which are an important component of wind-turbines.14  

Concerns have been voiced about the inclusion of component parts and multiuse products 
(products used for both environmental and other purposes) for three key reasons: 

 

 

 

inclusion of such products might negatively affect the environmental integrity of the 
agreement; 
there  are  implementation  issues  for  customs  officials  in  distinguishing  such 
environmental goods from other similar products 
the liberalisation of so many potential additional technologies raises concerns regarding 
impacts on established domestic industries.  

The case study analysis which forms part of the SIA demonstrates a number of benefits of 
including multi use products in the EGA, for the facilitation of environmental projects.  

Regardless of whether these issues on the inclusion of intermediate goods can be resolved, 
increasing trade in end use environmental goods will have significant knock on effects in 
generating  further  trade  throughout  the  relevant  value  chains.  Additional  research  and 
mapping of the global value chains for various environmental products would allow for a 
deeper understanding of the scale of potential gains for suppliers of various components. 

Indirect opportunities from increased adoption of environmental technologies:  

  Countries pursuing greening energy policies will benefit from improved 

uptake of relevant technologies. 

By  joining  the  EGA  and  the  associated  reduction  in  tariffs,  countries  can  facilitate  the 
uptake  of  environmentally  beneficial  technologies  into  their  domestic  market.  This  can 
improve the ability of domestic companies to enforce environmental legislation. The EGA 
has the potential to facilitate the implementation  of national level environmental law by 
reducing the consumer prices of environmental goods without the cost of trade barriers. 
This issue is addressed in more detail in section 5.2.3 of this report.  

Facilitating the dispersion of the most cutting edge and advanced environmental clean-up 
technologies  being  developed  around  the  world  can  help  to  reduce  the  costs  of 
environmental  remediation.  An  example  case  study  is  presented  in  section  8,  which 
analyses a Canadian hazardous waste management technology, which reduces both the 
cost and environmental impact of hazardous waste disposal from hospitals.  

Many  countries  are  increasingly  investing  in  environmental  infrastructure  as  well  as 
strengthening the required regulatory frameworks. Combined with  a general increase in 
environmental  awareness  internationally,  these  trends  are  creating  new  and  constantly 
evolving markets for environmental services. The Indian authorities have for example set 
a target that by 2020, the share of renewable energy in the electricity power generation 
mix will reach 15 per cent. This will include 100 GW of new solar power generation plants 
over  the  next  7  years.15  In  2012  India  ranked  4th  in  the  low  carbon  and  environmental 

14 ICTSD (Oct 2009) Liberalization of Climate-friendly Environmental Goods: Issues for Small 
Developing Countries, accessed on 29/11/2015, available at: 
http://www.ictsd.org/downloads/2009/10/liberalization-of-climate-friendly-environmental-
goods.pdf  
15 Prasad, Keshav (10 June 2015) Presentation: The Indian Market for Renewable Energy: The 100 
GW Solar Initiative, The confederation of  Indian  Industry, accessed on  11/11/2015, available  at: 
https://www.export-
erneuerbare.de/EEE/Redaktion/DE/Downloads/Publikationen/Praesentationen/2015-06-10-
intersolar-05-il-fs-energy-dev-india.pdf?__blob=publicationFile&v=2  

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goods and services (LCEGS) markets16 stimulated by stronger policy commitments and a 
more liberalised EGs market. 

  Signatories may see positive social impacts at the local level with increased 

opportunities for employment.  

The  local  social  benefits  brought  by  improved  employment  prospects  in  developing 
countries  can  be  seen  as  an  indirect  benefit  of  the  stimulation  of  domestic  growth  in 
manufacturing and service provision as inputs for projects. Direct benefits are seen when 
imports  are  accompanied  by  technology  transfer,  educational  services,  and  commercial 
presence with local hiring.  

A  common  finding  of  the  case  studies  analysis  has  been  the  observed  characteristic  of 
local job and value creation. Studies have shown that new investments in energy efficiency 
and  renewable  energy  have  consistently  generate  more  jobs  for  a  given  amount  of 
investment than the alternative case when maintaining or expanding a country’s existing 
fossil  fuel  sectors.17    The  deployment  of  imported  environmental  technologies  for 
environmental projects requires the adoption of complimentary products and services. For 
example,  training  is  extensively  used  when  new  infrastructure  is  introduced  through  a 
project. As an example, a case study is presented in chapter 8 of an Australian company 
which  developed  a  solar  powered  tuk  tuk  targeting  the  Cambodian  market.  Local 
production  sites  developed  via  this  business  are  now  employing  and training upward  of 
200 people in manufacturing, maintenance and distribution.  

  Supporting implementation of the UNFCCC Paris Agreement and the shared 

goal of limiting global warming to 2oC 

In December 2015, all countries of the UN committed in the Paris Climate Agreement to 
intended nationally determined contributions (INDCs), to reduce carbon emissions, with 
the shared goal of limiting global warming to 2oC above pre-industrial levels. Many INDCs 
include  commitments  on  the  reduction  of  fossil  fuels  and  the  adoption  of  increasing 
amounts of renewable energy and energy efficiency technologies. The reduction of trade 
barriers  can  stimulate  the  development  of  this  market  and  increase  the  uptake  of 
environmental technologies. EGs to be liberalised under the EGA can contribute to climate 
change  goals  by  facilitating  the  switch  to  renewable  energy,18  as  well  as  in  improving 
energy efficiency and thus reducing fossil fuel usage.19 

  Reduced costs and increased economic efficiency for local businesses 

through increased adoption of energy efficiency technologies 

The economic arguments for improving environmental performance in manufacturing and 
other  economic sectors are  significant. Estimates in Peru for example, have shown that 
equivalent economic costs resulting from poor environmental management are equivalent 
to 3.9 per cent of the country’s GDP,20 while in Morocco estimates are as high as 8 per 

p 

24, 

accessed 

Opportunities, 

16  Green  Alliance  (2013)_The  global  green  race:  a  business  review  of  UK  competitiveness  in  low 
carbon markets, available at:  
17 UNIDO, GGGI (2015) Global Green Growth: Clean Energy Industrial Investments and Expanding 
Job 
at: 
http://www.peri.umass.edu/fileadmin/pdf/published_study/GLOBAL_GREEN_GROWTH_REPORT_vo
l1_final.pdf  
18  Relevant  HS  6  headings  would  include  inter  alia:  700510,  700521,  700529,  841011,  841012, 
841013 
19  Relevant  HS  6  headings  would  include  inter  alia:902580,  392119,  450490,  680610,  680620, 
680690 
20 ITC (2014) Trade in Environmental Goods and Services: Opportunities and Challenges, Geneva, 
accessed on 29/11/2015, available at: 
http://www.intracen.org/uploadedFiles/intracenorg/Content/Publications/AssetPDF/EGS%20Ecosys
tems%20Brief%20040914%20-%20low%20res.pdf  

23/10/2015, 

available 

on 

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cent  of  Morocco's  annual  GDP.21  Increased  uptake  of  EGs  would  therefore  be  able  to 
contribute to increased economic efficiency. 

  Increased technology transfer opportunities  

Local enterprises in developing countries can benefit from  establishing joint ventures or 
other  forms  of  cooperation  with  foreign  environmental  goods  and  services  firms,  for 
example by acting as suppliers to larger firms. The investment and expertise brought to 
the local market by foreign firms can enable job creation (e.g. in post-sales services) and 
skills and technology transfers.  

Collaboration  between  foreign  environmental  goods  and  services  providers  and  local 
suppliers can lead to product-upgrading in the domestic partnering enterprises. This helps 
both the foreign services provider in obtaining quality products to the required standard, 
while domestic enterprises benefit from its exposure to innovation and upgrading.  

  Supporting environmental remediation, ocean governance, air pollution 

control and a host of other environmental issues.  

The EGA, through liberalising and improving the efficiency of the market in such a broad 
range  of  environmental  sectors,  has  the  potential  to  support  a  broad  range  of 
environmental objectives. As an example, air pollution has become a critical issue in many 
emerging economies. New emerging technologies, such as photocatalytic concrete which 
can "capture" pollution in the air, transforming it into inert salts and reducing smog levels, 
profiled in chapter 8 on the Milan Expo Italian Pavilion, presents an example of how such 
objectives can be supported.  

Challenges 

In the following section the project team has summarised the most prevalent perceived 
challenges for  countries in joining the  EGA.  Feedback was  received  on this issue  at  our 
international workshops and through the completed questionnaires:  

  Given the complex and highly interrelated nature of trade flows, impacts will 
not be consistent for all regions and as with any changes in trade flows, 
some groups may face new challenges in the short term.  

With  trade  liberalisation  there  may  be  challenges  faced  by  domestic  operators  in  some 
countries  and  in  sectors  where  they  would  face  increased  competition  from  established 
international companies.22 The overall cost benefit analysis of increased competitiveness 
would need to consider in a systemic manner any potential short to mid-term challenges 
faced  by  a  single  sector  or  sub-sector.  Considerations  such  as  longer  implementation 
periods for sensitive industries may need to be considered.  

  Potential losses to import tax revenue.  

Whilst the reduction of tariffs would reduce import tax revenue the introduction of the EGA 
has the potential to lead to net increases in tax revenue in the longer term as an agreement 
would boost growth and with it tax revenues.23 Analysis of the effects on public finances 
indicate that the tax authorities in developing countries would be able to use the longer-

21 Touahri, Sarah (2009). Morocco prepares ‘green’ charter for 2010. Magharebia, 10 January. 
Available  
from: 
http://www.magharebia.com/cocoon/awi/xhtml1/en_GB/features/awi/features/2009/10/01/featur
e-02  
22 Stakeholder questionnaire feedback   
23 Ibid.  

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term  increase  in  tax  generation  of  increased  industry  growth  to  offset  the  short  term 
decreases in tax revenue from tariff reduction. 

 Regulatory capacity building may be needed to help developing countries to

implement the agreement

Some  countries  in  particular  least  developed  countries  (LDCs)  might  require  technical 
assistance to upgrade their technical trade and custom capacity in order to implement the 
EGA.  Case  studies  implemented  by  the  project  team  on  environmental  projects  in 
Cambodia and Myanmar highlight these issues. These are presented in chapter  8 of this 
report.  Such  capacity  building  could  be  facilitated  through  mechanisms  supporting  the 
WTO Trade Facilitation Agreement (TFA). 

In conclusion, the  SIA  process has identified the potential opportunities for countries in 
joining this agreement to be very significant. Furthermore, the perceived challenges can 
be overcome with appropriate mitigation action, which should be built in to the final text 
of the EGA agreement.  

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