Conflicting Link - Trade & Sustainable Development

That conflicting link between Trade and Development that is truly Sustainable

The case of Environmental Goods

By Mauricio López Dardaine

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nternational trade and sustainable development continue to play a hellish game of hide and seek at the planetary level.

The global crisis has become a good excuse for the emergence of new tariff barriers under the cloak of health or environment protection. And the fact that many of the reasons wielded in order to apply these measures have a solid foundation, makes resolution of conflict much more difficult.

By the way, not all reasons are honest ones. Justification to apply barriers to imports, based on either health or environmental considerations are many. On the other hand, grounds to promote the elimination of existing tariff levels in an unsustainable manner are also not uncommon. Here comes to mind the case of the so-called Environmental Goods.

Between 2006 and 2009[1] our consulting firm carried out three studies related to the liberalisation of environmental goods. This question is negotiated within the framework of the WTO Doha Round. There is no clear-cut definition regarding Environmental Goods. For our purposes we found that the most suitable was the one developed by Robert House and Petrus van Bork in a work published by ICTSD in 2006:

“[Environmental Goods] are industrial goods used to provide environmental services with a view to attacking pollution and waste affecting water, soil and air. These goods have usually multiple end uses, one of which is that of providing environmental services. Furthermore, they habitually do not posses intrinsic environmental features; it is their use as providers of environmental services that [only then] qualify them as environmental goods.”

The studies we carried out went deep into the import tariff systems of Mercosur. This is not the place to develop these questions, not now at least. I propose we look at the above framed definition instead. The definition is one of many; however, we feel it is the one that better adapts to this conflicting bond between trade and sustainability. Especially in what concerns these goods.

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ithin the framework of the WTO Doha Round, a series of countries, most of them developed, introduced the idea that if an industrial good (under one of its forms) could be used in order to provide an environmental service, that made the product an Environmental Good. The detailed series of studies we began to complete by 2009, specially the one dealing with Argentina, showed that the various Lists of those industrial goods that have been set for liberalization under the Doha Round, on the grounds they are “environmental goods”, contain only a small portion of goods that are actually environmental. Which do justify liberalization to be undertaken.

We said at the beginning that even with good reasons in support, these discussions tend to be rather complex. Do countries such as Argentina or Brazil want to liberalise imports of electric motors, for instance, because electric motors are used in installations providing authentic environmental services? What would happen to the importation of other electric motors used exclusively for industrial purposes (other than environmental)?   

The good news is that after a few years of analysing, doing specific field work and discussing the question in both Mercosur and Geneva, we know that by going country by country, it is perfectly possible to define which are environmental goods, which dual purpose goods and which full fledged industrial goods.

All of which might be a good excuse for future comments.

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[1] See Bienes Ambientales

El Comercio de los Bienes Ambientales desde una Perspectiva Argentina para la ALADI - noviembre 2009 -  Mauricio López Dardaine y Maximiliano López Dardaine [ICTSD]