The Negotiations on Environmental Services in the CTS - SS

Workshop on Environmental Goods and Services for

Developing Country MembersWTO - 18 February 2010

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Negotiations on environmental services Two main aspects in the Special

Session of the Council for Trade in Services: Definition and classification of

environmental services Market access negotiations

Undertaking new “specific commitments” on environmental services

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Definition and classificationof services under the GATS There are two reference instruments:

Services Sectoral Classification List (W/120) UN Central Product Classification List (CPC)

Members use the 1991 version (co-called CPC prov.) There is no compulsory classification

system Members can use the classification system of

their choice. In practice, most Members use a combination

of the W/120 and the CPC prov. Important: classification instruments do

not determine the scope of the GATS!

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Environmental services in W/1206.ENVIRONMENTAL SERVICES CPC prov. A. Sewage services 9401B. Refuse disposal services 9402C. Sanitation and similar services

9403D. Other - -

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Remaining CPC items Cleaning services of exhaust gases

CPC 9404 Noise abatement services

CPC 9405 Nature and landscape protection services

CPC 9406 Other environmental services n.e.c.

CPC 9409

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Other environment-related services Moreover, other activities, found in various

sections of the W/120, are relevant for the provision of environmental services and for the protection of the environment more generally, for instance:

research and development services on natural science (CPC 851); engineering design services for the construction of sewage, industrial and solid waste treatment plants (CPC 86724); integrated engineering and project management services for water supply and sanitation works turnkey projects (CPC86732); testing and analysis services of chemical and biological properties of materials such as air, water, waste, soils (CPC 86761); construction services of water and sewer mains (CPC 5135).

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“Infrastructure” ES Focus of negotiations during Uruguay Round Predominant role for public sector Public good characteristics

Ex: cleaning of streets Prone to natural monopolies

Special distribution or collection networks High capital investments

But Trends towards delegation of certain tasks to private

operators Private sector also represents an important market.

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“Non-Infrastructure” ES Increasing importance to confront

environmental challenges Climate change

Rapid technological changes, more sophisticated technologies

Niches for SMEs More prone to “B2B” relations But public authorities also buy these

services.

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Classification of ES: is it outdated?

Debate among Members and several proposals

EC proposal: Identifies 7 “core” subsectors classified according

to environmental media (air, water, solid and hazardous waste, noise, soil, biodiversity, etc.)

Breakdown is different than in W/120, but references to CPC prov. remain

Main novelty: proposal to include a reference to water distribution service.

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EC Classification proposal6A) WATER FOR HUMAN USE & WASTEWATER MANAGEMENTWater collection, purification & distribution services through mains, except steam & hot water

Part of 18000

Waste Water Services 94016B) SOLID/HAZARDOUS WASTE MANAGEMENTRefuse disposal services 9402Sanitation & similar services 94036C) PROTECTION OF AMBIENT AIR AND CLIMATEServices to reduce exhaust gases and other emissions and improve air quality 94046D) REMEDIATION AND CLEANUP OF SOIL & WATERTreatment, remediation of contaminated/polluted soil and water Part of 94066E) NOISE & VIBRATION ABATEMENTNoise abatement services 94056F) PROTECTION OF BIODIVERSITY AND LANDSCAPENature & landscape protection services Part of 94066G) OTHER ENVIRONMENTAL & ANCILLARY SERVICESOther services not classified elsewhere Part of 9409

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Classification debate: where are we? No consensus so far to modify the

classification of environmental services in the W/120. Multilateral discussions are de facto

suspended. But, new classifications are used in

the market access negotiations by those Members interested in doing so.

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A Member’s obligations are defined by

GATS and national schedules

GATS provisions

and

its schedule ofspecific commitments

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Environmental services and modes of supply

Mode 1 – cross-border supply Remote monitoring and control of air pollution levels

Mode 2 – consumption abroad

Solid waste are treated abroad

Mode 3 – establishment of commercial presence

Subsidiary provides solid waste treatment services

Mode 4 – presence of natural persons

Foreign technician provides natural disaster assessment services

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Modes of supply: 1) Cross-border supply 2) Consumption abroad 3) Commercial presence 4) Presence of natural persons

Sector or subsector Limitations on market access

Limitations on national treatment

Add. com.

6. ENVIRONMENTAL SERVICES

A. Sewage Services (CPC 9401) B. Refuse Disposal Services (CPC 9402) C. Sanitation and Similar

Services (CPC 9403) D. Other - Cleaning services of

exhaust gases (CPC 94040) - Noise abatement services (CPC 94050) - Nature and landscape

protection services (CPC 94060)

1) Unbound 2) None 3) None 4) Unbound, except as

indicated in the Horizontal Section

1) Unbound 2) None 3) None 4) Unbound, except as indicated in the Horizontal Section

How GATS schedules are structured

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0

50

100

Distribution of specific commitments across sectors(Number of WTO Members)

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Specific commitments on environmental services

Members

Sub-sectorAll

Members

Recently acceded Members

Sewage services 49 20Refuse Disposal 48 20Sanitation 50 22Other 49 21

NB: based on EC-12 Schedule

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Services market access negotiations 2001 Negotiating Guidelines:

No a priori exclusion of any sector or mode of supply Starting point for the negotiations: current schedules Main negotiating method: request and offer approach Appropriate flexibility for individual developing country

Members for opening fewer sectors, liberalizing fewer types of transactions

Annex C of Hong Kong Ministerial Declaration: LDCs not expected to undertake new commitments Negotiating objectives (Modes/MFN

exemptions/scheduling principles) Plurilateral request-offer negotiations

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The collective request on environmental services (1) Recalls that environmental goods and services were

singled out in paragraph 31 (iii) of the Doha Declaration and notes that liberalized environmental services market benefits both exporters and importers of these services as well as environment and development

Refers to the right to regulate: “It is understood that liberalization in these sectors will

not impair the ability of governments to impose performance and quality controls on environmental services and to otherwise ensure that service suppliers are fully qualified and carry out their tasks in an environmentally sound manner. In addition, as under current obligations, each WTO Member can establish, maintain, and enforce its own levels of protection, inter alia, for consumers, health, safety, and the environment.”

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The collective request on environmental services (2)

Sub-sectors included: CPC 9401 to 9409 Water distribution is not included

Members can use the classification system of their choice W/120, EC proposal, etc.

Stresses importance of undertaking commitments in “related” sectors Ex: construction, engineering

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The collective request (3) – Scope of commitments sought Modes 1 & 2 : request seeks full commitments. Mode 3: calls for “ambitious” commitments.

Removal of barriers to commercial presence (e.g. foreign equity limitations, joint operation requirements, restrictions or requirements on types of legal entity for foreigners, such as joint venture). When exclusive rights exist, foreign suppliers should be able to participate in the supply of the service.

Mode 4: Members are “encouraged” to schedule mode 4 commitments.

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Offers on environmental services 16 offers by developed and

developing countries, involving all sub-sectors

Several restrictions concern public networks.

Some Members propose to redefine their commitments pursuant to a new classification.

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Services Signalling Conference – Report of the Chairman of the TNC (July 2008) Many indications of improvements were given across the

range of environmental services, including: sewage services; sanitation services; refuse and solid waste disposal services; waste water management services; soil remediation and clean-up; environmental laboratory services; and other services related to air pollution control and noise abatement. In addition to expanding sectoral coverage, several participants were willing to expand the modal scope of their commitments, and to reduce or eliminate restrictions such as joint venture requirements and foreign equity limitations.

Several participants expressed aspirations for new commitments on all modes of supply across the range of environmental services. A specific request was made for commitments on advisory services under mode 1.