The construction of the APEC list John Deng Deputy Permanent Representative The Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu

Outline Mandates to construct APEC list - Sectors nominated for EVSL EVSL results APEC environmental goods list - Aims - Approach - Comparison between APEC and OECD lists Lessons learned from the APEC list

Mandates to construct APEC list 1995 (Osaka, Japan): Call by Leaders to identify industries for tariff reduction 1996 (Subic Bay, Philippines): Trade Ministers directed to submit recommendations 1997 May (Montreal, Canada): Trade Ministers directed to identify candidate sectors for EVSL; Environmental goods proposed as distinct category by 4 economies 1997 November (Vancouver, Canada): Environmental goods identified as 1 st tier fast-track sector

Sectors nominated for EVSL A+ (Fast-Track sectors): Environmental goods and services, fish and fish products, forest products, medical equipment and instruments, energy, toys, gems and jewellery, chemicals, and a telecommunications mutual- recognition agreement. (9 sectors) A sectors: Oilseeds and oilseed products, food, rubber, fertilizers, automotive and civil aircraft. (6 sectors)

EVSL results 1998 June (Kuching and Kuantan, Malaysia): c onsolidated environmental goods list finalized 1998 November (Kuala Lumpur, Malaysia): Resultant proposal: a comprehensive package including undertakings on four elements - Tariffs - Services - Non-tariff measures - Economic and technical co-operation (Ecotech) EVSL tariff proposal referred to WTO

APEC environmental goods list Aims Approach Comparison between APEC and OECD lists

Aims of APEC list Obtain more favourable tariff treatment for environmental goods Promote sustainable economic growth

APEC approach Started with nominations Compiled list of goods Experts discussion to determine product coverage and tariff classification

Benefits to include environmental sector in EVSL: Dual benefits being sought - Economic benefits - Environmental benefits Participation of developing countries APEC approach

Economic benefits: APEC approach Importing members can acquire environmental goods and technologies at lower cost Both developing and developed exporting countries can enjoy expanded market opportunity

Environmental benefits: APEC approach Improving the effectiveness of environmental investment programmes undertaken by business and government Direct quality of life benefits

APEC approach 10 categories: APC = Air Pollution Control H/E = Heat/Energy Management M/A= Monitoring/Analysis N/V = Noise/vibration abatement ORS = Other Recycling Systems PWT = Potable Water Treatment R/C = Remediation/cleanup S/H = Solid/Hazardous Waste WWM = Waste Water Management REP = Renewable Energy Plant

APEC approach Challenges: Classification Can product distinctions be practically implemented by customs officials? Dual use Parts & Components WTO legal issues

APEC approach Classification issues (1) End-use certificate method was not adopted Goods designated as environmental on the basis of their PPMs were not included

APEC approach Classification issues (2): Many HS headings contain more than just environmental goods Few HS headings are comprised uniquely of goods that could be considered part of the environmental industry Consideration was based both upon the prevalence and importance of the environmental goods in a given tariff heading Core environmental products at the 6-digit HS category

APEC approach Classification issues (3) National HS tariff lines are not uniform below 6-digit level A product was included with a detailed break-outs in their own tariff schedule Example: solar cells

APEC approach Solutions: –Practical approach –Bottom-up –Ex-out heading

APEC approach Other points: –Chemicals excluded –Medical equipment and instruments + energy sectors also excluded, but there are overlaps

Comparison between APEC and OECD lists Reasons for the lack of overlap: Some goods on APEC list assigned to different categories on OECD list Difference of emphasis In several cases, APEC list provides greater specificity

Lessons learned from APEC list 1. EVSL negotiation failed on: - Tariff elements - Forest and Fisheries sectors 2. Broad coverage and sector segmentation of EVSL enabled APEC to focus on environmental goods listing 3. APEC list limited only to goods readily distinguished by customs agents and treated differently for tariff purposes 4. APEC approach is practical

Lessons learned from APEC list 5.Negotiators may have to consider how to treat goods that have dual uses, but if theres a will to include goods within these categories, theres usually a way.