International experience in trade liberalization negotiation for environmental goods and services: Lesson learnt and options for Viet Nam © Dr. David Luff

Agenda 1.Introduction 2.Environmental Goods 3.Environmental Services 4.General assessment 2

Introduction 3 The relevant international regulatory framework covers commitments set out by WTO agreements, i.e. GATT and GATS, and regional and bilateral FTAs, and other trade related international agreements, especially those which are aimed at the protection of natural resources (Multilateral Environmental Agreements—”MEAs”). International rules and laws on trade in EGS do not constitute homogeneous regulatory environment. The obligations of countries participating in international trade are diverse, and dependable upon many conditions.

Environmental Goods (1) Vietnam participates in development of new forms of trade liberalization. It is a Member of the APEC Agreed to the list of EGs—widely known as an APEC list—which is a basis for further voluntary reductions of tariffs on green goods included in this list below the threshold of 5% by the end of 2015 The practical dimension of this list is limited, as average tariffs on EGs applied by all those countries are below 5%. The most important issue concerns standards and technical regulations 4

Environmental Goods (2) The trade regime for green goods is relatively liberalized Vietnam is not contributing to the environmental negotiations on other forums than APEC—like for example plurilateral Environmental Goods Agreement (”EGA”) EGA—first and foremost—can provide some new more efficient rules on NTBs 5

Environmental Goods (3) Evaluation of all economic consequences of on-going liberalization negotiations is essential element for trade policy formulation process Undertaking the proper trade negotiation strategy is essential for effective participation in negotiations— listing products for tariff reductions, in which the need for local use or comparative advantage can be identified. 6

Environmental Goods (4) In the case of Vietnam, most needs are for local use, with limited existing production industry of EG. Ensuring the availability of EG is therefore important. Tariffs in Vietnam are already quite low. However, it is important to keep in mind that the most important process of liberalization is in respect of NTBs 7

Environmental Services (1) Vietnam has taken on several commitments liberalizing access to ESs on the level of GATS In comparison—other countries of the region have undertaken more commitments in their FTAs than at the level of GATS Singapore: 19 FTAs, India: 10, Malaysia: 11 and Vietnam: 6 In some of its FTAs (e.g. with the US, Peru, Panama, Korea or Australia), Singapore has agreed on the full liberalization of trade in ESs, including in its schedules only negative lists of exceptions, in which some discriminatory measure can be applied 8

Environmental Services (2) Trade in ESs can substantially boost the transfer of technology and grant local entrepreneurs access to knowledge and state-of-the-art technology, not yet available to local service suppliers. The case of FTAs concluded by Singapore clearly shows that there is not one single effective trade liberalisation method in the field of Ess: Singapore prefered to liberalise ES through FTAS more then through the WTO. In FTAs, both the negative list and traditional one based on positive commitments, can be pursued simultaneously, as in the case of Singapore. 9

General comments Any further commitments in the field of EGS can substantially facilitate general trade cooperation with third countries. The issue of green goods and services can play an important role in the process of articulating and negotiating Vietnamese trade interest during bilateral, or multilateral negotiations 10

Lessons from the ongoing WTO negotiations on EGS (1) The negotiations on trade and environment are conducted under the auspices of the WTO Committee on Trade and Environment — Special Session, and focus on the fostering environment protection by the reduction of tariff and non-tariff barriers to trade in green goods and services. At the beginning of the negotiations, the proper definition of EGS that would be subject to the tariff reduction commitments was the main issue at stake. 11

Lessons from the ongoing WTO negotiations on EGS (2) The conclusion of the APEC list brought a impetus to the negotiations. On 24 January 2014, Australia, Canada, China, Costa Rica, Chinese Taipei, the European Union, Hong Kong, Japan, Korea, New Zealand, Norway, Switzerland, Singapore, and the United States launched the initiative (so-called the ”Davos initiative”) to at least pursue, in the context of the Doha Round, plurilateral negotiations on EGA. Israel, Turkey and Iceland are also joining. 12

Lessons from the ongoing WTO negotiations on EGS (3) The preliminary list of EGs — based on goods nominated by the negotiating parties — has been completed on the 5th round of the negotiations. Therefore, any new submissions for extending the list of EGs will not be considered. In the further rounds of the negotiations, the list of EGs will be finalized, and negotiators will begin discussions on other issues related to the text of EGA. 13

Lessons from the ongoing WTO negotiations on EGS (4) It is believed that the ongoing negotiations on green goods on the WTO forum can have a great impact on the fostering trade in EGs, as the countries who launched the ”Davos initiative” represent together ca. 86% of world trade in green goods. Furthermore these negotiations are seen as a support to the favorable outcome of the on-going climate negotiations, which is expected to be concluded in December 2015 in Paris. It is believed that new international commitments related to trade in green goods represent a significant step for the intensification of efforts in the prevention of dangerous climate change. 14

Lessons from the ongoing WTO negotiations on EGS (5) The negotiations’ approach, which follows the APEC list of EGs — at this particular moment — seems to be the only one acceptable — at least — on the plurilateral forum. This is despite the adoption of the APEC model of liberalization of the trade in EGs leads to some challenges and difficulties. There needs to be a review mechanism associated with the list. 15

Lessons from the ongoing WTO negotiations on EGS (6) It would be important to avoid the possible inconsistent implementation of the EGA by the customs authorities of the contracting states. As the list is based on the ”ex- outs”, there is not necessarily a uniform customs classification for them. The EGA cannot become an additional standardisation mechanism. The lacunas identified in the APEC list are likely to be fixed by EGA negotiators. 16

Final Remarks Vietnam should consider participating in the EGA negotiations and Join Singapore. It would be important to clearly specify the ex-outs which will ne included in the list of EG that will be liberalized. 17

THANK YOU! Washington Kampala Brussels Geneva Warsaw Singapore 18