Recent international focus on the liberalization of trade in environmental technologies offers the promise of increasing the availability of these technologies and services by making their movement across borders cheaper and easier. Businesses are expected to be key beneficiaries of this increased access, through the creation of new opportunities for growth and cost savings. Society at large is also expected to benefit as increased adoption and use of these technologies provides a critical tool for addressing environmental challenges, including biodiversity loss.
Removing barriers While tariffs do not represent the only — nor, perhaps, the most significant — obstacle to the transfer and implementation of environmental technologies, their elimination or reduction is a step in the right direction to improving access to these technologies. Even more promising, is the possibility of streamlining non-tariff barriers, such as testing and certification processes, customs procedures, and product standards and technical regulations, which can impede the movement of technologies more than tariffs. From a business perspective, the liberalization of trade in these technologies means technology can be obtained more cheaply and easily. If environmentally-friendly technologies are specifically targeted for tariff reductions, these may become competitive relative to less environmentally-friendly alternatives. Businesses profit, while the adoption of such technology produces environmentally positive outcomes, including reduced demand on environmental resources, decreased generation of waste, and ultimately less pressure on the ecosystems that protect biodiversity. At the international level, negotiations on the liberalization of environmental technologies are currently taking place at the World Trade Organization (WTO), referred to there as Environmental Goods and Services (EGS) negotiations. Discussions by the trade delegates are currently deadlocked on whether the environmental technologies should be liberalized on a product-by-product basis or as a package of technologies associated with a particular environmental project, such as a waste-water treatment facility. Although many companies have much to gain from these negotiations, they have been largely silent. This is unfortunate given that they no doubt have much to say about the barriers they face in accessing environmentally-friendly technologies necessary to their work. Such information would allow negotiators to direct final trade agreements toward the most positive outcomes for both business and the environment. Regardless of the outcome of the WTO negotiations, many governments will likely continue to pursue liberalization of environmental technologies through other negotiating fora, such as bilateral or regional trade agreements. For this reason, businesses — especially those involved directly in conservation activities — should stay engaged in national deliberations on trade liberalization.
Emerging examples Cheaper, more accessible environmentally-friendly technologies can be win-win situations for both business and the environment, with concrete impacts on local biodiversity. We see examples, such as in the tourism sector, where businesses face increased demand for environmentally-responsible business practices.
In Kenya, hotels have begun to invest significantly in energy- and water-saving technology, water-management systems, and sewage treatment facilities (1). Kenyan cities, Nairobi in particular, face considerable constraints on their ability to manage municipal waste, and considerable amounts of sewage enter rivers, lakes, and coastal waters. The efforts of hotels have reduced water consumption by 10% in some cases and, overall, have reduced the burden on municipal treatment systems. To the extent that liberalization can make such environmentally friendly technologies more affordable in Kenya or elsewhere, this is a positive outcome for threatened ecosystems.
Harmonizing standards The benefits of trade agreements can go beyond simply reducing the cost of importing environmentally-sound technology. Trade agreements can also help to create a business environment that supports businesses through a process of streamlining and harmonization of customs procedures and certification processes. For instance, a business selling its good or service consistent with a harmonized regional standard is able to access all countries within that regional market without having to comply with varying national standards. In some cases, the need for consistency with a harmonized standard will create a business opportunity, a niche from which a business can grow rapidly in the region.
MERCOSUR, a trade bloc including Argentina, Brazil, Paraguay, Uruguay, and Venezuela has begun to create these kinds of impacts in the region (2). Under an environmental section of the agreement, countries agreed to work toward harmonization of their environmental standards. When Brazil took the lead in developing regulations limiting emissions, for example, other members followed suit. This creates opportunities for businesses manufacturing technology or selling services related to emissions control to expand their operations around the region (3).
Trade agreements and liberalization of EGS may appear limited in their impact on the broad challenge of preserving the Earth’s biodiversity. Yet, trade liberalization and its resultant technology transfer can become quite significant, particularly in the context of global climate change — which the Millennium Ecosystem Assessment predicts will become the dominant direct driver of biodiversity loss by the end of this century. Transfer of technology, such as energy technologies, will be critical to mitigating the effects of climate change. Whether trade barriers are eliminated through WTO negotiations, or as a part of an international agreement on climate change following the expiration of the Kyoto Protocol, or simply via regional and bilateral agreements, a serious response to climate change is likely to include efforts to make these green energy technologies more available via trade liberalization (4).
Business must be aware of and engaged in these developments, not only because of the enormous trade and investment opportunities these changes represent for the business world, but also for the momentous potential to contribute to the protection of the world’s ecosystems and biodiversity.
Hussein Abaza (
hussein.abaza@unep.ch) is Chief,
Economics and Trade Branch, UNEP Division of Technology, Industry, and Economics.
(1) Moses Muriira Ikiria and John M. Mutua, 2006. “Identifying Complementary Measures to Ensure the Maximum Realisation of Benefits from the Liberalization of Trade in Environmental Goods and Services, Case Study: Kenya”, OECD Trade and Environment Working Paper No. 2004-02 (
http://www.oecd.org/dataoecd/32/27/37324543.pdf).
(2) In addition to these Full Members, MERCOSUR also includes Bolivia, Chile, Colombia, Ecuador and Peru as Associate Members.
(3) See Oswaldo Lucon and Fernando Rei, 2006. “Identifying Complementary Measures to Ensure the Maximum Realisation of Benefits from the Liberalization of Trade in Environmental Goods and Services, Case Study: Brazil”, OECD Trade and Environment Working Paper No. 2004-04 (
http://www.oecd.org/dataoecd/18/53/37325499.pdf). See also OECD Joint Working Party on Trade and Environment, 2007.“Regional Trade Agreements and the Environment” (COM/ENV/TD(2006)47/FINAL) (
http://www.oecd.org/dataoecd/54/27/38599779.pdf).
(4) Note, for example, the EU Trade Commissioner’s call, on 18 December 2006, for a WTO agreement to totally eliminate tariffs on clean power generation (
http://ec.europa.eu/trade/issues/global/environment/pr181206_en.htm).
