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 1st tier fast-track sector

Sectors nominated for EVSL

“A+” (Fast-Track sectors): Environmental goods and services, fish and fish produ

cts, 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): consolidated environmental goods list finalized

1998 November (Kuala Lumpur, Malaysia): Resultant proposal: a comprehensive package including u

ndertakings 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 ManagementM/A= Monitoring/AnalysisN/V = Noise/vibration abatementORS = Other Recycling Systems PWT = Potable Water TreatmentR/C = Remediation/cleanupS/H = Solid/Hazardous Waste WWM = Waste Water ManagementREP = Renewable Energy Plant

APEC approach

Challenges:Classification

Can product distinctions be practically implemented by customs officials?

Dual useParts & 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 approachClassification issues (2):

Many HS headings contain more than just

environmental goodsFew 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 levelA product was included with a detailed

break-outs in their own tariff scheduleExample: solar cells

APEC approach

• Solutions:

– Practical approach

– Bottom-upBottom-up

– ““Ex-out” headingEx-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 listsComparison 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 listLessons 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 listLessons learned from APEC list

5. Negotiators may have to consider how to treat goods that have “dual uses”, but if there’s a will to include goods within these categories, there’s usually a way.