Policy Brief: Opening Markets for Environmental Goods and Services

Trade barriers can be hazardous to the environment, at least those that prevent the free flow of environmental goods and services (EG&S). Roughly, these refer to the goods and services used to measure, prevent, limit, minimise or correct environmental damage. Studies have stressed the importance of eliminating barriers to trade in environmental goods and services as a key to improving environmental protection. And negotiations to reduce or eliminate barriers to trade in environmental goods and services are included in the current World Trade Organisation (WTO) talks. Today, because OECD countries have already eliminated most barriers to trade in EG&S, increasing trade flows in these products requires commitments from countries in the developing world.

Defining environmental goods and services is an important challenge. Since WTO ministers did not define the term, many countries have simply put forward lists of what they regard as environmental goods, mainly goods used for managing pollution or harvesting renewable energy. Some WTO members are also proposing “environmentally preferable products”, such as bicycles and natural biodegradable materials, for consideration.

WTO members find it easier to agree on the definition of environmental services. Nonetheless, negotiations related to this sector are progressing slowly. To date, only a few developing-country and least-developed-country (LDC) members of the WTO have made any market opening commitments in this area.

This Policy Brief describes the background to the current trade negotiations and explains the broad positions taken by countries to date. It also provides a definition of environmental goods and services, examines the types of barriers that prevent them from being traded efficiently and explains the potential benefits from liberalising that trade.