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A study conducted within the framework A study conducted within the framework of the UNCTAD project “Building Capacity of the UNCTAD project “Building Capacity

for Improved Policy Making and for Improved Policy Making and Negotiation on Key Trade and Negotiation on Key Trade and

Environment Issues” (INT/0T/AQ).Environment Issues” (INT/0T/AQ).

Ministry of Development, Industry and Trade MIFIC

José Guillermo López LópezHead of Foreign Trade Policy, (DPCE), MIFIC.

The Situation of Environmental Goods in Nicaragua with Reference

to the APEC and OECD Lists

MIFIC

Trade and Environment in the Global Context

Much progress made in the legal field. International agreements for the protection and preservation of the environment.Severe imbalances in the production and distribution of goods and services.A high proportion of the world’s population lives in extreme poverty.Rapid technological change on a global scale; not matched by coordinated environmental management, which always lags behind social and economic development.

Study on Environmental Goods in Nicaragua

Conducted within the framework of the WTO Ministerial commitments made in Doha, Qatar.

The WTO Ministerial mandate: to negotiate“the reduction or, as appropriate, elimination of tariff or non-tariff barriers to environmental goods and services”.

Doha Ministerial Declaration, paragraph 31(ii).

Development of the Environmental Goods Issue in Nicaragua

Has not been developed in a

manner specifically linked to trade

Has been considered within the context of

national environmental issues, but not directly

Environmental Law

Political Constitution

MARENA (Ministry of the

Environment and Natural Resources

Aims of the Study

To contribute to securing the basic tools for building capacity for policy-making and negotiation on environmental goods with a view to eliminating tariff and non-tariff barriers.

To identify the need to use these goods in conditions that favour the preservation and protection of the environment.

To propose a conceptual framework that allows the negotiation process to be defined by means of clear rules.

To determine what constitutes an environmental product, an environmentally preferable product (EPP) or an organic product.

To evaluate environmental goods in Nicaragua by examining trade flows, tariff protection levels, production and production limitations.

Functions of the Environment

A place to deposit wastes and residues that generate

production and consumption

A source of services related to enjoyment of the environment:

scenic beauty, clean air, etc.

Provides resources needed for production

Environmental Goods Arising From These Three Functions

Chlorine, chemicals, etc.

Equipment Medicines

Etc.

Capital goods

Inputs and raw materials

Natural medicine, etc.

Air purifiers, water purifiers, aspirators, etc.

‘Cleaner’ machinery

WTO Negotiations on Environmental Goods

Remove non-tariff barriers

- Import licensing- Quotas- Quantitative restrictions- Permits- Import controls- Etc.

Eliminate bound tariffs

Reduce import tariff to 0%

Result: to allow access free of trade barriers, so as to encourage their use in less costly conditions, thereby promoting an environment that is better protected and preserved.

A clear definition of environmental goods is needed for the purpose of trade negotiations

The standard definition used in some countries does not relate to trade:

“Tangible resources used by human beings as production inputs or for final consumption and which are used up and transformed in the process”.

The definition normally used:

Makes no reference to any environmental properties.Covers products of all types.Relates more to ‘friendly’ production methods and processes.

Wood, fruit, animal hides, meat, seeds, medicines, etc.

Definition proposed by Nicaragua’s consultant:

“Environmental goods are goods which allow raw materials, inputs, capital goods and consumer goods in general to be produced and marketed under technologically and ecologically rational conditions, which allow compliance with environmental requirements in international markets, and which aim to preserve and protect the environment and human, plant and animal health. This includes cleaner technologies and products which reduce environmental risks and minimize pollution and the use of resources”.

Indicative Lists Compiled by APEC and the OECD

Were drawn up before trade negotiation objectives were undertaken in the WTO.

Are based on the interests of highly industrialized developing countries (USA, EU, Japan, etc.).

Were drawn up taking into account the expansion and facilitation of trade rather than environmental effects.

A common list accommodating the interests of all WTO Members must be drafted within the WTO.

Nicaragua must negotiate the inclusion of a list of goods not yet included in the APEC and OECD lists, e.g. medicines, chemicals, etc.

Nicaragua: liberalization in other countries could serve to attract investment in these goods.

Trade Based on the APEC and OECD Lists

There is no tariff classification of any kind, but Nicaragua does grant unilateral preferential treatment to all.

Environmental goods do not feature in WTO, regional or bilateral integration agreements.

Trade FiguresTotal APEC and OECD

In thousands of US dollars

Year Total Exports Exports of environmental goods

% of Nicaragua’s total exports

Total imports Imports of environmental goods

% of Nicaragua’s total exports

2000 629,351.10 3,880.12 1 1,720,629.40 49,603.04 3

2001 532,243.20 5,697.11 1 1,774,847.00 57,301.35 3

2002 634,827.97 9,943.25 2 1,798,753.90 53,147.67 3

Total 1,796,422.27 19,520.48 1 5,294,230.30 160,052.06 3Source: Ministry of Development, Industry and Trade (MIFIC), Nicaragua.

Individual Figures for APEC and OECD

List Exports Imports Total Exports

Total imports

Year 2000 Year 2001 Year 2002 Year 2000 Year 2001 Year 2002 Period Period

OECD 3,842.8 5,371.52 8,813.52 43,646.6 45,349.9 44,628.8 44,628.8 133,625.4

APEC 187.6 570.93 3,671.16 18,878.0 26,575.2 23,580.8 23,580.8 69,034.1

Source: MIFIC (Documentation Centre, OECD and APEC lists).

Destination of Exports from Nicaragua Based on APEC and OECD Lists

COUNTRY EXPORT 02 %

TOTAL 9,943.25 100

DOMINICAN REPUBLIC 3,278.14 33

COSTA RICA 2,010.52 20

GERMANY 1,938.94 20

CANADA 1,834.19 18

UNITED STATES 295.69 3

HONDURAS 252.59 3

GUATEMALA 106.87 1

UNKNOWN 67.25 1

AUSTRALIA 47.92 0

PANAMA 42.37 0

BOLIVIA 33.74 0

EL SALVADOR 18.01 0

ARGENTINA 9.95 0

BELIZE 3.77 0

IRELAND 1.73 0

COLOMBIA 1.48 0

MEXICO 0.05 0

NORWAY 0.04 0

Source: Statistics Department, MIFIC, Nicaragua.

Provenance of Imports to Nicaragua Based on APEC and OECD Lists

COUNTRY IMPORT 02 %

TOTAL 53,147.67 100

GERMANY 42,790.69 80.5

BRAZIL 3,456.32 6.5

COSTA RICA 2,177.30 4.1

CHINESE TAIPEI 1,435.88 2.7

EL SALVADOR 1,145.72 2.2

CHINA 645.92 1.2

CHILE 523.97 1

UNITED STATES 355.36 0.7

COLOMBIA 140.65 0.3

SPAIN 117.59 0.2

CANADA 97.93 0.2

BELGIUM 83.39 0.2

AUSTRIA 64.24 0.1

ITALY 50.38 0.1

REPUBLIC OF KOREA 31.71 0.1

AUSTRALIA 30.56 0.1

GUATEMALA 0.06 0

Source: Ministry of Development, Industry and Trade (MIFIC), Nicaragua

WTO MFN and Bound Tariff Levels in Effect in 2003

23

6

1472

Total items: 179

MFN - import tariff = 0

MFN - import tariff = 5

MFN - import tariff = 10

MFN - import tariff = 15

Environmental Goods: OECD and APEC Lists

Exports Imports Total % Total % Lines

Import tariffs 2000 2001 2002 2000 2001 2002 Export Import

0% 1,156.08 3,439.48 4,978.61 34,817.11 38,432.29 37,712.05 9,574.17 49 110,961.45 69 147

5% 122.50 310.23 1,488.67 10,802.23 15,222.98 11,175.10 1,921.40 10 37,200.31 23 23

10% 15.76 10.73 45.74 1,537.48 1,492.64 1,481.02 72.23 0 4,511.14 3 2

15% 6.51 12.45 42.74 1,775.61 1,919.92 2,527.84 61.70 0 6,223.37 4 6

40% 2,579.27 1,924.22 3,387.49 670.61 233.52 251.66 7,890.98 40 1,155.79 1 1

Total 3,880.12 5,697.11 9,943.25 49,603.04 57,301.35 53,147.67 19,520.48 100 160,052.06 100 179

Source: Ministry of Development, Industry and Trade, Nicaragua.

WTO Bound Tariffs - 2003

168 items. Tariffs = 40% Tariff item = 44%, but in 2004 = 40%

No major sensitivities at WTO level as no APEC or OECD products were bound at levels higher than the overall 40%. Of these, 70% enjoy 0% MFN.

Environmental Goods of Export Interest

HS HS 6-digit description

MFN-Import-

tariff

Bound Category OECD APEC 2000 2001 2002

2003 WTO 2003

USE EXPORT EXPORT EXPORT

3,589.77 4,963.33 6,231.81

2207.10 Ethanol 10 44 Other energies X 2,579.27 1,924.22 3,387.49

2522.20 Slakes (hydrated lime)

5 40 Chemical recovery systems

X 3.57 25.01 32.97

2835.23 Phosphates of trisodium

0 40 Chemical recovery systems

X - 656.11 -

3209.90 Other paints and varnishes,

in aqueous medium

15 40 Cleaner technology and

products

X 6.51 9.22 1.52

3802.10 Activated carbon

0 40 Chemical recovery systems

X 932.91 2,040.61 655.83

Environmental Goods of Export Interest (CONT’D)

HS HS 6-digit description

MFN-Import-

tariff

Bound Category OECD APEC 2000 2001 2002

2003 WTO 2003

USE EXPORT EXPORT EXPORT

3,589.77 4,963.33 6,231.81

3924.90 Household and toilet articles of

plastic

10 40 Waste collection equipment

X 15.76 10.62 42.66

3926.90 Other articles of plastic

5 40 Screens/

strainers

X X(ex) 26.51 74.88 180.74

7309.00 Tanks, vats etc. 5 40 Sewage treatment

X 14.49 41.90 82.34

8409.99 Parts for diesel or semi-diesel

engines

0 40 Mufflers/

silencers

X 10.75 180.76 1,633.66

8419.19 Other instantaneous

or storage water heaters, non-electric

5 40 Renewable energy plant

X X(ex) - - 214.60

Source: Own, based on data from APEC, OECD and the Ministry of Development, Industry and Trade of Nicaragua (MIFIC).

Environmentally Preferable Products (EPPs) and Organic Products

Organic products Certified In transition

1. Coffee X

2. Sesame X

3. Cocoa X

4. Beans X

5. Vegetables X

6. Soya X

7. Tobacco X

8. Flowers and foliage X

9. Manioc X

10. Annatto X

11. Turmeric X

12. Ginger X

13. Neem X

14. Cashews X

15. Medicinal plants X

16. Maize X

17. Chayotes X

18. Sorghum X

19. Tomatoes X

20. Avocados X

21. Organic fertilizer X

Source: Pedro Cussianovich, Consultant, IICA

ConclusionsConclusionsThe definition of environmental goods must not cover agricultural, organic or environmentally preferable goods.Environmental goods must lend themselves to specific functions for achieving ‘friendly’ production methods and processes.Importance of tariff and non-tariff liberalization of environmental goods within the WTO.Need for clear identification of these goods in the Harmonized Commodity Description System at international level.OECD and APEC lists must be treated as indicative, i.e. as a reference for the purpose of establishing a common list.Nicaragua has a high level of unilateral tariff liberalization with regard to APEC and OECD environmental goods.Nicaragua must negotiate and request reciprocal access levels in line with its unilateral liberalization, with a view to promoting investment in environmental goods.

THANK YOU FOR YOUR ATTENTION

glopez@mific.gob.ni