An Earth Day Story

The HS gets in the way of spreading environmental goods

What’s the difference between a pipe used in treating wastewater and a pipe that transports oil? A hotplate and a solar cooker? A refrigerator that’s energy-efficient versus an energy hog? In the Harmonized Commodity Coding and Description System (HS) — at the six-digit level — absolutely nothing. And that’s a problem for policymakers who would encourage global trade in environmental goods, or EGs.

World Trade Organization (WTO) members have worked for years to agree on EGs that would benefit from trade liberalization, starting with a list of around 400. In 2007, the U.S. and EU called on WTO members to eliminate tariffs no later than 2013 on 43 EG identified by the World Bank as being “climate friendly.” Last December, the U.S. Trade Representative signaled support for a plurilateral agreement within the WTO to lower trade barriers to EGs.

The World Bank’s 43 EGs, identified at the WTO-recognized six-digit HS code level used to specify tariffs and track trade, fall into seven categories:

1. Air Pollution Control
2. Management of Solid and Hazardous Waste
3. Renewable Energy Plant
4. Heat and Energy Management
5. Waste Water Management and Potable Water Treatment
6. Cleaner or More Resource Efficient Technologies and Products
7. Environmental Monitoring, Analysis, and Assessment Equipment

Trouble is, the six-digit codes lump together the environmentally good, bad and ugly, drawing no distinction drawn between, for instance, clean and dirty coal technologies. The World Bank proposes a “systematic alignment of harmonization standards.” The World Bank’s 2007 report is at http://bit.ly/bT13xv.

Suggesting the magnitude of realigning HS is the multi-year “mapping exercise” by the International Center for Trade and Sustainable Development (ICTSD) that would “set the stage” for customs classification of renewable energy, buildings, and transport goods. Reports to date are at http://bit.ly/96iBsH.

Of course, the HS codes also frustrate buyers and sellers trying to gauge EG market demand. Fortunately, there are other sources for detailed market information — such as The Datamyne bill of lading database — for the U.S, the largest import market for EG, taking in 13% of an estimated $215 billion in global exports in 2008. More global EG trade numbers are in a December 2009 Special Report from U.S. Sen. Ron Wyden, at http://bit.ly/a7oxCZ. To learn more about how The Datamyne can help research the U.S. import market, contact us.

Global Bounce Back

WTO forecasts 9.5% growth in trade volumes

The World Trade Organization (WTO) projects a rebound in world trade in 2010, recovering some, but by no means all, ground lost in 2009, when global trade volumes contracted 12.2% — the largest decline since World War II. If growth keeps to the current pace, it will take another year for trade volumes to surpass 2008 peak levels.

The WTO report measures trade on a volume basis because it provides a more reliable point of year-by-year comparison, undistorted by changes in commodity prices or currency fluctuations.

One good thing about the dismal year just past: no significant new barriers to trade were raised. Trade volumes tumbled because global demand contracted. The mix of products involved, the presence of global supply chains, and the synchronization of decline across countries were factors that steepened the fall.

Brazil’s Retaliatory Tariffs

After 8 years, 30 days to sanctions

With the approval of the World Trade Organization, Brazil is set to impose tariffs on a range of U.S. products and commodities in retaliation for U.S. government subsidies to American cotton growers.

The trade dispute started in 2002 when Brazil went to the WTO with its complaint against the U.S. subsidies and their impact on Brazilian cotton. The WTO sided with Brazil in 2004 and its decision was upheld on appeal in 2005. In 2006, the U.S. agreed to comply with WTO recommendations; but a 2007 WTO review found the U.S. had fallen short on compliance. A 2008 WTO arbitration panel set the parameters for retaliatory action. (This synopsis is based on a policy statement from U.S. Wheat Associates, a trade group anxious to increase U.S. wheat’s share of the Brazilian market.)

On March 3, Brazilian Foreign Minister Celso Amorim, said the U.S. had 30 days to negotiate a bilateral agreement with Brazil to avoid the new tariffs. On March 8, Brazil published the list of 102 import products on which it intends to levy tariff increases. You can see the complete list here: http://www.bit.ly/bI5OZp. The product descriptions are in Portuguese, but the tariff codes and percentages don’t need translation. Top U.S. import crude oil (see The Datamyne Top 5 Brazil’s U.S. Imports) is not on the list, but #2 passenger motor vehicles is.