Title: EGS and Climate Change: China a case study
1EGS and Climate Change China a case study
2Structure of the presentation
- What framework policy is China following to
control implications of climate change? - How does this link with trade?
- Linking trade flows in the list of 80 EGs with
Environmental problems related to Climate Change
and its associated technologies - Trends in trade of EGS related to Climate Change
- Policy implications
3Policy of co-control and co-benefit
- Earlier local pollution control policy and
climate change policy were considered
independently without links - Ancillary benefits or secondary benefits of GHGs
reduction were found to be also beneficial for
controlling local air pollution. - The joint benefits of controlling GHGS were
measured. - Thus it was decided to design policies/programs/pr
ojects in order to maximize joint benefits of GHG
reduction and local pollution. - These joint control policy and projects were
designed and implemented for the five year period
2006-2010
4Joint benefit program
5Success of the Co-Control Policy
6Foreign trade policy challenges
- Environmental accounting of the trade balance
between China and the rest of world, using
DRC-CGE model simulation 1.2 billion ton of
carbon deficit, taking up about 23 of total
direct emissions - 5.3 million ton SO2 deficit, taking up about 39
of total industrial emissions - 61.5 billion ton of water resources, taking up
about 12 of industry and agriculture consumption
7What is green trade for China
- Green trade is one of the measures to achieve the
goal of 11th five year plan - Suggestions include
- Put tariff on export goods with high energy and
pollution intensity - Encourage eco-labels on exported products
- Encourage imports of environmental goods and
services as well as technologies
8Liberalization of Environmental Goods and
Services (EGS) trading
- Low carbon EGS products are the core of low
carbon economy, which have co-benefits associated
with high/low sulphur/PM etc - High carbon product trading sanction Vs Low
carbon product trading liberalization - CDM investments mode 3 of trade in service 49
shares limitation - Visa a barrier of mode 4 of trade in service for
co-benefit consulting service - Carbon-friendly equipments importing limitation
for co-control projects - Liberalization of EGS trading is the key barrier
of actions with co-benefits for low carbon, low
sulphur, low PM society
9Liberalization of EGS trading
- Who should and how to deal with the barrier of
EGS trading? - WTO Doha Round negotiation on EGS
- The problems of EGS negotiation
- Trade interest driven but environment demand
driven - Environment is used by trade officials as an
excuse to promote exports - National interest driven but should be global
interest driven. Its very necessary to have
global environmental goods to improve global
environment
10What to Liberalise? Issues of Product Coverage
- Difficult to
- Isolate climate-friendly products from others
for easier trade liberalisation. Dual-use
categories includes environmental and
non-environmental products. - Deal with intrinsically dual-use products
11What to Liberalise? Issues of ProductCoverage
- (iii) Present HS classification also difficult to
operationalise faster liberalisation for
relatively friendlier products especially if
product remains the same but embedded technology
changes. Eg Energy efficient products.
12Where are the Environmental Hotspots
- The developed countries have higher per capita
carbon emissions than developing countries. If
carbon emissions from agriculture are included
then their emissions would increase
substantially. - However, reducing carbon emissions is not merely
a matter of technology or products but patterns
of consumption too, especially food.
13Technology
- Substantial convergence in technological
achievement between China and the developed
countries according to a World Bank study. - This is attributed to the openness of China to
foreign trade, foreign direct investment. - Returning Chinese migrants have also dramatically
increased both exposure to new technologies and
the opportunities to use foreign markets to
exploit increasing returns to scale. - Hence both exports and imports of EGs important
for China.
14Trade in EGS products in general
- Top ten importers of EGs identified by job 54 of
the WTO prominently includes China. China
accounts for roughly 10 of total imports and
exports at the global level. - China along with Hong Kong accounts for over half
of the developing countries exports and imports.
15Exports of Climate mitigation products and
technologies in the area of energy
- China a major exporter, i.e among the top twenty
countries in almost all categories of climate
friendly energy products. - However, its volume of exports much lower than
those of developed countries in a range of
products. - Its exports are highest in small hydro plants and
turbines and products associated with solar
energy. - In addition a number of Climate friendly energy
technologies use electronic components in which
China has a comparative advantage.
16Exports of Climate mitigation products and
technologies in the area of energy
- China also is the number one exporter in a number
of geothermal energy exports. - It has a comparative advantage in a number of
solar energy exports as demonstrated by the fact
that it is among the top 5 exporters of nearly
twenty products in this category. - It is a relatively small exporter of wind energy
products and technologies.
17Imports of climate mitigation products
- In almost 66 of the 84 categories of energy
products, China is among the top twenty
importers. - However, Chinas rank as an importer among the
top twenty is much lower than that of its
exports. - This indicates that China has a net comparative
advantage in value terms in the production of
most products which are climate friendly energy
products. - Nevertheless, the gap between China and the
developed countries remains wide in terms of both
exports and imports.
18Tariffs of top ten Developing country importers
of EGs
19An analysis of tariff profiles
- Applied tariffs of most high level importers
fluctuates between 0 and 12. While these are not
very high, on specific tariff lines they can be
as high as 40. - Chinas tariffs on an average for these products
is between 5 and 8. - Liberalisation through cutting tariffs would
yield real market access benefits to China as far
as intra-developing country trade is concerned. - However, these benefits would only accrue if
imports of developing countries sensitive to
tariff cuts.
20Linking trade flows with Climate Change
- Essentially climate associated technologies
scattered around 84 product categories for energy
efficient products. - If we use the World Bank identification of
climate friendly technologies and products as the
starting point, around 43 products identified as
being associated with climate change. - About 30 of these products do not show any
sensitivity to tariff changes. - A number of these products are also dual use, so
difficult to identify how many would be put to
environmental end use.
21Linking trade flows with Climate Change
- An important shortcoming of the world bank as
well as the WTO list is that both do not identify
technologies or products associated with
agriculture which could reduce carbon emissions. - According to some studies if the EU reduces its
meat consumption by just 5, the reduction in
carbon emissions would be equivalent to removing
21 million cars off the road. - Thus Carbon emissions associated with intensive
agriculture, particularly intensive meat
production needs to be calculated.
22Policy Implications and proposals
- While the Doha Mandate puts environment at the
centre of the EGS negotiations, it is difficult
to see how products classified in the HS code can
be directly related to Climate Change. - Thus the next logical step is to examine the
trade implications for developing countries of
the lists proposed as EGs to the extent that they
are relevant to climate change. - While additional tariff lines identified by other
studies may be more relevant to climate change,
the process of isolation and agreement on what
would be considered as climate friendly may be
somewhat cumbersome.
23Policy Implications and proposals
- Examining the list of 84 EGs, China has a clear
comparative advantage in a number of products. - The list can be further examined in light of
dynamic comparative advantage of China. - In this case, the comparative advantage of
climate friendly technologies and products would
not shift in favour of China in the near future.
(2015). - In addition, if NAMA negotiations are successful,
they would achieve the liberalisation of a number
of climate friendly goods too.
24Policy Implications and proposals
- However, other factors such as FDI, GDP,
Environmental performance and technical
assistance projects are much more important
determinants of trade flows than tariffs. - The elasticity with respect to TA of trade in
Energy products is particularly high. - This shows that international and bilateral
donors would have a large role to play in
directing the trade of EGs, rather than tariff
negotiations.
25- Thank you very much
- Please send comments to
jhaveen_at_gmail.com