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.
Date posted: April 22, 2010