Working Paper on Trade in Environmental Goods and Services - Australia

Description
Many obstacles prevent reliable definition of the EGS industry. These include the multiple possible end uses of many EGS and incompatibility with standard industry classification systems, which mostly categorise by key constituents or appearance and lack the required level of detail.

ECONOMIC ANALYTICAL UNIT
WORKING PAPER

AUSTRALIA’S TRADE IN
ENVIRONMENTAL GOODS AND SERVICES

EXECUTIVE SUMMARY
Environmental goods and services, EGS, are a growing part of the international economy, expected to reach
$US600 billion worldwide by 2010. The Doha Declaration, launching a new round of World Trade Organization,
WTO, negotiations, includes reference to negotiations to liberalise trade in EGS. Understanding the industry is
therefore particularly important to parties to the negotiations.
Def i ni ng Envi r onment al Goods and Ser vi c es
Many obstacles prevent reliable definition of the EGS industry. These include the multiple possible end uses
of many EGS and incompatibility with standard industry classification systems, which mostly categorise by key
constituents or appearance and lack the required level of detail. Many multilateral and national agencies are
pursuing efforts to further define the industry, of which the Organisation for Economic Cooperation and
Development, OECD, has the broadest currency. The OECD defines the industry as follows:
“The environmental goods and services industry consists of activities which produce goods and services to
measure, prevent, limit, minimise or correct environmental damage to water, air and soil, as well as
problems related to waste, noise and eco-systems. This includes cleaner technologies, products and
services that reduce environmental risk and minimise pollution and resource use.”
Considerable debate surrounds the scope of the EGS industry, especially whether it should include so called
environmentally friendly goods. Environmentally friendly goods are goods produced, used or disposed of in a
way that has a reduced or minimal impact on the environment. The OECD definition of EGS does not include
environmentally friendly goods defined as such due to their environmentally friendly production processes.
The paper seeks to circumvent some of the other definitional issues with environmental goods by measuring
trade using the concept of potential environmental goods. Potential environmental goods are defined as those
goods identified as having possible end uses in environmental management or protection, and are those
goods listed on OECD and Asia Pacific Economic Cooperation, APEC, concordance lists between their
respective classification systems and the Harmonised System used by customs authorities. Potential
environmental goods, that is, including dual use goods, represent a larger group of goods than environmental
goods, but since it is not currently possible to quantify accurately trade in environmental goods, they provide
the only way of approximating trade in the industry. This concept may also simplify the implementation of trade
liberalisation measures by eliminating the need for new regulations governing goods with multiple end uses.
Aust r al i a’s Tr ade i n Envi r onment al Goods and Ser vi c es
While Australia’s precise exports of EGS cannot be quantified exactly, they are thought to be between $A150
million and $A300 million per annum. Exports of the broader category of potential environmental goods
exceed $A2 billion. Domestically, Australia’s EGS industry has an estimated turnover of over $A10 billion.
Australia imports almost $A7 billion in potential environmental goods, giving a sectoral trade deficit in potential
environmental goods approaching $A5 billion per annum.
Inadequate data prevent any reliable efforts at estimating the size of Australia’s trade in environmental
services. Nevertheless, various qualitative sources suggest Australia’s sectoral strengths are concentrated in
the larger segments of the industry, such as water treatment, wastewater management and waste
management, and in mine rehabilitation.
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Trade in Environmental Goods and Services
Aust r al i an Envi r onment al l y Fr i endl y Goods I ndust r y
Environmentally friendly goods are goods produced, used or disposed of in a way that has a reduced or
minimal impact on the environment. Demarcating between environmentally friendly goods and normal goods is
difficult, as measures of environmental impact are always relative and community standards and technology
are constantly evolving.
Australia has a strong and expanding capacity to produce a wide range of environmentally friendly agricultural
goods using improved production methods. Australia is also a world leader in meeting the ISO 14000
standards of environmentally friendly management practices. Levels of ISO 14000 certification are an
indication of an economy’s potential and preparedness to measure up to international standards for
environmentally friendly goods. Some European economies have the highest very high levels of certification,
while the developing world and the United States have quite low rates of certification.
I mpl i c at i ons f or Tr ade Negot i at i ons
Due to difficulties in demarcating between EGS and other goods and services, there may be merit in taking an
inclusive approach to the negotiations to avoid the need to apply and enforce tariffication according to end use.
Such an approach would include any goods and services that may be used as end use EGS into the
liberalisation negotiations.
Australia is supporting the use of the APEC classification list as the basis for WTO negotiations on increased
liberalisation of environmental goods given the focus of this list on end use criteria. This approach however
does not discount negotiations on potential environmental goods that may not be covered by the APEC list
due to the development of new technologies. Australia does not support the use of the OECD list of
environmental goods as a negotiating tool; although it is a useful tool to assist in terms of definitional and
classification issues. The OECD indicated at the February 2003 WTO trade and environment negotiations that
they did not support using the OECD as a negotiating tool as that was never its purpose and it was intended
for analysis only. One of the problems with the OECD list was that it was created through a developed country
forum, as opposed to the APEC list which was created through developed and developing country input.
Australia is not supporting WTO negotiations on environmentally friendly goods due to practical problems
associated with regulating trade on this basis and the potential to distort trade without achieving environmental
gains. The Australian government does however support market driven efforts by commercial interests to
trade in environmentally friendly goods, consistent with the outcomes of the World Summit on Sustainable
Development Plan of Implementation.
As Australia has considerable strength in environmentally friendly agricultural products, there is significant
rationale for forming alliances with developing countries with regard to the WTO negotiations, particularly
regarding any moves to expand the negotiations to include environmentally friendly goods. Many developing
countries are not placed strongly to meet current or new international standards on environmentally friendly
goods. Controlling trade in favour of environmentally friendly goods by regulating production methods would
interfere with national sovereignty and be deleterious to international trade and the interests of developing
countries.
PAGE ii

I. DEFINING THE ENVIRONMENTAL
GOODS AND SERVICES INDUSTRY
KEY POINTS
• Environmental goods and services are a growing part of the international economy, expected to
reach $US600 billion worldwide by 2010.
• The World Trade Organization is conducting specific negotiations on trade and the environment,
including trade in environmental goods and services, making understanding of the industry
particularly important to parties to the negotiations.
• Many obstacles prevent reliable definition of the environmental goods and services industry. The
Organisation for Economic Cooperation and Development classification system is the most
advanced in developing a comprehensive system for the industry.
• Considerable debate surrounds the scope of the environmental goods and services industry,
especially whether it should include so called environmentally friendly goods. World Trade
Organization rules suggest trade cannot be restricted in favour of environmentally friendly goods
defined by their process and production methods, as they are not materially different to their non-
environmentally friendly counterparts.
• Broadly defined potential environmental goods may provide a way of circumventing definitional
and data problems, by including all goods that could potentially be used for environmental
purposes. It may also simplify the implementation of trade liberalisation measures.
At the start of the twenty-first century, industry of all kinds, from agriculture to transport, along with urban
sprawl, continue to exert pressure on air and water quality, biological diversity and resources. In response,
there has been an increasing use of technology to remedy or ameliorate the resulting environmental
challenges.
The goods and services used to address such challenges, termed environmental goods and services, EGS,
form an expanding industry worth in excess of $A10 billion in Australia in 2001 and projected to reach $US600
billion worldwide by 2010 (Trade Promotion Coordinating Committee, 2000). Some have even predicted the
shift towards more environmentally sustainable development will have such important impacts on accepted
business models as to be considered part of the sixth wave of technological change since the Industrial
Revolution (Department of Industry, Science and Resources, 2000).
Of course, substantial and increasing international trade in EGS exists, and concurrent with the industry’s
development, a long running debate continues about the relationship between trade and the environment, an
issue that is a major part of the broader globalisation debate. The World Trade Organization, WTO, among
other multilateral organisations, has sought to address the issue of trade and the environment through a
standing committee, the Committee on Trade and Environment, whose members and observers are in
ongoing discussions about the environmental effects of trade. In addition, the WTO’s Doha Ministerial
Declaration mandated specific negotiations on the trade and environment issue (see Box). Clause 31 refers to
negotiations as part of the new Doha round to be conducted by the Committee on Trade and Environment in
Special Session. Clause 32 instructs the standing committee to focus on a number of issues in its normal
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Trade in Environmental Goods and Services
discussions. Discussions have commenced within the bounds of this mandate, focussing initially on the
method and scope of the negotiations.
EXCERPT FROM THE DOHA MINISTERIAL DECLARATION:
31. With a view to enhancing the mutual supportiveness of trade and environment, we agree to
negotiations, without prejudging their outcome, on:
(i) the relationship between existing WTO rules and specific trade obligations set out in multilateral
environmental agreements, MEAs. The negotiations shall be limited in scope to the applicability of
such existing WTO rules as among parties to the MEA in question. The negotiations shall not prejudice
the WTO rights of any Member that is not a party to the MEA in question;
(ii) procedures for regular information exchange between MEA Secretariats and the relevant WTO
committees, and the criteria for the granting of observer status;
(iii) the reduction or, as appropriate, elimination of tariff and non-tariff barriers to environmental goods and
services.
32. We instruct the Committee on Trade and Environment, in pursuing work on all items on its agenda
within its current terms of reference, to give particular attention to:
(i) the effect of environmental measures on market access, especially in relation to developing countries,
in particular the least-developed among them, and those situations in which the elimination or
reduction of trade restrictions and distortions would benefit trade, the environment and development;
(ii) the relevant provisions of the Agreement on Trade-Related Aspects of Intellectual Property Rights; and
(iii) labelling requirements for environmental purposes. (WTO, 2001)
Aust r al i a’s Envi r onment I ndust r y
As Australia does not possess particular strengths in major EGS industries to support exports on a large scale,
it is probably a net importer of EGS (see Chapter 2). Waste management and water treatment constitute a
majority of Australia’s EGS industry, as they do in many economies around the world Nevertheless, in some
segments, such as mine site management and rehabilitation, Australia’s experience means it is well placed to
export its goods and services. Both as an exporter and as an importer of foreign expertise and management,
Australia’s interests lie with a liberalised trading environment for EGS in order to further promote international
best practice environmental management.
WHAT ARE ENVI RONMENTAL GOODS AND SERVI CES?
Of pivotal relevance to the Doha negotiations is the definition of the EGS industry. For various reasons, many
EGS are difficult to identify. The evolving nature of the industry and the potential for to use particular goods
and services to improve environmental outcomes from almost every human economic activity create
difficulties in drawing the boundaries between environmental and other goods and services.
Cl assi f i c at i on I ssues
A number of obstacles arise in putting together any comprehensive definition of EGS. The need to differentiate
goods and services by their end use rather than their physical characteristics, the embedded nature of
environmental technology and the wide-ranging nature of the EGS industry, all present many challenges in
classification of EGS. The evolving nature of the industry will also require its classification to change with it.
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Incompatibility with Existing Classification Systems
EGS does not appear as its own category in any industrial or trade classification system. Rather, EGS are
spread through the existing categories, often divided by what they are made of or what they look like. In
addition, such classification systems often are not detailed enough to be able to identify the precise types of
goods which may be used as EGS. For example, the Harmonised System used for traded goods by customs
authorities is only harmonised internationally up to the 6 digit level, so while classifications beyond that, up to
12 digits, may exist, they are not internationally comparable. This has obvious impacts for measurement of the
industry, but also means that liberalisation of trade in EGS in any precise way would require modification of
customs authorities’ classification systems.
End Use
Many environmental goods also have other uses; it is their particular usage which sets them apart as
environmental. For example, one use of a centrifuge is for separating harmful waste products from a mixture,
but a wide range of other industrial uses also exist. Existing classification systems often do not classify goods
by their usage. This problem of establishing the usage of goods complicates the process of estimating the size
of the EGS industry, and creates the possibility of either excluding some products with environmental uses or
including some trade in products not being used for environmental purposes.
Embedded Technology and Integrated Services
Cleaner production methods often use embedded technology, which in some circumstances involves little
more than the use of a particular substance or technique at a particular stage of production. Often neither the
substance nor the standard equipment are environmental goods, but the particular production method has a
smaller ‘environmental footprint’ than conventional methods. Similarly, providers of environmental services
increasingly provide integrated commercial services which may include non-environmental construction,
engineering or managerial services. These issues complicate the valuation of the good, service or technology
for the purposes of inclusion in EGS.
Definition by Outcome or by Motivation?
A final complication in defining the industry is determining whether to include some cost-reducing technologies
and practices which have the convenient effect of being less polluting than alternative methods, but whose
utilisation could easily be motivated by good management or good house keeping. For example, are goods
which reduce use of an expensive and polluting substance environmental goods or not? These may be termed
win-win outcomes, in the sense that both the producer and the environment win. More problematically, is a
product that assists with processing recycled paper but also produces toxic by-products an environmental
good or not? In this case, the forests win but the waterways may lose.
Numerous parties have endeavoured to surmount the problems, presenting further standardisation problems.
Combined, these problems make it difficult to grasp the size and importance of EGS activity in the economy
and as part of trade with other economies.
Cl assi f i c at i on Ef f or t s
Multiple parallel efforts at defining the industry are underway, at multilateral, regional and national levels.
Major organisations pursuing efforts to define the industry are as follows.
The Organisation for Economic Co-operation and Development, OECD, and the Statistical Office of
the European Communities, Eurostat, have published The environmental goods and services
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Trade in Environmental Goods and Services
industry: Manual for data collection and analysis (OECD, 1999) which many OECD members,
including the United States, Canada, France, Germany and Australia, use as a basis for surveying
their own industries. Many WTO members also use the OECD categories in their submissions to the
new round of negotiations. The OECD defines the EGS industry as follows:
“The environmental goods and services industry consists of activities which produce goods and
services to measure, prevent, limit, minimise or correct environmental damage to water, air and soil,
as well as problems related to waste, noise and eco-systems. This includes cleaner technologies,
products and services that reduce environmental risk and minimise pollution and resource use
(OECD, 1999).”
With respect to environmental services, the WTO employs the evolving GATS W/120 classification
list, which is derived from the United Nations Central Product Classification, UN CPC (General
Agreement on Tariffs and Trade, 1991).
In 1997, the leaders of the Asia Pacific Economic Cooperation, APEC, economies meeting in
Vancouver endorsed the inclusion of the EGS sector in its early voluntary sectoral liberalisation
initiative. A panel of technical experts produced a list of environmental goods, based on the OECD
definition of the industry (WTO, 2002a). The list also included the Harmonized System codes for
concordance with the customs classification system, but work on the list ceased in 1998 when
leaders handed early voluntary sectoral liberalisation in EGS to the WTO.
The Australian Department of Industry, Science and Resources and Environment Australia have
published an Environment Industry Action Agenda, which adopts the OECD definition of the EGS
industry (Department of Industry, Science and Resources, 2001). However in some areas additional
emphasis has been given to potential growth areas.
An ongoing debate exists about the relative virtues of the particular classification systems. For example,
OECD (2001) provides a detailed critique of the deficiencies of the W/120 system and suggests a number of
ways it could be revamped (pp. 17–25). The OECD classification system seems to be the most widely used at
this stage, but the W/120 system continues to be used at the WTO and the United Nations, particularly for
services. Negotiations on environmental goods are currently examining both the APEC and OECD lists.
In addition to efforts to classify the EGS industry, other international and domestic systems to quantify
expenditure on environmental protection also are being developed. At the international level, the United
Nations’ Classification of Environment Protection Activities exists, while domestically, the Australian Bureau of
Statistics, ABS, compiles statistics on Environment Protection in Mining and Manufacturing Industries
(Australian Bureau of Statistics, 2002). The resulting measures are somewhat comparable but the different
methodology and substantial difficulties in defining and collecting data mean they must be treated separately.
For example, the Australian EGS industry considers the ABS figures to underestimate considerably the size of
the industry (Environment Australia, 2001).
OECD/Eurostat Classification System Comprehensive and Wide Ranging
The OECD/Eurostat Classification System is the most advanced and comprehensive of all efforts to classify
and define the industry. It divides the EGS industry into three major groups: the pollution management group,
the cleaner technologies and products group and the resource management group. Each of these groups are
sub-divided into a number of categories and subcategories (Table 1.1).
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Table 1.1
OECD/Eurostat Environmental Goods and Services Industry Manual Classification
Air pollution control The ‘Pollution Management’
Group
Environmental equipment
and specific materials
Wastewater management
Solid waste management
Remediation and clean-up of soil, surface
water and groundwater
Noise and vibration abatement
Environmental monitoring, analysis and
assessment
Other
Environmental services Air pollution control
Wastewater management
Solid waste management
Remediation and clean-up of soil, surface
water and groundwater
Noise and vibration abatement
Environmental R&D
Environmental contracting and engineering
Analytical services, data collection,
analysis and assessment
Education, training and information
Other
Construction and installation
The ‘Cleaner Technologies
and Products’ Group
Cleaner/resource-efficient technologies
and processes
Cleaner/resource-efficient products
Indoor air pollution control The ‘Resource
Management’ Group
Water supply
Recycled materials
Renewable energy plant
Heat/energy saving and management
Sustainable agriculture and fisheries
Sustainable forestry
Natural risk management
Eco-tourism
Other
Source: OECD, 1999. Included in full at Appendix A.
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Trade in Environmental Goods and Services
Ar e Envi r onment al l y Fr i endl y Goods i nc l uded?
A key issue in the definition of EGS is whether environmentally friendly goods, EFG, form a part of EGS. EFG
are goods that through their life cycle, that is their production, use and/or disposal, have lower environmental
impacts than their non-EFG counterparts. EFG that have reduced impacts through their use and/or disposal
are included in the OECD/Eurostat classification of EGS and represent an area of overlap between EFG and
EGS. However, EFG defined as such due to their environmentally friendly production methods do not currently
feature in the OECD/Eurostat system.
WTO Rules Exclude Production Method Based EFG
With respect to goods produced in an environmentally friendly way, WTO rules, as they have been interpreted
to date, stipulate that trade in goods and services cannot be restricted on the basis of the process and
production methods, PPMs, used to produce them, if those PPMs are ‘non-incorporated’. A non-incorporated
PPM is one that has no discernable impact on the final product – i.e. it is impossible to tell the PPM used by
examining the final product. In many cases, EFG are distinguishable from their non-environmentally friendly
counterparts by the way that they are produced, and hence, it is thought WTO rules would disallow any
barriers to international trade in favour of them. Therefore, the reference to EGS in clause 31 (iii) of the WTO
declaration would generally not be thought to include PPM-based EFG.
Goods that are used or can be disposed of in a more environmentally friendly way, for example energy or
water efficient equipment or recyclable computer equipment, could be argued to be discernibly different from
their non-EFG counterparts, and as such would not fall foul of WTO rules.
It is important to note that while the OECD/Eurostat classification system seems to be consistent with WTO
rules at this stage, it is still evolving and Australian policymakers need to keep a watching brief on any
changes that may include PPM-based EFG in the list in the future.
Pitfalls in PPM Based Liberalisation
Leaving aside WTO rules, any attempt to liberalise trade in PPM based EFG would not be feasible without
impinging on the sovereignty of members to determine their own environmental objectives. Given the site
specific nature of many environmental problems, countries’ different natural and human environments, not to
mention developmental priorities, give rise to widely different environmental standards with respect to water,
air and land use. This in turn leads to different priorities in determining what are environmentally friendly PPMs.
Multilateral liberalisation in favour of PPM based EFG would effectively impose WTO based standards on
PPMs, providing protection for those with PPM standards matching or exceeding the WTO standards at the
expense of those with lower standards, regardless of the pressing environmental problems of each.
Voluntary Eco-labelling
Suppliers of PPM based EFG may of course use voluntary eco-labelling as a marketing tool, as is common in
many developed countries. Compulsory eco-labelling would not be enforceable in a WTO compliant manner,
since a product that is eco-labelled to indicate it has been produced in a particular way is not materially
different from one that is not labelled. This is distinct from energy efficiency and nutrition labelling, both of
which are product-incorporated and intended to facilitate better communication to the consumer of the nature
of the product itself. The experience with eco-labelling of timber in Europe demonstrates that eco-labelling
also can be subject to fraud and misrepresentation.
The WTO’s Committee on Technical Barriers to Trade is conducting ongoing discussions on eco-labelling to
ensure it does not become trade restricting while continuing to better inform consumers and assist EFG
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producers in extracting a ‘green’ premium. In addition, the Doha declaration included a commitment in clause
32 (iii) that the Committee on Trade and Environment give particular attention to labelling.
Schemes from different countries facilitating mutual recognition between each other may help reduce the
degree to which voluntary eco-labelling is a barrier to entry for outsiders. Counterproductively, larger, more
onerous schemes may present even more significant barriers to entry, particularly developing country
exporters. As eco-labelling becomes more common, the share of the world marketplace available to producers
of unlabelled goods is smaller. In this case, more assistance may be required for developing country
producers to inform them of the requirements in order to qualify for eco-labelling.
I MPLI CATI ONS FOR TRADE NEGOTI ATI ONS
Despite the various efforts to develop cohesive classification systems to characterise the EGS industry, these
systems do not neatly match the approach used in classification of goods and services for customs and
tariffication purposes. This has important implications for trade negotiations on EGS. While end use is rarely of
any consequence to customs agencies, many EGS (eg. pumps, filters, extractors, etc.) have multiple uses,
only some of which are for environmental management. It is logistically unwieldy to apply different tariffs on
goods and services as they cross the border according to whether their end use is for environmental
management or not. Enforcement of EGS’ actual end usage is not likely to be worthwhile.
That being the case, if tariff and non-tariff barriers to EGS are reduced or eliminated as set out in the Doha
declaration, what about the myriad goods and services that have multiple possible uses? Given that reduction
in barriers to trade is the intent of the Doha mandate, an all-inclusive approach would suggest that trade in any
good or service that could possibly be used as an EGS could be liberalised. Where the EGS does not have
product incorporated features indicating that it is only used as an EGS, this would result in goods and services
that ultimately are not used as EGSs being included in the liberalisation, but it appears better to err on the side
of liberalising trade and include these than exclude goods or services that may play an important role in
environment protection or management.
Pot ent i al EGS
Given the logic and possibility of an inclusive approach to trade liberalisation in this area, where EGS specific
information is not available, this report takes a broader approach, including any goods and services that are in
some cases used for environmental management. Such goods and services are termed potential EGS in this
report
1
. Characterisations of Australia’s trading position in these goods and services will not reflect perfectly
the position with respect to EGS, but this trading position would actually be more relevant to negotiators were
the inclusive approach to be accepted in the negotiations. It is reasonable to assume that at least the direction
of the trading position, if not the magnitude, will be the same for actual EGS and the broader potential EGS
industries.
With environmental goods, the detailed categorisation that exists within the Harmonized System used by
customs agencies around the world provides some ability to narrow down the kinds of goods used for
environmental management. Existing WTO submissions list concordance annotation for the Harmonized
System to both the OECD and the APEC classifications of environmental goods (WTO, 2002b). This enables
the compilation of potential environmental goods data, which are referred to in this report. For environmental
services, however, trade data is relatively scarce and less detailed, preventing even this approach.

1
Potential EGS are goods or services which could be EGS but also include non-EGS due to reliance on a customs data.
Data are calculated using a combination of OECD and APEC concordance lists (See Appendix B). Detailed negotiations on
EGS has the potential to narrow this list further by specifying more detailed lists of goods than is possible using 6 digit
Harmonised System categories.
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Trade in Environmental Goods and Services
REFERENCES
Australian Bureau of Statistics, 2002, Environment Protection, Mining and Manufacturing Industries 2000-01,
ABS 4603.0, Canberra.
Department of Industry, Science and Resources, 2001, Investing in Sustainability – Environment Industry
Action Agenda, Canberra.
———, 2000, ‘Shaping Australia’s Future’, Framework Paper, Canberra.
General Agreement on Tariffs and Trade, 1991, ‘Services Sectoral Classification List’, MTN.GNS/W/120,
Geneva.
OECD (Organisation for Economic Co-operation and Development), 2001, Environmental Goods and Services:
The Benefits of Further Global Trade Liberalisation, J oint Working Party on Trade and Environment,
Paris.
———, 1999, The Environmental Goods and Services Industry: Manual for Data Collection and Analysis,
Paris.
Oxley, A., 2002, ‘The Environmental Threat to Development in the Doha Development Round’, APEC Study
Centre, Melbourne.
US Trade Promotion Coordinating Committee, 2000, ‘The National Export Strategy’, Annual Report to the
United States Congress, Washington
WTO (World Trade Organization), 2002a, ‘Environmental Goods’, Submission by New Zealand to Committee
on Trade and Environment Special Session, TN/TE/W/6, 6 J une.
———, 2002b, ‘List of Environmental Goods’, Note by the Secretariat to the Committee on Trade and
Environment Special Session, TN/TE/W/18, 20 November.
———, 2001, ‘Ministerial Declaration’, WT/MIN(01)/DEC/1, 14 November, Doha.

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II. ENVIRONMENTAL GOODS AND
SERVICES
KEY POINTS
• Australia’s EGS industry has an estimated turnover of over $A10 billion. Worldwide, the industry
is estimated at $US600 billion (around $A1000 billion).
• Australia’s precise exports of EGS cannot be quantified exactly but are thought to be between
$A150 million and $A300 million per annum. Exports of broader potential environmental goods
exceed $A2 billion.
• Australia imports almost $A7 billion in potential environmental goods, giving a sectoral trade
deficit in potential environmental goods approaching $A5 billion per annum.
• Inadequate data prevent any reliable efforts at estimating the size of Australia’s trade in
environmental services.
• Australia’s sectoral strengths are concentrated in the larger segments of the industry, such as
water treatment, wastewater management and waste management, and has expertise in mine
rehabilitation.
SI ZE OF THE I NDUSTRY
The EGS industry accounts for between one and two per cent of GDP for most countries around the world,
including Australia, making it a significant part of the economy.
Aust r al i an Mar k et
Total expenditure on environment protection was estimated at $A8.6 billion, 1.6 per cent of GDP, in 1996-97
(Australian Bureau of Statistics data reported in Department of Industry, Science and Resources, 2000). The
majority of environment protection expenditure was on wastewater management and water protection,
$A3 billion, and waste management activities, $A2.5 billion. Expenditure to protect biodiversity and landscape
accounted for $A1.5 billion, with the remaining $A1.6 billion spent on protection of ambient air, climate, soil
and groundwater, research and development, noise and vibration abatement and other environment protection
activities not separately identified. While the Australian Bureau of Statistics no longer compiles this data for
the whole economy, in 2001-02, 1.6 per cent of GDP equated to around $A11.4 billion.
The Australian Bureau of Statistics continues to compile data on environment protection expenditure in the
mining and manufacturing industries, two key consumers of environmental goods and services. This was
estimated at $A1.5 billion in 2000-01, or 1 per cent of their total expenditure. This included $A482 million on
solid waste management, $A402 million on liquid waste and waste water management, $A222 million on air
emissions management and $A105 million on mine rehabilitation (Australian Bureau of Statistics, 2002).
Other estimates of the size of the Australian EGS industry also exist. Environment Business Australia
estimated the turnover of the Australian industry in 2000 to be between $A8 billion and $A11 billion
(Environment Management Industry Association of Australia, 2000). An input-output analysis of the industry
estimated direct expenditure on the environment was $A7.9 billion in 1995-96 (Industry Policy Consultants,
1998).
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Trade in Environmental Goods and Services
I nt er nat i onal Mar k et
The US Department of Commerce estimated the global environment market to be $US513 billion, almost
$A1000 billion, in 2000 (US Department of Commerce, 2000). The European Commission estimated that the
size of the global EGS market in 1998 was around €330 billion, around $A550 billion, and forecasts it will
increase to €439 billion, around $A750 billion, by 2010 (European Union, 1999).
The international market can be divided into two broad segments:
– in developing economies, basic needs like clean water delivery and waste-water treatment form the
majority of demand, which normally is limited to around 1 per cent of GDP; international aid agencies
often provide the necessary funding
– in developed economies, a more sophisticated range of environmental goods and services are in
demand from a wider range of government agencies and firms, pushing demand to up to 2 per cent
of GDP.
This dichotomy stems from the ‘luxury good’ characteristic of environmental protection; as the incomes of
economies and populations increase, they are prepared to spend more on protecting the environment (World
Bank, 1992). Hence, the majority of the global environment market exists in the richer countries, not only
because they account for a majority of global GDP but also because they are more able to divert resources to
solving environmental problems. Developed countries’ ability to implement environmental regulations is also
higher because enforcement agencies are often better funded and more transparent. More market driven
regulatory infrastructure means economic incentives also often operate better in more developed economies,
translating regulations into demand for EGS. However, the fastest growth of market size occurs in rapidly
developing economies, both because of their increased income and their increased ability to afford to protect
the environment.
In many less developed economies, international aid agencies have an important role in funding
environmental protection and in some cases donor industrialised economies also influence decision making
regarding environment projects. A recent European Union, EU, report estimated that up to 40 per cent of EU
exports of EGS may be as a result of ‘tied aid’ to developing countries (European Union, 1999). EU tied aid is
highest to Central and Eastern Europe, South East Asia, India, Africa and South America. Such aid can
advantage EU firms at the expense of others, including Australian ones.
TRADE I N EGS
Estimation of Australia’s trade in EGS is difficult; hence estimates are scarce (see Chapter 1). Given the vastly
different approach to defining the EGS industry compared to conventional industries, accurate quantification of
the industry would require a separate statistical survey. Nevertheless, a number of more approximate
measures of the industry exist.
Aust r al i an Ex por t s
A number of estimates of the size of EGS exports exist, but little supporting data or methodology is available
to substantiate or elaborate on many of these estimates. In 1994, a report by the Australian Council of Trade
Unions and the Australian Conservation Foundation Green J obs Unit estimated industry exports at around
$A200 million (Cook, 1994). In the same year, the Environment Management Industry Association of Australia
suggested EGS exports exceeded $A300 million (Environment Management Industry Association of Australia,
1994). More recently in 2000, the Environment Management Industry Association of Australia Chair, Paul
Perkins, estimated EGS exports at around $A140 million (Department of Industry, Science and Resources,
2000).
PAGE 10

Using the broader definition of potential EGS, which includes any good with a substantial component of
environmental end use, generates an estimate of Australia’s trading position in the industry. The logic of an
inclusive approach to trade liberalisation policy means that such estimates are useful in their own right (see
Chapter 1).
Analysis of Australian trade data indicates that in the 2001/02 financial year, Australia exported $A2.1 billion in
potential environmental goods (Table 2.1).
12
This includes $A882 million in machinery, $A650 million in
precision equipment and $A208 million in chemicals similar to the types of goods used in environmental
management. When compared to Australia’s imports, it is apparent that Australia does not have a comparative
advantage in any of the goods categories used in environmental management. Anecdotal evidence suggests
that, as is the case in most Australian manufacturing sectors, Australia produces and exports specialised
environmental goods in niche markets but as a whole it is a net importer.
Table 2.1
Australia’s Trade in Potential Environmental Goods
a
, $A million, 1997/98 and 2001/02
Exports Imports Trade balance
1997/98 2001/02 1997/98 2001/02 1997/98 2001/02
Chemicals (eg. catalysts) 115 208 353 641 -238 -434
Plastic and rubber products 97 159 431 548 -334 -388
Machinery 849 882 3 083 3 252 -2 234 -2 370
Electrical machinery 56 116 415 491 -359 -375
Precision equipment 392 650 1 381 1 703 -989 -1 053
Other 101 108 244 270 -143 -162
Total 1 610 2 123 5 907 6 906 -4 297 -4 783
Notes:
a
Potential environmental goods are all goods which could potentially be used for environmental management,
as far as is it is possible to ascertain using the Harmonized System of classification and concordance with the OECD
and APEC environmental goods classifications.
Services data are much less detailed, making analysis of even potential environmental services difficult. It is
not possible to concord the sectoral data compiled by the Australian Bureau of Statistics with the end-use
based OECD environmental services classification or any other classification system. This applies to exports,
imports and, by implication, the trade balance. As such, the various estimates above of combined EGS
exports are the only estimates available.
Aust r al i an I mpor t s
An input-output analysis conducted for the Environment Industry Action Agenda suggested that in 1996,
imports of EGS amounted to about $A4 billion (Industry Policy Consultants, 1998). Australian industry also has
considerable investment from foreign sources in a number of areas, suggesting there may be significant levels
of import penetration in the Australian environmental services industry, particularly of overseas technology and
know-how. For example, subsidiaries of two of the largest environmental companies in the world, Vivendi and
Suez Lyonnaise des Eaux, are leading firms in the waste management and water treatment sectors of the
Australian EGS industry (Department of Industry, Science and Resources, 2000).

1
Some reports term represent this as trade in environmental goods per se, but this is not entirely accurate (see for example
Centre for Strategic Economic Studies, 2001).
2
This is substantially larger than the less precise estimates of environmental goods alone that appear above, perhaps
indicating that some further refinement of the classification of potential environmental goods is required.
PAGE 11
Trade in Environmental Goods and Services
In 2001/02, Australia imported around $A6.9 billion of potential environmental goods, including $A3 252
million in machinery, $A1 703 million in precision equipment and $A641 million in chemicals (Table 2.1).
Taking its exports into account, Australia is a net importer of $A4 to 5 billion per year in potential
environmental goods across all major categories of manufactured goods. This trading position has not
changed significantly over the last five years.
As noted earlier, no data on Australia’s trade in environmental services exist.
AUSTRALIA’S TARIFF LEVELS
Australia already has very low tariffs on potential environmental goods, reflecting the low general tariff
arrangements across most industrials. The weighted average tariff on Australia’s imports of potential
environmental goods is 2.9 per cent. Of the 170 Harmonized System 6-digit categories classed as
potential environmental goods, 81 lines enter Australia tariff-free, 84 are taxed at 5 per cent, with the
remaining 5 taxed at 15 per cent. These 5 lines generally incur the higher tariff as they are considered to
be of a kind potentially used as components in passenger motor vehicles. Tariffs vary across industry
groupings, with chemicals and precision equipment generally entering tariff-free, while plastics and
machinery are generally taxed at 5 per cent (Table 2.2).
Table 2.2
Australian Tariff Levels on Potential Environmental Goods
a
, per cent, 2002
Simple average tariff Weighted average
tariff
b
Chemicals 0.8 0.7
Plastic and rubber products 5.0 5.0
Machinery 4.8 4.4
Electrical machinery 2.0 1.4
Precision equipment 0.6 0.4
Other 4.4 4.5
All 2.9 2.9
Notes:
a
Potential environmental goods are all goods which could potentially be used for environmental
management, as far as is it is possible to ascertain using the Harmonized System of classification and
concordances with the OECD and APEC environmental goods classifications.
b
Weighted by imports in 2002.
Maj or Over seas Ex por t er s of EGS
During the early 1990s, the OECD considered the US, German and J apanese environmental industries to be
the largest exporters of EGS, narrowly defined (OECD, 1996). More recently, Environment Business
International estimated that in 1998, the US environment industry earns export revenue of almost $US19
billion, followed by the J apanese industry with around $US15 billion and Germany with a little over $US9
billion (Environmental Business J ournal, 2000). Some other European countries, such as Finland and Norway,
also have internationally focussed industries, but have a smaller market share.
As such, EGS seem to be concentrated in capital and technology rich economies. Despite the lack of data,
basic trade theory would suggest that, given the outcomes, Australia does not appear likely to become a major
net exporter of EGS. As Australia possesses large amounts of capital and a highly skilled workforce, it is quite
capable of producing EGS for domestic consumption and provision and exporting small amounts in particular
niche markets where firms possess particular skills or technology. However, given its relatively more abundant
resources and land, in terms of comparative advantage it is more likely to continue to concentrate on resource
PAGE 12

and land intensive products, and products of associated industries, for the bulk of its export revenue. In some
cases, Australia’s niche EGS markets will lie in agriculture or mining related areas where it is able to exploit
particular environmental know-how.
AUSTRALI AN SECTORAL ASSESSMENTS
Envi r onment al Goods
A breakdown of the number of firms in the Interdata Environment Handbook in 1996 revealed that 477 out of
1674 firms, 28 per cent, were involved in the supply of environment management equipment (Industry Policy
Consultants, 1998). However, the proportion of firms that produced or otherwise sourced the equipment in
Australia is not clear from this study.
In a study of the EGS industry using Porter attractiveness ratings, Industry Policy Consultants concluded
Australia had relatively few strengths in the provision of environmental equipment, i.e. goods (Industry Policy
Consultants, 1998)
3,4
. This is primarily due to the small size of the Australian market, the economies of scale
that exist in the production of most environmental goods and the dominance of those markets by large
multinational companies. However, Australia does have positive attributes, such as good domestic capability
in niche equipment and technology, medium scale metals and engineering fabrication and information
technology, communications and software, all of which support the development of capacity in selected
sectors of environmental goods production. In particular, the analysis suggests Australia is competitive in the
provision of water equipment, air pollution control equipment and instrument manufacture.
The Porter attractiveness ratings suggest Australia possesses less strength in waste management and
process and prevention technologies, largely because of the economies of scale in those industries and the
small and diffuse nature of the Australian market (Industry Policy Consultants, 1998). On the other hand, a
more recent APEC survey of environmental markets in APEC economies concluded waste management was
an area of potential high growth for Australia (APEC, 2001). The importance of this segment within the EGS
industry means that even modest growth for the segment could be significant for the Australian EGS industry
as a whole.
Envi r onment al Ser vi c es
As recently as 2000, a comprehensive review of the Australian services sector by the Department of Industry,
Science and Tourism did not specifically include the environmental services industry as one of 20 sectors
covered in the report (Department of Industry, Science and Tourism, 2000). This indicates the difficulty of
separating out environmental services, which tend to be spread right across a wide range of management,
engineering and ancillary services. Despite this, some, mostly qualitative, information on the industry exists.
Statutory authorities, including government research and development corporations, supply many of
Australia’s environmental services. More broadly, Australia’s strong educational infrastructure in
environmental sciences and environmental engineering and professional skills provide an important source of
strength for the industry (Centre for Strategic Economic Studies, 2001). Environmental research from the
Commonwealth Scientific and Industrial Research Organisation, the Cooperative Research Centres and
universities has encouraged innovation in the industry. In the private sector, according to a breakdown of the

3
Porter attractiveness ratings assess industry competitiveness based on four sets of conditions; factors of production, the
size and rate of growth of domestic demand, the presence of internationally competitive supplier industries and ‘firm
strategies and structure’ (Porter, 1990).
4
Fifteen industry segments were considered in the study, five equipment segments, five services segments and five
‘resources’ segments. For the purposes of this report, the ‘resources’ segments are also classed as services.
PAGE 13
Trade in Environmental Goods and Services
number of firms in the Interdata Environment Handbook in 1996, a majority of Australian firms, 1197 out of
1674 firms, 72 per cent, were involved in the provision of environment management services (Industry Policy
Consultants, 1998)
3
. The Industry Policy Consultants study found Australia was particularly strong in providing
environmental services, particularly analytical services and consulting and engineering, due to the significant
potential domestic demand and high skill base of university trained people (Industry Policy Consultants, 1998).
(See Box).
Other factors, such as public pressure, have given impetus to the environmental services industry, developing
some strengths. For example, in the late 1980s and 1990s, opposition to using high temperature incinerators
for waste disposal spurred the development of alternative technologies. Australia’s waste management
industry is now noted to be a world leader in technology for the disposal of some toxic wastes such as
polychlorinated biphenyls, PCBs (APEC, 2001). Australia has a wide range of sensitive environments and a
considerable number of environmental problems in common with many countries, providing another source of
competitive strength.
Particular industry segments where Australia is noted to have some strengths or future potential include solid
waste management including organic waste processing and recycling, contaminated site rehabilitation, water
resource management, marine resource management, hazardous waste management services, waste water
management, water protection, arid land management, clean mining and mineral processing, pollution
monitoring and control, airport noise abatement, eco-tourism and renewable energy such as photovoltaics
(Industry Policy Consultants, 1998; APEC, 2001; Department of Foreign Affairs and Trade, 2001; Centre for
Strategic Economic Studies, 2001).

AUSTRALIAN EXPERTISE IN SERVICES WIDE RANGING
Aquatec-Maxcon is a provider of water and wastewater technology, equipment and associated services from
pilot studies to process selection and design, construction and installation, commissioning, operation and
maintenance. It has exported to many countries, including New Zealand, Papua New Guinea, Indonesia,
Singapore, Vietnam, China and India and has established a sister company in Indonesia.
Coffey Geosciences is a company of specialist consulting engineers and scientists, maintaining offices
throughout Australia and in J akarta, Kuala Lumpur, Manila, Bangkok, Hanoi and Hong Kong. Its international
clients include agencies such as the Asian Development Bank, the World Bank, the United Nations
Agencies and AusAID.
Egis Consulting Australia is an environmental engineering and management consultancy. The
environmental group has been active in the international market for 30 years and had undertaken many
environmental engineering, management and scientific projects in Indonesia, the Philippines, Malaysia,
Thailand, Papua New Guinea, Vietnam, Laos, China, Pakistan and other countries for the major aid
agencies and major private and public sector clients.
The United Nations Environment Programme has engaged Environment Australia to develop training
materials on improved mining practices for use in developing countries. The training kit will build on the
knowledge of Australian industry practitioners and regulators and be based on the Best Practice in
Environmental Management in Mining series currently in use in Australia. The kit will highlight Australia’s
high quality environmental technology and mining support services.
Fisher Stewart is an environmental management consultancy. In the past two years, Fisher Stewart has
completed project management, design and construction of over 30 water and wastewater treatment plants
PAGE 14

in Indonesia, China, Vietnam and the Philippines; and over 300 specialist natural resource studies and
projects in Australia, Asia Pacific and Europe.
Geo2 is a waste management company. Geo2 has joint ventures in China and the United States transferring
knowledge and technology from the minerals industry into reprocessing plastic scrap from the information
technology industry. It also re-engineered a gold and copper processing operation with financial and waste
problems at Huludao in China to give economies of scale and produce a near zero discharge system.
Landfill Management Services is a specialist landfill gas company. It has been involved in many projects
abroad, including in Taiwan, Thailand, Philippines, Hong Kong, India, Indonesia, Europe and North America.
Lochard supplies noise and flight track monitoring systems to airports. Its current installation base covers
twelve countries on four continents and includes airports in Chicago, London and Hong Kong.
GRD Minproc is involved in waste and water treatment, particularly for the minerals resources sector. The
company has completed two recycling facilities in China and a mercury scrubbing facility in Indonesia.
MPL is a risk management consultancy and laboratory. Its international projects include corrosion control for
a mine and township in Papua New Guinea, surveys for a new copper mine in Mauritania and an
environmental impact study of drainage from coal mines in Indonesia.
Natural Technology Systems is transferring its expertise in remote Australia communities to the remote
areas of South East Asia. In 1995, the Forestry Department of Brunei Darussalam commissioned them to
design and install a renewable energy power system for a national park.
Oceans Environmental Engineering is a waste management company using a unique reed bed technology
in Great Britain, New Zealand, India and Indonesia.
OPEC Systems are marine and industrial pollution experts specialising in the treatment of spills and leaks.
They have offices throughout Australia and South East Asia.
Sepa Waste Water Treatment designs, manufactures and installs water and wastewater treatment plants. It
operates throughout Australia, New Zealand and South East Asia, and has built treatment plants in 15
countries. Recent projects include a complete wastewater and sludge dewatering plant for BHP’s Thailand
flat products steel mill, a plant for treating oil refinery wastewater for the Petron Corporation in the
Philippines and a dissolved air flotation plant for waste treatment at Northlands Dairies in New Zealand.
Sinclair Knight Merz provides engineering and other professional services. It undertakes a considerable
volume of consultancy work abroad, particularly for the major multilateral agencies. One of its more
noteworthy recent projects is the Samut Prakarn Wastewater Project in Bangkok.
SMEC is a multi-disciplinary consultancy group with offices throughout Australia, Asia, Oceania, Africa and
the Middle East. SMEC Environmental has undertaken a range of landmark projects, including Ho Chi Minh
City Environmental Improvement Program in Vietnam, environmental and social impact assessment of roads
in India and Nepal, the Cagayan Economic Development Zone Masterplan in the Philippines, the Rabaul
Zoning Development Plan in Papua New Guinea, undertaken post volcanic destruction, project preparation
to support the Mekong River Commission’s Water Utilisation Program, the Coral Reef rehabilitation and
management project in Indonesia and flood control projects in J ava, Indonesia and Thailand.
Source: Centre for Strategic Economic Studies, 2001; Environment Australia, 2001
PAGE 15
Trade in Environmental Goods and Services
REFERENCES
APEC, 2001, Survey of Environmental Markets in APEC, APEC Committee on Trade and Investment, J une.
Australian Bureau of Statistics, 2002, Environment Protection, Mining and Manufacturing Industries 2000-01,
ABS 4603.0, Canberra.
Centre for Strategic Economic Studies, 2001, National Capability Statement on Australia’s Environment
Industry, Victoria University, Melbourne, J une.
Cook, P., 1994, ‘A Strategy for the Environment Management Industry’, address to the Environment
Management Industry Association of Australia, 14 September.
Department of Foreign Affairs and Trade, 2002, Australia’s Trade Outcomes and Objectives Statement 2002,
Canberra.
———, 2001, From Sheep’s Back to Cyberspace: Trade and Regional Australia in Changing TImes, Canberra.
Department of Industry, Science and Resources, 2001, Investing in Sustainability – Environment Industry
Action Agenda, Canberra.
———, 2000, Investing in Sustainability – A Discussion Paper to Assist the Development of an Environment
Industry Action Agenda, Canberra.
Department of Industry, Science and Tourism, 2000, Australian Services Sector Review 2000, Canberra.
Environment Australia, 2001, ‘Envirobusiness Update’, Issue 6, April, Environment Industries Focus Unit,
Canberra.
Environment Management Industry Association of Australia, 2000, The Australian Environment Industry
Directory, Canberra.
———, 1994, Building Competitiveness and Success in the International Market Place – Environment Industry
Internationalisation Strategy, Canberra.
Environmental Business J ournal, 2000, as quoted in Department of Industry, Science and Tourism, 2000.
European Union, 1999, The EU Eco-Industry’s Potential, Final Report to DGXI of the European Commission.
Industry Policy Consultants, 1998, Environmental Sciences Research and Development: Market Analysis,
Department of Industry, Sciences and Resources, Canberra.
OECD (Organisation for Economic Co-operation and Development), 2001, Environmental Goods and Services:
The Benefits of Further Global Trade Liberalisation, J oint Working Party on Trade and Environment,
Paris.
———, 1999, The Environmental Goods and Services Industry: Manual for Data Collection and Analysis,
Paris.
———, 1996, The Global Environmental Goods and Services Industry, Paris.
Porter, M., 1990, The Competitive Advantage of Nations, Free Press, New York.
US Department of Commerce, 2000, US Industry and Trade Outlook (Chapter 20: Environmental
Technologies and Services), Springfield, United States.
World Bank, 1992, World Bank Development Report, Washington DC.
PAGE 16

III. ENVIRONMENTALLY FRIENDLY GOODS
KEY POINTS
• Environmentally friendly goods are goods produced, used or disposed of in a way that has a
reduced or minimal impact on the environment. Demarcating between environmentally friendly
goods and normal goods is difficult, as the environmental impact is always relative.
• Australia has a strong and expanding capacity to produce a wide range of environmentally
friendly agricultural goods using improved production methods.
• Australia is a world leader in meeting the ISO 14000 standards of environmentally friendly
management practices. Some European economies also have very high levels of certification,
while the developing world and the United States have much lower rates of certification.
• Levels of ISO 14000 certification are a good indication of an economy’s potential and
preparedness to measure up to international standards that might in future be instituted for
environmentally friendly goods.
WHAT ARE ENVI RONMENTALLY FRI ENDLY GOODS?
For the purposes of this paper, environmentally friendly goods, EFG, are goods that through their life cycle,
that is their production, use and/or disposal, have lower environmental impacts than their non-EFG
counterparts. Producers of EFG may use environmental goods and services, EGS, in their production in order
to reduce the environmental impacts. As discussed in chapter 1, goods that have reduced or minimal impact
on the environment in their use or their disposal are incorporated into the definition of EGS. Goods produced
in a more environmentally friendly way, or process and production method, PPM, based EFG may not be
materially different from their standard counterparts, and may rely on labelling or the reputation of the producer
to enable their identification. Trade restrictions in favour of PPM based EFG would not be WTO compliant.
Wher e t o Dr aw t he Li ne
Another major problem with defining EFG is the relative nature of environmentally friendly production, usage
and disposal processes. The production, use and disposal of most EFG could be even more environmentally
friendly. Where to draw the line is a key consideration. Should any step towards being more environmentally
friendly qualify the product for categorisation as an EFG? In addition, as the benchmark of the ‘normal’ good
changes by itself becoming more environmentally friendly, for example by the adoption of unleaded fuel, so
does the appropriate definition of environmentally friendly. Therefore by its nature, what is or is not an EFG will
always be an issue of debate.
Envi r onment al l y Fr i endl y Agr i c ul t ur al Goods
One of the most prominent producers of EFG in Australia is the agriculture industry and its associated service
industries. Organic food production is expanding, while many farms are setting a good example with particular
aspects of their production processes (see Box).
The organic food industry is a growing part of Australian agriculture, comprising approximately 2000 certified
producers, exporters, processors and retailers and seven certifying organisations (Agriculture, Forestry and
Fisheries Australia, 2003). Significantly, Australia has the largest area of land in the world under organic
PAGE 17
Trade in Environmental Goods and Services
production, 7.6 million hectares. The Australian Quarantine Inspection Service has estimated the value of
Australian organic production at about $200 million, including $40 million in exports.
EXAMPLES OF FARM PRODUCED ENVIRONMENTALLY FRIENDLY GOODS
• Tamburlaine Manufacturing Pty Ltd of Stockton, in the Hunter region, received Government funding to
implement a total waste management program for small to medium viticulture enterprises. The program
reduces packaging, improves chemical use in the winery and implements a solid waste and water
remediation/reuse strategy.
• Bau Farm in NSW built a containment pond and an artificial wetland to store and treat the nutrient load from
irrigation run-off and to reuse the water. The system is new to the horticultural industry and provides
environmental benefits and cost savings.
• Castlesteads Partnership of Boorowa, NSW developed a cropping zone management package that enables
farmers to identify different soil types and conditions within the farm and enable the correct amount of
fertilizer and seed to be distributed to achieve the best crop results and long term, sustainability of the land.
• Glenvar Pastoral Company Pty Ltd in WA uses a technique that mechanically captures all harvest residue
from a crop, removes potentially damaging herbicide-resistant weed seeds from paddocks and then uses the
material for value-adding into stock feed. The project has excellent flow-on economic and environmental
benefits at the regional, state and national levels.
• Taylor ’s Island Fisheries from Port Lincoln, SA has developed new techniques for pilchard fishing, which
reduce the impact on the environment. Instead of mesh scoops, a large vacuum pump transfers pilchards
from the boat to shore where they are collected in a special tanker truck. Pumping the pilchards to shore
reduces damage to the catch and blood spill at the dock, which is an environmental issue.
• Sunsalt based in Victoria produce fertiliser from salt bittern. The salt is extracted from saline groundwater,
aiding in salt mitigation. It is then processed to remove the magnesium sulphate component, which is then
used for fertiliser.
Source: Agriculture, Forestry and Fisheries, Australia, 2003.
Ec o-l abel l i ng
A number of voluntary eco-labelling and environmental standards exist to assist firms acquire a reputation as
environmentally friendly producers or to certify certain goods have been produced using environmentally
friendly practices. Locally, the Australian Environmental Labelling Association is one of a number of
organisations offering standards for eco-labelling, using its Environmental Choice label (Australian
Environmental Labelling Association, 2002). Their certification scheme is established under the International
Organization for Standardization, ISO. In addition, they comply with the WTO Guidelines for Standard
Development Bodies in regard to Technical Barriers to Trade.
Particular industries also seek to label their goods to highlight environmentally friendly aspects of their
production, including for export markets. For example, an Australian pork product manufacturer has adjusted
its packaging for the J apanese market, while a number of Australian regions are keen to promote a clean,
green image. Anecdotal evidence suggests food retailers increasingly request food producers to include
environmental information on their packaging.
Internationally, most developed countries have some kind of government, non-government or quasi
government coordinated eco labelling system (United States Environmental Protection Agency, 1998). Most
are voluntary.
PAGE 18

MEETI NG I NTERNATI ONAL STANDARDS
One of the only sources of aggregated data on EFGs is the number of international standard certificates
granted for the environmental management standards contained in the ISO 14000 series (ISO, 2002). ISO
14000 certifies that the applicant organisation meets certain criteria on minimising the harmful effects on the
environment caused by its activities and improving its environmental performance. As such, certification does
not necessarily signify ‘environmental friendliness, but that the applicant has procedures in place to improve
its environmental performance from existing levels.
The ISO publishes annual data on the number of certificates issued broken down by the originating economy.
The number of ISO 14000 certificates issued is a good indicator of the level of international recognition for the
degree of environmental consciousness in management found in an economy or region. If international
coordination efforts toward supporting EFGs take hold, the ISO 14000 standards could play a key role, as
environmentally friendly management techniques could be used to produce EFGs.
Aust r al i a i n Top 10 I SO 14000 Ec onomi es
Australia has the ninth highest rate of ISO 14000 certification in the world with about 3.5 certifications per $US
million of GDP, behind a handful of European and South East Asian economies (Table 3.1). While the
appearance of greener Northern European economies such as Sweden and Denmark in the top 10 is not
surprising, a notable trend is for some developing and transition economies, such as Slovenia and Hungary in
Europe and Malaysia and Thailand in South East Asia, also to be at the forefront of environmentally friendly
management techniques. However, the majority of developing countries, especially those in Eastern Europe
and the Former Soviet Union, Africa and Central and South America, are lagging, with around 0.5
certifications per $US million of GDP. Interestingly, North America, and in particular the United States, has one
of the lowest rates of certification for a major economy, with only 0.2 certifications per $US million of GDP. As
the largest economy in the world, its firms probably rely less on international reputation building and hence
have a reduced need for certification by the ISO.
PAGE 19
Trade in Environmental Goods and Services
Table 3.2
ISO 14000 Certifications, level and ratio to GDP, regions and selected economies, 2001
Certifications Ratio to GDP
a
,
number per $US million
Western/Northern/Central Europe 18243 2.1
Sweden 2070 9.1
Slovenia 136 7.5
Hungary 340 7.5
Denmark 919 5.7
Finland 687 5.7
Spain 2064 3.7
Eastern Europe and Former Soviet Union 274 0.4
North America 2700 0.2
East/South East Asia 12796 1.8
Malaysia 367 4.1
Thailand 485 4.0
Africa and West Asia 923 0.5
Central and South America 681 0.5
Australia and New Zealand 1422 3.2
Australia 1370 3.5
Developed Economies 32576 1.3
Developing Economies 4463 0.7
Source: ISO, 2002; World Bank World Tables, 2002 accessed via dX Database.
Notes:
a
GDP levels are 2000 figures.
I mpl i c at i ons of I SO Cer t i f i c at i on Resul t s
Were ISO certification to become a form of eco-labelling in support of EFGs, Australia would be well placed
along with most of Europe. The United States’ current level of certification is low, making them less well placed,
but this may simply reflect a low level of recognition of ISO standards in that economy. If required, it is likely
many more US firms could conform to the required standards. Most developing countries would be particularly
disadvantaged, as their rates of certification are low compared to Europe. Some developing economies are
suspicious of international standards, claiming they are largely established by and for developed economies
with not enough consideration for developing economies’ implementation capacity (Laird, 2002). Given the
emphasis on development in the Doha Development Round, it would be inconsistent to impose another barrier
to developing country trade.
The level of certification under ISO 14000 also has implications for the potential for countries in meeting other
standards, for example for the ecolabelling of particular EFGs. The higher rates of certification in Australia and
other countries is an indication of the potential and preparedness to meet other EFG standards as they are
developed. However, Australia would be well placed to seek alliances with developing countries and the
United States against introducing any compulsory environmental standards, such as those of the ISO, into
world trade.
PAGE 20

REFERENCES
Agriculture, Forestry and Fisheries Australia, 2003, mimeo.
Australian Environmental Labelling Association, 2002, ‘The Good Environmental Choice Label’,
www.aela.org.au, accessed December.
dX Database, 2002.
ISO (International Organization for Standardization), 2002, The ISO Survey of ISO 9000 and ISO 14000
Certificates, Eleventh Cycle, Geneva.
Ivanovski J ohnson, P. and Lundie, S., Ecolabelling Standards – Developments Overseas and the Good
Environmental Choice Label Australia’.
Laird, S., ‘What does the WTO do for Developing Countries’, Seminar Paper, Leverhulme Centre for Research
on Globalisation and Economic Policy, University of Nottingham,
www.nottingham.ac.uk/economics/leverhulme/, accessed February 2003.
United States Environmental Protection Agency, 1998, Environmental Labeling Issues, Policies, and Practices
Worldwide, Washington DC.
PAGE 21
Trade in Environmental Goods and Services

PAGE 22

IV. IMPLICATIONS
KEY POINTS
• There may be merit in taking an inclusive approach to the negotiations to avoid the need to apply
and enforce tariffication according to whether a good or service is used for environmental
management. Such an approach would include any goods and services that may be used as EGS
into the liberalisation negotiations.
• Given Australia appears to have a large trade deficit in EGS, Australia should take a positive
approach to liberalising its EGS tariff arrangements in the WTO negotiations, in order to reduce
costs of EGS inputs to the economy and to industry in particular.
• There is scope to form alliances with developing countries in WTO negotiations regarding EFG,
along similar lines to agricultural trade, as regulating trade in favour of EFG would be deleterious
to their interests.
There are a number of implications arising from this paper affecting the approach Australia could take to
negotiations on trade and environment in the WTO.
Advant ages i n an Al l -I nc l usi ve Appr oac h
As outlined in chapter 1, EGS do not fit easily within the standard classification systems used for international
trade, such as those used by customs agencies. This is partly because many EGS have multiple possible
uses, both environmental and non environmental, and singling out environmental uses for classification or
differential tariffication is difficult. Therefore, the merits of such special treatment need to be weighed up
against the merits of liberalising all goods and services with possible environmental uses. Given the
unwieldiness and low enforceability of special treatment, an inclusive approach to liberalisation would seem to
be more attractive.
Aust r al i a Shoul d Appr oac h Li ber al i sat i on Posi t i vel y
This paper shows that Australia almost certainly imports more EGS than it exports, making it a net importer.
This is not surprising given Australia’s broad comparative advantage in land and resource-intensive exports
such as agriculture, mining and tourism. Therefore, it is in the interests of the Australian economy that EGS
are allowed to be imported freely, to minimise costs for Australian industry and Australian exporters. Moreover,
the land-intensive export industries are all dependent on a clean environment, making it all the more essential
to Australia’s export success.
A positive approach to the negotiations regarding the liberalisation of trade in EGS will therefore support the
Australian economy and Australian exporters. Multilateral liberalisation of EGS markets will also support the
small but not insignificant number of Australian exporters of EGS in niche markets such as mine site
rehabilitation and the like.
Devel opi ng Ec onomi es ar e Aust r al i a’s Al l i es on EFG
Australia is developing its EFG production capacity, and demonstrates a high readiness to meet
environmental standards should they be brought in, as demonstrated by our high rate of ISO 14000
PAGE 23
Trade in Environmental Goods and Services
compliance and significant organic food industry. Nevertheless, Australia’s opposition to process and
production method based trade restrictions should and will no doubt continue.
In this debate, Australia could seek the cooperation of developing economies. Developing economies often do
not have the resources to produce in more environmentally friendly ways and have less capacity to comply
with standards, particularly those written to suit foreign markets. Therefore, developing economies stand to
lose considerably from any authorisation of compulsory environmental standards and would be highly suitable
as allies in any debate on such standards.
PAGE 24

APPENDIX A
OECD/EUROSTAT ENVIRONMENTAL
GOODS AND SERVICES INDUSTRY
MANUAL CLASSIFICATION
THE “ POLLUTI ON MANAGEMENT” GROUP
A. Envi r onment al Goods
Air pollution control
This class includes any activity that produces equipment, technology or specific materials for the treatment
and/or removal of exhaust gases and particulate matter from both stationary and mobile sources. It includes
air-handling equipment, dust collectors, precipitators, filters, catalytic converters, chemical treatment and
recovery systems, specialised stacks incinerators, scrubbers, odour control equipment, environmentally less-
damaging specialised fuels.
Waste water management
This class includes any activity that produces equipment, technology or specific materials for collection,
treatment and transport of waste water and cooling water. It includes pipes, pumps, valves, aeration
equipment; gravity sedimentation equipment, chemical treatment and recovery equipment; biological recovery
systems, oil/water separation systems, screens/strainers, sewage treatment equipment, waste water reuse
equipment; water purification equipment and other water handling systems.
Solid waste management
This class includes any activity that produces equipment, technology or specific materials for collection,
treatment, transport, disposal and recovery of hazardous and non-hazardous solid waste. It includes waste
storage and treatment equipment (thermal, biological, chemical), waste collection equipment, waste disposal
equipment, waste handling equipment, waste separation and sorting equipment, recovery equipment. It also
includes equipment for outdoor sweeping and watering of streets, paths, parking lots, etc. It includes
equipment, technology or specific materials for treatment of low level nuclear waste. It excludes high level
nuclear waste. Recycling activities excludes manufacture or production of new materials or products from
recovered waste or scrap and subsequent use of these materials or products.
Remediation and cleanup of soil, surface water and groundwater
This class includes any activity that produces equipment, technology or specific materials to reduce the
quantity of polluting materials in soil and water, including surface water, groundwater and sea water. It
PAGE 25
Trade in Environmental Goods and Services
includes absorbents, chemicals and bio-remediators for cleaning-up, as well as cleaning-up systems either in
situ or in appropriate installations.
Noise and vibration abatement
This class includes any activity that produces equipment, technology or specific materials to reduce or
eliminate the emission and propagation of noise and vibration both at source and dispersed. It includes
mufflers/silencers, noise deadening material, noise control equipment and systems vibration control
equipment and systems.
Environmental monitoring, analysis and assessment
This class includes any activity that produces equipment, technology or specific materials for sampling,
measurement, and subsequent recording, analysis and assessment of various characteristic of environmental
media. It includes measuring and monitoring equipment, sampling systems, data acquisition equipment, other
instruments or machines for measurement. Environmental information systems, analytical software, specific
safety and personal protection are included.
B. Envi r onment al Ser vi c es
Air pollution control
This class includes any activity that designs, manages systems or provides other services for treatment and/or
removal of exhaust gases and particulate matter from both stationary and mobile sources.
Waste water management
This class includes any activity that designs, operates systems or provides other services for collection,
treatment and transport of waste water and cooling water. It includes design, management or other services
for sewage treatment systems, waste water reuse systems, water handling systems.
Solid waste management
This class includes any activity that designs, operates systems or provides other services for the collection,
treatment, management, transport, storage and recovery of hazardous and non-hazardous solid waste. It
includes design, management or other services for waste handling (collection, transports separation, sorting
and disposal), operation of sites, recycling (including collection of waste and scrap), operation of recycling
plants. It includes services for outdoor sweeping and watering of streets, paths, parking lots, etc. Services for
treatment of low-level nuclear waste are included. It excludes high-level nuclear waste. It excludes services for
manufacture of new materials or products from recovered waste or scrap and subsequent use of these
materials or products.
Remediation and cleanup of soil, surface water and groundwater
This class includes any activity that designs, manages systems or provides other services to reduce the
quantity of polluting materials in soil and water, including surface water, groundwater and sea water. It
includes cleaning-up systems either in situ or in appropriate installations, emergency response and spills
cleanup systems. Treatment of water and dredging residues are included.
PAGE 26

Noise and vibration abatement
This class includes any activity that designs, manages systems or provides other services to reduce or
eliminate the emission of noise and vibration both at source and dispersed. It includes designing,
management or other services for acoustic and sound-proof screens and street covering.
Environmental R&D
This class includes any systematic and creative activity which is concerned with the generation, advancement,
dissemination and application of scientific and technological knowledge to reduce or eliminate emissions in all
environmental media and to improve environmental quality. It includes creative scientific and technological
activities for the development of cleaner products, processes and technologies. It includes non-technological
research to improve knowledge on ecosystems and the impact of human activities on the environment.
Environmental contracting and engineering
This class includes any activity that investigates feasibility, designs and manages environmental projects
which are not included elsewhere. It includes multidisciplinary environmental contracting and engineering.
Environmental management consulting, and auditors are included.
Analytical services, data collection, analysis and assessment
This class includes any activity that designs, manages systems or provides other services to sample, measure,
and record various characteristics of environmental media. It includes monitoring sites, both operating singly
and in networks, and covering one or more environmental medium. Health, safety, toxicology studies, and
analytical laboratory services are included. Weather stations are excluded.
Education, training, information
This class includes any activity that provides environmental education or training or disseminates
environmental information and which is executed by specialised institutions or other specialised suppliers. It
includes education, training, and information management for the general public, and specific environmental
work-place education and training. The activities of the general educational system are excluded.
C. Const r uc t i on
This class includes any activity for the construction and installation of facilities for: air pollution control; waste
water management; solid waste management; remediation and cleanup of soil, water and groundwater; noise
and vibration abatement; environmental monitoring, analysis and assessment; other environmental facilities.
THE “ CLEANER TECHNOLOGI ES AND PRODUCTS” GROUP
This group includes any activity which continuously improves, reduces or eliminates the environmental impact
of technologies, processes or products.
Cleaner/resource efficient technology
Cleaner and resource efficient technologies decrease material inputs, reduce energy consumption, recover
valuable by-products, reduce emissions, minimise waste disposal problems, or some combination of these.
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Trade in Environmental Goods and Services
Cleaner/resource efficient product
Cleaner or resource efficient products decrease material inputs, improve product quality, reduce energy
consumption, minimise waste disposal problems, reduce emission during use, or some combination of these.
THE “ RESOURCES MANAGEMENT” GROUP
Indoor air pollution control
This class includes any activity that produces equipment, technology or specific materials, designs, constructs
or installs, manages or provides other services for the treatment and renewal of indoor air to remove pollutants.
It excludes air-conditioning.
Potable water treatment and distribution
This class includes any activity that produces equipment, technology or specific materials, designs, constructs
or installs, manages or provides other services for water supply and delivery systems, both publicly and
privately owned. It includes any activities aiming to collect, purify and distribute potable water to household,
industrial, commercial or other users.
Recycled materials
This class includes any activity that produces equipment, technology or specific materials, designs, constructs
or installs, manages or provides other services for manufacturing new materials or products, separately
identified as recycled, from recovered waste or scrap, or preparation of such materials or products for
subsequent use.
Renewable energy plant
This class includes any activity that produces equipment, technology or specific materials, designs, constructs
or installs, manages or provides other services for the generation, collection or transmission of energy from
renewable sources, including biomass, solar, wind, tidal, or geothermal sources.
Heat /energy saving and management
This class includes any activity that produces equipment, technology or specific materials, designs, constructs
or installs, manages or provides other services to reduce heat and energy use or minimise heat and energy
loss (e.g. co-generation). It includes equipment, technology or specific materials to reduce climate change.
Sustainable agriculture and fisheries
This class includes any activity that produces equipment, technology or specific materials, designs, constructs
or installs, manages or provides other services for systems which reduce the environmental impact of
agriculture and fishery activities. It includes biotechnology applied to agriculture and fishery activities.
Sustainable forestry
This class includes any activity that produces equipment, technology, or specific materials, designs, constructs
or installs, manages or provides other services for programmes and projects for reforestation and forest
management on a long term sustainable basis.
PAGE 28

Natural risk management
This class includes any activity that produces equipment, technology, or specific materials, designs, constructs
or installs, manages or provides other services for systems to prevent or reduce the impact of natural disasters
(storms, floods, volcanic eruptions, etc.).
Eco-tourism
This class includes any activity that designs, constructs, installs, manages or provides other services for
tourism that involves protection and management of natural and cultural heritage, or education and
interpretation of the natural environment, and that do not damage or degrade the natural environment.
Other
This class includes any activity that measures, prevents, limits or corrects environmental damage to air, water,
and soil, as well as problems related to waste, noise and eco-systems, which is not included in any other class.
These activities should be separately specified and listed.
Source: OECD 1999, The Environmental Goods & Services Industry: Manual for Data Collection and Analysis,
Paris.
PAGE 29
Trade in Environmental Goods and Services
PAGE 30

APPENDIX B
POTENTIAL ENVIRONMENTAL GOODS
AND SERVICES
Below is a full list of potential environmental goods and services, representing a combination of categories
from the concordance lists with APEC and OECD classification systems.
Table B.1
Potential Environmental Goods and Services
Harmonised
System Code
Description
CHEMICALS
220100 Water
220710 Undenatured ethyl alcohol of an alcoholic strength by volume of 80% vol or higher
230210 Bran, sharps and other residues, whether or not in the form of pellets derived from the
sifting, milling or other working of maize (corn)
252100 Limestone flux; limestone and other calcareous stone used for the manufacture of lime or
cement
252220 Slaked lime (excl. calcium oxide and hydroxide of 2825)
280110 Chlorine
281410 Anhydrous ammonia
281511 Solid sodium hydroxide (caustic soda)
281512 Sodium hydroxide (caustic soda) in aqueous solution (soda lye or liquid soda)
281610 Hydroxide and peroxide of magnesium
281830 Aluminium hydroxide
282010 Manganese dioxide
282090 Manganese oxides (excl. manganese dioxide)
282410 Lead monoxide (litharge, massicot)
283210 Sodium sulphites
283220 Sulphites, inorganic, metallic (excl. sodium sulphites, hydrosulphites and concentrated
sulphite lye)
283510 Phosphinates (hypophosphites) and phosphonates (phosphites), metallic
283521 Phosphates of triammonium
283523 Trisodium phosphate
283524 Potassium phosphate
283525 Calcium hydrogenorthophosphate ("dicalcium phosphate")
283526 Calcium phosphates (excl. calcium hydrogenorthophosphate ("dicalcium phosphate"))
PAGE 31
Trade in Environmental Goods and Services
283529 Phosphates, inorganic, metallic, nes
285100 Inorganic compounds nes, liquid air; compressed air; amalgams (excl. amalgams of
precious metals)
290511 Methanol (methyl alcohol)
320910 Paints, varnishes, enamels and lacquers based on acrylic or vinyl polymers, dispersed or
dissolved in an aqueous medium
320990 Paints, varnishes, enamels and lacquers based on synthetic polymers nes or chemically
modified natural polymers, dispersed or dissolved in an aqueous medium
380210 Activated carbon (excl. those having the character of medicaments or put up in retail
packs as deodorisers)
381500 Catalysts
PLASTICS AND RUBBER
391400 Ion exchangers based on polymers of 3901 to 3913, in primary forms
392020 Plates, sheets, film, foil and strip nes, of polymers of propylene, non-cellular and not
reinforced, laminated, supported or similarly combined with other materials
392490 Household articles (excl. tableware and kitchenware) and toilet articles of plastics
392690 Articles of plastics and articles of other materials of 3901 to 3914 nes
WOOD AND STRAW
460120 Mats, matting and screens of vegetable materials
TEXTILES
560314 Nonwovens, whether or not impregnated, coated, covered or laminated, of man-made
filaments, weighing more than 150/g/m2
580190 Woven pile fabrics and chenille fabrics (excl. fabrics of 5802 or 5806) of textile materials
nes
591190 Textile products and articles for technical uses, nes
ARTICLES OF STONE, CEMENT, CERAMIC and GLASS
681099 Articles of cement, concrete or of artificial stone nes
690210 Refractory bricks, blocks, tiles and similar refractory ceramic constructional goods nes,
containing by weight, singly or together, more than 50% of the elements magnesium,
calcium or chromium
690220 Refractory bricks, blocks, tiles and similar refractory ceramic constructional goods nes,
containing by weight more than 50% of alumina, of silica or of a mixture or compound of
these products
690290 Refractory bricks, blocks, tiles and similar refractory ceramic constructional goods (excl.
those of siliceous fossil meals or similar siliceous earths) nes
690310 Refractory ceramic goods nes, containing by weight more than 50% of graphite or other
forms of carbon or of a mixture of these products
690320 Refractory ceramic goods nes, containing by weight more than 50% of alumina or of a
mixture or compound of alumina and of silica
690390 Refractory ceramic goods (excl. constructional and those of siliceous fossil meals or of
similar siliceous earths) nes
690919 Ceramic wares for laboratory, chemical or other technical uses (excl. porcelain or china)
700800 Multiple-walled insulating units of glass
701710 Laboratory, hygienic or pharmaceutical glassware of fused quartz or other fused silica
701720 Laboratory, hygienic or pharmaceutical glassware of glass having a linear coefficient of
expansion not exc 5 millionths per Kelvin within a temperature range of 0 degrees C to
300 degrees C nes
701790 Laboratory, hygienic or pharmaceutical glassware nes
PAGE 32

701990 Glass fibres (incl. glass wool) and articles thereof, nes
ARTICLES OF BASE METALS
730900 Reservoirs, tanks, vats and similar containers for any material (excl. compressed or
liquefied gas) of iron or steel, exc 300 l capacity, not fitted with mechanical or thermal
equipment
731010 Tanks, casks, drums, cans, boxes and similar containers for any material (excl.
compressed or liquefied gas) of iron or steel, 50 l or more but not exc 300 l capacity, not
fitted with mechanical or thermal equipment
731021 Cans which are to be closed by soldering or crimping, for any material (excl. compressed
or liquefied gas) of iron or steel, of a capacity of less than 50 l, whether or not lined or
heat insulated but not fitted with mechanical or th
731029 Tanks, casks, drums, cans, boxes and similar containers for any material (excl.
compressed or liquefied gas) of iron or steel, of a capacity of less than 50 l, whether or
not lined or heat insulated but not fitted with mechanical or
732510 Cast articles of iron or steel nes of non-malleable cast iron
780600 Articles of lead nes
MACHINERY
840410 Auxiliary plant for use with boilers of 8402 or 8403 (eg economisers, super-heaters, soot
removers and gas recoverers)
840420 Condensers for steam or other vapour power units
840510 Producer gas or water gas generators; acetylene gas generators and similar water
process gas generators
840991 Parts suitable for use solely or principally with spark-ignition internal combustion piston
engines (for other than aircraft)
840999 Parts for internal combustion piston engines (excl. spark-ignition or aircraft)
841090 Parts for hydraulic turbines and water wheels (incl. regulators)
841011 Hydraulic turbines and water wheels of a power not exc 1,000 kW
841012 Hydraulic turbines and water wheels of a power exc 1,000 kW but not exc 10,000 kW
841013 Hydraulic turbines and water wheels of a power exc 10,000 kW
841090 Parts for hydraulic turbines and water wheels (incl. regulators)
841320 Hand pumps for liquids (excl. those of 8413.11 or 8413.19)
841350 Reciprocating positive displacement pumps (excl. those for internal combustion piston
engines)
841360 Rotary positive displacement pumps (excl. those for internal combustion piston engines)
841370 Centrifugal pumps, nes for liquids
841381 Pumps for liquids nes
841410 Vacuum pumps (not of glass)
841430 Compressors of a kind used in refrigerating equipment
841440 Air compressors mounted on a wheeled chassis for towing
841459 Fans nes
841480 Air pumps, air or other gas compressors and fans and ventilating or recycling hoods
incorporating a fan nes
841490 Parts, of air or vacuum pumps, air or other gas compressors and fans, ventilating or
recycling hoods incorporating a fan
841780 Industrial or laboratory furnaces and ovens nes (incl. incinerators), non-electric
841790 Parts of non-electric industrial or laboratory furnaces and ovens, incl. incinerators
841911 Instantaneous gas water heaters, non-electric
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Trade in Environmental Goods and Services
841919 Instantaneous (excl. gas water heaters) or storage water heaters, non-electric
841940 Distilling or rectifying plant
841950 Heat exchange units
841960 Machinery for liquefying air or other gases
841989 Machinery, plant and equipment, for the treatment of materials by a process involving a
change of temperature (eg cooking, roasting or cooling) nes (excl. machinery or plant of a
kind used for domestic purposes)
841990 Parts for machinery, plant or laboratory equipment, for the treatment of materials by a
process involving a change of temperature and for non-electric instantaneous or storage
water heaters
842119 Centrifuges (excl. centrifugal cream separators and clothes-dryers)
842121 Machinery and apparatus for filtering or purifying water
842129 Filtering or purifying machinery and apparatus for liquids nes
842139 Filtering or purifying machinery and apparatus for gases (excl. intake air filters for internal
combustion engines)
842191 Parts of centrifuges (incl. centrifugal dryers)
842199 Parts of filtering or purifying machinery and apparatus for liquids or gases
842220 Machinery for cleaning or drying bottles or other containers
842381 Weighing machinery nes having a maximum weighing capacity not exc 30 kg
842382 Weighing machinery nes having a maximum weighing capacity exc 30 kg but not exc
5,000 kg
842389 Weighing machinery (excl. balances of a sensitivity of 5 cg or better but incl. weight
operated counting or checking machines) nes
842490 Parts for mechanical appliances for spraying etc liquids or powders, fire extinguishers,
spray guns and the like and steam or sand blasting machines and the like
842833 Continuous-action elevators and conveyors nes, belt type
843680 Agricultural, horticultural, forestry or bee-keeping machinery (incl. germination plant fitted
with mechanical or thermal equipment) nes
846291 Hydraulic presses (excl. those of 8462.10 to 8462.49) for working metal or metal carbides
847290 Other office machines (excl. duplic. mach., addressing mach. and address plate emboss.
mach., mach. for sorting or folding mail or for inserting mail in envelopes or bands, mach.
for opening, closing or sealing mail and mach. affix o
847410 Machinery for sorting, screening, separating or washing earth, stone, ores or other
mineral substances, in solid (incl. powder or paste) form
847432 Machines for mixing mineral substances with bitumen
847439 Machinery for mixing or kneading earth, stone, ores or other mineral substances (excl.
concrete or mortar mixers and machines for mixing mineral substances with bitumen), in
solid (incl. powder or paste) form
847982 Machines and mechanical appliances for mixing, kneading, crushing, grinding, screening,
sifting, homogenising, emulsifying or stirring nes
847989 Machines and mechanical appliances having individual functions nes
847990 Parts for machines and mechanical appliances having individual functions nes
848110 Pressure-reducing valves
848130 Check valves for pipes, boiler shells, tanks, vats or the like
848140 Safety or relief valves for pipes, boiler shells, tanks, vats or the like
848180 Valves nes, taps, cocks and similar appliances for pipes, boiler shells, tanks, vats or the
like (incl. thermostatically controlled valves)

PAGE 34

ELECTRICAL MACHINERY
850231 Wind-powered generating sets
850590 Electro-magnets; electro-magnetic or permanent magnet chucks, clamps and similar
holding devices (incl. parts for goods of 8505)
851410 Industrial or laboratory electric resistance heated furnaces and ovens
851420 Industrial or laboratory induction or dielectric furnaces and ovens
851430 Industrial or laboratory electric furnaces and ovens (excl. resistance heated or induction
or dielectric types)
851490 Parts for industrial or laboratory electric (incl. induction or dielectric) furnaces and ovens;
parts for other industrial or laboratory induction or dielectric heating equipment
851629 Electric soil heating apparatus and space heating apparatus (excl. storage heating
radiators)
853931 Fluorescent, hot cathode discharge lamps (excl. ultra-violet lamps)
854140 Photosensitive semi-conductor devices (incl. photovoltaic cells); light emitting diodes
854389 Electrical machines and apparatus, having individual functions, not specified elsewhere
in AHECC chapter 85
TRANSPORT EQUIPMENT
870892 Silencers and exhaust pipes for motor vehicles for the transport of persons or goods and
special purpose motor vehicles (excl. for tractors used on railway station platforms)
890710 Inflatable rafts
890790 Floating structures (eg tanks, coffer-dams, landing-stages, buoys and beacons but excl.
inflatable rafts)
PRECISION EQUIPMENT
901320 Lasers (excl. laser diodes)
901540 Photogrammetrical surveying instruments and appliances
901580 Surveying (excl. photogrammetrical surveying), hydrographic, oceanographic,
hydrological, meteorological or geophysical instruments and appliances (excl.
theodolites, tacheometers, levels and compasses)
901590 Parts and accessories for surveying (incl. photogrammetrical surveying), hydrographic,
oceanographic, hydrological, meteorological or geophysical instruments and appliances
(excl. compasses) and rangefinders
902229 Apparatus based on the use of alpha, beta or gamma radiations (excl. those for medical,
surgical, dental or veterinary uses but incl. radiography or radiotherapy apparatus)
902511 Liquid-filled thermometers, for direct reading, not combined with other instruments
902519 Thermometers and pyrometers, not combined with other instruments (excl. liquid-filled
thermometers, for direct reading)
902580 Hydrometers and similar floating instruments, pyrometers, hygrometers and
psychrometers and any combination of these instruments and combinations of
thermometers and barometers with these instruments
902590 Parts and accessories for hydrometers and similar floating instruments, thermometers,
pyrometers, barometers, hygrometers and psychrometers and any combination of these
instruments
902610 Instruments and apparatus for measuring or checking the flow or level of liquids (eg flow
meters, level gauges, manometers, heat meters) (excl. instruments and apparatus of
9014, 9015, 9028 or 9032)
902620 Instruments and apparatus for measuring or checking the pressure of liquids or gases (eg
flow meters, level gauges, manometers, heat meters) (excl. instruments and apparatus of
9014, 9015, 9028 or 9032)
902680 Instruments and apparatus for measuring or checking variables (excl. flow, level or
pressure) of liquids or gases (eg heat meters) (excl. those of 9014, 9015, 9028 or 9032)
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Trade in Environmental Goods and Services
902690 Parts and accessories for instruments and apparatus for measuring or checking the flow,
level, pressure or other variables of liquids or gases (eg flow meters, level gauges) (excl.
those of 9014, 9015, 9028 or 9032)
902710 Gas or smoke analysis apparatus
902720 Chromatographs and electrophoresis instruments for physical or chemical analysis
902730 Spectrometers, spectrophotometers and spectrographs using optical radiations (UV,
visible, IR)
902740 Exposure meters
902750 Instruments and apparatus using optical radiations (UV, visible, IR) (excl. spectrometers,
spectrophotometers, spectrographs and exposure meters)
902780 Instruments and apparatus for physical or chemical analysis, for measuring or checking
viscosity, porosity, expansion, surface tension and the like and quantities of heat or
sound nes
902790 Microtomes; parts and accessories for instruments and apparatus for physical or
chemical analysis, for measuring or checking viscosity, porosity, expansion and the like,
quantities of heat, sound or light and microtomes
902810 Gas meters (incl. calibrating meters therefor)
902820 Liquid meters (incl. calibrating meters therefor)
902830 Electricity supply or production meters (incl. calibrating meters therefor)
903010 Instruments and apparatus for measuring or detecting ionising radiations (eg alpha, beta,
gamma, X-ray, cosmic)
903020 Cathode-ray oscilloscopes and cathode-ray oscillographs
903031 Multimeters
903039 Instruments and apparatus nes, for measuring or checking voltage, current, resistance or
power, without a recording device (excl. meters of 9028)
903083 Instruments and apparatus for measuring or checking electrical quantities (excl. meters of
9028); instruments and apparatus for measuring or detecting alpha, beta, gamma, x-ray,
cosmic or other ionising radiations; with a recording
903089 Oscilloscopes, spectrum analysers and other instruments and apparatus for measuring or
checking electrical quantities (excl. meters of 9028) nes
903089 Oscilloscopes, spectrum analysers and other instruments and apparatus for measuring or
checking electrical quantities (excl. meters of 9028) nes
903090 Parts and accessories for instruments and apparatus for measuring or checking electrical
quantities (excl. meters of 9028) and for measuring or detecting alpha, beta, gamma, x-
ray, cosmic or other ionising radiations
903110 Machines for balancing mechanical parts
903120 Test benches
903130 Profile projectors
903149 Optical instruments and appliances nes (excl. those for inspecting semiconductor wafers
or devices or for inspecting photomasks or reticles used in manufacturing semiconductor
devices)
903180 Measuring or checking instruments, appliances and machines nes
903190 Parts and accessories for measuring or checking instruments, appliances and machines
nes
903210 Thermostats
903220 Manostats
903281 Hydraulic or pneumatic automatic regulating or controlling instruments and apparatus
(excl. thermostats and manostats)
903289 Automatic regulating or controlling instruments and apparatus (excl. thermostats,
manostats and hydraulic or pneumatic)
PAGE 36

903290 Parts and accessories for automatic regulating or controlling instruments and apparatus
903300 Parts and accessories nes for machines, appliances, instruments or apparatus of
Chapter 90
960310 Brooms and brushes, consisting of twigs or other vegetable materials bound together
MISCELLANEOUS MANUFACTURES
960350 Brushes constituting parts of machines, appliances or vehicles (excl. brushes for use on
the person)
Source: OECD, 1999; APEC, 2001.

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