Plurilateral Trade Agreement in Environmental Goods: Implications to Korea

On June 25, 2013, President Barack Obama of the United States announced his Climate Change Action Plan, listing the specific policy measures regarding one of the top-priority issues of his second term. One of the measures is initiating a trade negotiation on environmental goods, suggesting that the United States would take the related debates more seriously. The aim of the negotiation is to lower tariffs to environmental goods worldwide so as to solve the global environmental issues through free trade. This article discusses the obstacles to reaching such an agreement, and reviews the current situation of Korea's trade in environmental goods. Also, we assess the legal options for the trade agreement in this area and their respective strengths and weaknesses. Finally, we draw policy implications. There are two technical, yet fundamental, issues obstructing countries from reaching a consensus on trade agreement on environmental goods. The first one is how to define the scope of "environmental goods" to be subjected to be such an agreement. Namely, products suggested as "environmental goods" may also be used or applied for other, non-environmental ends. Should these dual-use products be categorized as environmental, the scope of environmental goods for which tariffs are to be lowered will be expanded, thus raising a tension between developed countries and developing ones. Second, the current debate on environmental goods, mainly based on the so-called list approach, focuses mostly on HS-Code 6 products. Even if we were to detail the environmental goods to include those falling under finer HS Codes, there is yet not an immediate solution to categorize the goods reflecting their environmental impacts into standard customs classifications. There are several lists of environmental goods discussed worldwide. These lists can be divided as shown in Table 1, along the purposes they serve and the scopes of environmental goods they include.