Environmental Goods: Where Do the Dynamic Trade Opportunities for Developing Countries Lie?

This study seeks to review some of the key issues surrounding ongoing WTO negotiations on trade liberalisation of environmental goods and to provide trade data and analyses to assess developing countries’ current and potential performance in environmental goods trade. Data indicate that developing countries have significant export strength and potential, not only in environmentally preferable products, but in many manufactured and chemical goods used in the provision of environmental services as well. For many developing countries, this latter class of goods includes some of their most dynamic exports, which can be significantly expanded by trade liberalisation, particularly through increased South-South trade. For other developing countries, trade liberalisation of environmentally preferable products may provide immediate gains needed to support rural economies and facilitate the integration of their small and medium sized enterprises into global supply chains. The study finds that to provide gains for all countries – each with a unique production and export profile – the scope and spectrum of environmental goods targeted for liberalisation must be wide and selective, allowing developing countries to select a limited ‘best- fit’ subset of goods for their tariff reduction commitments within an eventual WTO agreement.